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'Temporary band aid': Political parties rip into 'worse than expected' Budget

Newshub logo Newshub 19/05/2022 Jamie Ensor
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The cost of living package announced as part of Budget 2022 is just a "temporary band-aid", National says, while ACT expects "ambitious New Zealanders" are going to look at the Government's latest initiatives and consider heading offshore.

Te Pāti Māori says the Budget is "worse than expected" as it doesn't "go far enough" to support Māori, but the Greens are broadly supportive even if there are areas it believes more can be done.

The Government unveiled the Budget on Thursday afternoon by spotlighting its monumental four-year $11 billion spend on health and a surprising $1 billion cost-of-living package. Finance Minister Grant Robertson said he's balanced responding to the short-term pain of inflation with addressing long-term issues like health inequities and infrastructure.

"One Budget cannot solve all of New Zealand's challenges in one year, a longer-term approach is smarter, logical and provides more certainty," he said. "Which is why we are making long-term investments in health, climate and infrastructure."

But other political parties have now picked it over and here's what they had to say:

It's the first Budget for Christopher Luxon as the leader of the National Party and he believes it's sending Kiwis "backward".

"This is the Backwards Budget. Kiwis, the economy and outcomes are all going backward under Labour and today's forecasts confirm the situation is only going to get worse before it gets better," Luxon said.

"Labour's spending addiction means the books are going backward. Not content with a $6 billion spending spree, they've also raided future budgets - spending $2 billion from Budget 2023 and $0.4 billion from Budget 2024.

He said there was also spending on climate and cost of living on top of that. 

The climate spending, mostly announced on Monday, comes from the Climate Emergency Response Fund (CERF), which contains proceeds from the Emissions Trading Scheme (ETS). Essentially, that means polluters are paying for the action to reduce emissions.

The cost of living package includes $350 over three months for Kiwis who make under $70,000 and aren't eligible for the Winter Energy Payment. It also sees the Government extend reductions on fuel excise duty, road user charges and public transport fares.

"Labour's cost of living package is a temporary band-aid," the National leader said. "The squeezed middle is paying the price for Labour's economic mismanagement."

The centre-right party has been advocating for income tax thresholds to be adjusted to inflation, which it said would save those on a salary of $55,000 about $800 over a year.

To pay for its cost of living package, the Government's taken about $1 billion from the COVID Response and Recovery Fund. That fund has now ended and the remaining money in it is being repriotrised, but $1.2 billion is being kept in case any COVID-19 issues arise before the next Budget.

Those funding methods mean the spending on climate and cost of living won't create any additional debt.

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Speaking of debt, the Budget Economic and Fiscal Update, also released on Thursday, shows net debt as a percentage of GDP will peak at 19.9 percent in 2024, before dropping to 15 percent by 2026.

"They're pushing out surpluses and shifting the goalposts to clear the way for more spending by lifting debt limits," Luxon said.

"With inflation at a 30-year-high and prices running laps around wages, Kiwis are experiencing the worst cost of living crisis in a generation. The forecasts today show inflation is rampant for years to come."

New Zealand will have a surplus by 2025 but that's a year later than forecast in December. Other forecasts show inflation will peak this year, before slowly dropping to 2.2 percent in 2026 and unemployment will grow to 4.8 percent in 2025.

The good news is wages are tipped to rise next year by 6 percent - more than the anticipated 5.2 percent inflation rate - meaning salaries will eventually rise faster than the cost of living. 

But ACT believes Kiwis will now be looking at heading offshore. 

"Jacinda Ardern and the Labour Government have today presented New Zealand with the Brain Drain Budget," leader David Seymour said. "Ambitious New Zealanders, tired of being milked, will weigh up leaving for greener pastures.

"Last December Treasury forecast a population of 5.188 million in the next financial year, six months later it forecasts only 5.175 million people. Even Treasury is forecasting a brain drain expecting New Zealand's population to be smaller today than it expected six months ago."

He said the cost of living payments will only add to inflation and those making over $70,000 are "left to swim against the tide" of rising costs. 

ACT wants to simplify the tax system by creating only two thresholds. 

"Simpler taxes don't just mean less bureaucracy, they send a message that we are committed to a future where we won't fleece you for every extra effort. It's about exorcising tall poppy syndrome from the New Zealand psyche," Seymour said.

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Te Pāti Māori said the Budget is "worse than expected".

"Māori will receive less than a percent of a total Government Budget of $157.5 billion dollars on Whenua that was 100 percent ours. It just does not go far enough.

"Today was an opportunity for this Government to put their money where their mouth is and to learn off the success of Māori providers through COVID-19 when it came to protecting our whakapapa. The Government has not learnt from this success and has decided to withhold our unique Māori potential."

To deal with inequities, the party wanted to see a capital gains tax - which Prime Minister Jacinda Ardern has ruled out - as well as a vacant homes tax and removing GST off kai. 

"Māori Health will receive $257 million in pocket money out of a total $11.1 billion investment into health over four years. In total, we're looking at 2 percent budget toward Māori health in which it's taken 182-years to reach this level of investment," said co-leader Rawiri Waititi.

"Based on that logic, it will take 1840 years to get to 20 percent. Our whānau suffer from worse outcomes, we're dying 7-10 years earlier than the general population. 

"It's astounding to think the Government thinks this suffices."

Associate Health Minister Peeni Henare believes the move to the Māori Health Authority will transform the delivery of services for Māori. 

"To ensure our healthcare system and the Māori Health Authority can provide better health services to whānau, Budget 2022 invests $168 million over four years for direct commissioning of services," he said.

There's a further $20.1 million over four years to support the development of iwi-Māori partnership boards to "ensure the voice of iwi and whanau is strongly represented across our new healthcare system". 

"We are also investing $39 million to provide the Māori health workforce with additional access to training and development to support them within the new health system, so they can continue to deliver much-needed services to whānau Māori across Aotearoa," Henare said.

The Greens have welcomed support for people on low incomes but wanted the Budget to go further.

"We welcome the decision to unlock child support payments for all parents and caregivers as recommended by the Welfare Expert Advisory Group. But communities are still waiting for action on the other recommendations," said the party's spokesperson for Social Development and Employment Ricardo Menéndez March.

"The changes to dental grants will ensure more people are able to access much-needed treatment. But more should be done to prevent dental problems [from] occurring in the first place.

"One of the simplest ways to do this is to boost people's incomes, which are one of the biggest determinants of oral health."

The Greens want a guaranteed minimum income, an immediate rent freeze and for the supermarket duopoly to be broken up. It also welcomed the extension to half-price public transport but wants the Government to go further and make it free for everyone. 

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