Cognito: Family friendly budget lays platform for sticky sweets later on

15 May 2014

* Dulce pomum quum abest custos

In his sixth Budget, Bill English has served up a pretty reasonable main course for families – with more spending on health and some on housing.

But, it’s the promise of a tax cut dessert (possibly three years away) that’s going to get voters to the table later this year.

The “steady as she goes” Finance Minister and his party realise the election rests on the sentiment of middle class mums and dads – some of them on struggle street.

So, Budget 2014 has cleverly pinched the Opposition’s policy platform with announcements such as the $172 million to boost paid parental leave next year.

As Mr English said in his speech to Parliament, “what’s good for vulnerable kids and communities is also good for the government’s books”.

Right wing pundits will be disappointed National has moved into left wing territory, even if it does cut Labour and the Greens off at the pass.

Cognito thinks the $90 million extension of free doctors’ visits for children under 13 years old (in time for winter) is a friendly nod to NZ First Leader Winston Peters who introduced the existing free visits for children under six years. This could factor (positively for National) in post-election negotiations. The policy also means more money in people’s pockets too.

Alongside families, Auckland and Christchurch are winners (mainly housing), while business also get some good news with research and development tax relief.

Rising house prices got some token attention with temporary suspension of duties and tariffs on imported building materials to save $3,500 on the cost a new build.

Business innovation spending includes $56.8 million over four years in contestable science and innovation (increasing the total to $1.5 billion by 2015/16).

Key themes in the Budget include a consistent approach to modest spending, a return to surplus ($375 million next year), and reducing Crown debt to 20% of GDP by 2020.

For the first time, the total health budget will top the $15 billion mark in 2014/15, thanks partly to the skills of outgoing Health Minister Tony Ryall and the belief that better healthcare will result in better economic wellbeing.

Minister Joyce also got a win for his Business Growth Agenda, with $53 million to establish another three Centres of Research Excellence (CoREs) increasing the number to 10, including a CoRE that focuses on Maori research.

To support inroads into export markets, the Budget also includes:

  • $69 million for NZTE to expand New Zealand’s presence in China, South America and the Middle East, to help 200 more firms break into markets.
  • $57 million extra over four years for contestable science funding.
  • $58 million in increased tax deductions for R&D by start-up firms.
  • 6,000 extra places in the apprenticeship reboot.

The Government is also raiding its Future Investment Fund (created with the assets sales money) to pay $200 million for health, $175.5 million for education, and $198 million to KiwiRail and its plagued Aratere ferry.

In addition, the Fund will pay $375 million of new capital to NZTA, $75 million for a Christchurch housing contingency, $40 million for Crown irrigation, $30.6 million towards the Hobsonville Land Company housing development, $11.3 million for the TVNZ Archive at Avalon, and $8 million for maintenance of Te Papa – the national museum.

This leaves $1.7 billion in the Future Investment Fund for Budget 2015 and 2016 – leaving options open for future spending on public services.

The sticky sweets are still on the shelf for now but the packet is open. Cognito expects more sweeteners to be announced come August. Look out for more focus on Canterbury and Auckland.

In the meantime, Mr English has lived up to expectations by delivering a modest surplus and laying the platform for his boss to woo voters ahead of the election.  

* Sweet is the apple when the keeper is away

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