National deliver high tax, high spend Budget

Your humble taxpayer advocates have just been released from today’s Budget 2015 lock-up. 

We wish we had better news

From a taxpayer perspective, Budget 2015 is Bill English’s worst. We have awarded it a two out of ten, and “National’s Labour-Green high tax, high spend Budget”.

Instead of controlling spending, cutting government waste and reprioritising spending into areas most in need, Budget 2015 introduces new taxes and reduces the incentive to work.

The good:

• more money to health (an additional $1.7 billion over the next four years), education ($686.9 million increase for 2015/16), tertiary education ($113 million for 2015/16) and law and order ($218.5 million between Police, the SFO and Justice/Courts for 2015/16).
• A ‘child hardship package’ targeting those most vulnerable and increased requirements on those receiving benefits to be available for work.
• Modest changes to Working for Families to reduce welfare for those earning more than $88,000 (the average reduction being around $3 a week).
• Provision for annual ACC levy cuts of $375 million in 2016 and a further $120 million in 2017.
• Removal of the $1,000 KiwiSaver ‘kick-starter’ which gave a bonus even to babies of millionaires to join KiwiSaver. We’ve expressed our concern in the past with the economic analysis showing that despite it’s cost, the KiwiSaver subsidies do little to increase the overall amount of private savings.
• Making more Crown land available for housing.

The bad:

• The 2014/15 financial year is forecast to be a deficit of $684 million.
• Budget 2015 estimates a tiny surplus of $176 million for 2015/16. The consensus from our economic advisers is that this surplus is optimistic at best. Any further declines in dairy prices, for example, would obliterate this amount.
• Very little reprioritisation of existing spending to areas more in need. The taxpayer funded lobbying, advertising campaigns, and pointless government programmes will continue.
• No commitment to cut the Wellington bureaucracy - the number of back office pen pushers will remain as high as at anytime under the Helen Clark Government.

The ugly:

• A new Travel Tax! The Government is introducing a new tax on international travel that will add around $22 per return ticket for every traveller.
• Reducing the incentive for beneficiaries to get into work - Budget 2015 increases the benefit rates for families with children by $25 per week – the first core benefit rate increase above inflation since 1972!
• An extra $80 million for the corporate welfare scheme that saw Larry Ellison’s Oracle Racing awarded millions.
• Despite the recent report by the Auditor-General damning the lack of oversight and high administration costs, Budget 2015 allocates $49.8 million more to Whānau Ora.
• Yet another $429 million for KiwiRail. In answering questions in the lock-up, Mr English was quite candid that despite the KiwiRail ‘Turnaround Plan’ (and the billions of taxpayer money piled in) – it still hasn’t turned round!

Our initial comments to media on the Budget 2015 are available here. We have also issued press releases specifically on the new 'Travel Tax' and the changes to KiwiSaver.

Taxpayers’ Union co-founder, David Farrar, has blogged his thoughts on the Budget at KiwiBlog.

We will be spending the next week or so going through the fineprint and working hard to uncover what the politicians don’t want you to know. In the meantime, it looks like National has well and truly turned into a Labour/Green-like Government that looks likely to cost taxpayers a fortune.