Budget 2020: What Taxpayers Need to Know
As I write this, Grant Robertson is unveiling Budget 2020 in Parliament.
Two members of our team have just emerged from the pre-Budget briefing. Below, our Consulting Economist Joe Ascroft summarises the contents of the Budget and what it will mean for you, the taxpayer.
We've also had Neil Miller – a former Treasury Analyst and Director of Research for the Leader of the Opposition – in the room. He's written for David's Kiwiblog and well as a separate piece on the political ramifications of today's announcements (see below).
Overall impression: The Blank Cheque Budget – big set up for election announcements to come
The economic landscape in New Zealand has fundamentally changed in recent months and if anyone had forgotten that fact, Budget 2020 is a wake-up call. Debt is expected to skyrocket, economic growth is projected to collapse, and unemployment is forecast to climb higher than during the GFC.
The total size of the Government’s fiscal response is simply enormous. The Budget centre-piece is a $50 billion ($27,332 per household) ‘Covid-19 Recovery Fund’ to be spent over five years, which includes a (more focused) extension of the wage subsidy schemes among other policies.
The Budget was clearly rushed and it showed. Much of the announcements are simply big numbers with no actual allocation. Think Shane Jones's Provincial Growth Fund on steroids. All of the "Wellbeing" focus from last year has been unceremoniously canned. Unlike in recent years, none of the Associate Finance Ministers were anywhere to be seen and the Secretary of the Treasury did not speak to the room or make herself available to take questions.
About half of the recovery fund has still been left available to be spent across the forecast period as required. More spending announcements should be expected in the coming months to be funded from this allocated balance.
And yet despite the severe recession we now find ourselves in, the Government has still wasted plenty of taxpayers’ money. KiwiRail, our foreign aid budget, and NZ Post all receive big cheques.
This Budget (and the election campaign to come) is going to need a lot of scrutiny if we are to avoid a 1970s-style 'big government' economic paralysis. We'll be burning the midnight oil over the next few days as we wade through the detail and pick out what the politicians don't want you to know...
Read our economic and political analyses of Budget 2020: