Budget 2019 kicked of this year with more focus on secrecy leaks rather than the content itself. Let’s just say I wouldn’t like to be an official in Treasury right now!
The much awaited, world-first wellbeing budget, but what was actually delivered? From a tax perspective, there are a couple of items of interest, but for the most part it was about programmes to deliver on five key wellbeing priorities.
The five priorities for the budget were:
- Creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy
- Supporting a thriving nation in the digital age through innovation, social and economic opportunities
- Lifting Maori and Pacific incomes, skills and opportunities
- Reducing child poverty and improving child wellbeing, including addressing family violence
- Supporting mental wellbeing for all New Zealanders, with a special focus on under 24-year olds
Hon Grant Robertson started by setting the scene that this budget was focused on making NZ a kinder place, which values not just GDP growth, but also child wellbeing, mental health services and rivers and lakes we can swim in.
New spending in the budget was an average of $3.8 Billion a year over the four-year forecast period in operating expenditure, and new capital expenditure of $10.4 Billion. The economy continues to see economic growth, with an average of 2.6% over the forecast period, slightly lower than previous forecasts, but above the OECD average of 2.3%.
Mental Health gets a significant investment with $455 Million for front line services, and a $40 Million focus on suicide. A $320 Million package to improve child wellbeing, by way of targeting family and sexual violence and also a funding increase for decile 1-7 schools to offset school donations.
Though there was less focus on initiatives which would impact businesses in the short to medium term, some key initiatives which will have some impact to businesses include:
- The introduction of a $300 Million fund for venture capital, to assist with start-ups, to grow and develop. Focused on those businesses who pass the early start-up phase, then find themselves with a ‘capital gap’. This initiative will be targeted towards mid-sized business.
- Additional funding has been allocated for research and innovation to develop and commercialise new technologies. This is in addition to the now enacted R&D tax credits announced in Budget 2018.
- More funding for research into the reduction of emissions in the agricultural and energy sectors.
- Announced pre-budget was the GST treatment for telecommunications roaming services. Currently when New Zealanders are travelling internationally, no GST is charged on the roaming charges as they are overseas, however this will align roaming charges to the ‘remote’ services rules, and taxation will be based on the users residency rather than location, from 1 October 2020.
- More funding has been allocated to support and reform vocational education.
- There has been a significant investment in infrastructure, with 1 Billion being invested into new rail networks and asset replacement. Full funding for the Dunedin Hospital re-build and $1.2 billion has been allocated to the school property programme.
- A $229.2 Million package to support farmers and councils to improve land use practices and to restore at risk waterways and wetlands, as well as other investment focused on productive and sustainable land use.
With the budget being named the Well-being budget, the investment in mental health and child wellbeing is unsurprising, but a few areas of interest for businesses to keep an eye on.