Announced in the Government's 2022 Budget yesterday afternoon
Forecast budget deficit $1.4bn for 2022/23 (forecast to finished at $27.7bn for 2021/22), returning to surplus in 2023/24. Net Government debt increasing to $142bn by 30 June 2023, increasing to $156bn by 30 June 2026.
No new taxes for business or individuals. Unfortunately, not a lot for business either, other than the pre announced extension of the Apprenticeship Boost scheme, development of Business Grow Fund and some support aorund decarbonisation; potentially customers with a little more money in their pockets from 1 August 2022 ($350 cost of living payment). The $61.9bn in new infrastruture spending over the next five years should at least help with additional revenue for businesses.
The headline budget item is the $814m to provide for a $350 per person cost-of-living payment for individuals earning under $70k, which equated to $27 a week per person over three months. The payments will be made through the Inland Revenue, so you need to ensure that your bank account is loaded within MyIR over the next few weeks (more details below).
Large investments around health ($12.8bn, mostly to bring the DHBs together as part of Health NZ), education ($2.8bn), climate related initiatives ($2.8bn), housing ($1.8bn), and additional Maori/Pacific Support (circa $1.3bn).
Of the $61.6bn the Government put aside for the COVID-19 Response and Recovery Fund, $58.4bn has been spent, leaving $3.2bn for any future impacts.
Below is a summary of the key budget announcements in more detail:
Cost of Living
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$350 paid by way of three monthly instalments to individuals that earn less than $70,000, and are not eligible for the winter energy payment. Will be paid by the Inland Revenue on 1 Aug 22, 1 Sept 22, and 1 Oct 22. You will need to register your bank account with the Inland Revenue is you haven't already, which is easiest done through MyIR;
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Fuel excise tax will continue to be reduced by $0.25+GST for a further 2 months;
- Public transport fares will continue to be reduced by 50% for a further 2 months, and permanently set at 50% for beneficiaries; and
- Funding for the Commerce Commission to assess how to remove barriers to entry for the grocery sector (supermarkets).
Health
- $11.1bn across 2 years to reform the health sector, by way of consolidating the existing DHBs into an entity called Health New Zealand, includes covering the exiting DHB debts;
- Funding for maori & pacific health services ($787m), additional funding for mental health ($202m) and additional funding for Pharmac for additional medicines ($191m); and
- Additional infrastructure funding for hospitals and the like ($1.3bn).
Climate Change
- Establishment of the $4.5b Climate Emergency Response Fund, funded by the Emissions Trading Scheme over the next 4 years;
- Funding to assist with decarbonising the transport sector ($1.3bn), including $569m to assist low and middle income New Zealanders swap their existing petrol vehicle for low emission alternatives;
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Funding to assist business decarbonising ($764m), provided through the Decarbonising Industry Fund (GIDI) to assist business with switching to alternative low-carbon fuel/energy sources; and
- $380m for Agricultural and $347m for Foresty, to fund research and development for emissions mitigation and carbon sink options.
Growth & Business
- $148m in funding for Industry Transformation Plans to agree on long term visions and identify potential business/industry opportunities;
- $192m investment for regional business support and tourism support;
- A further $230m for Apprenticeship Boost Scheme extension, reduced rate of $500 per month per apprentice, available to 31 Dec 2023; and
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Creation of business growth fund ($100m), representing Government equity investment into businesses.
Housing & Infrastructure
Commitment of $61.9bn over the next 5 years for housing, transport, health, and education building projects; which should ensure there is plenty of revenue opportunities for businesses and subtrades involved with infrastructure. Within the 2022 budget, key areas are:
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Funding of $1.8bn to support new housing, construction of additional public housing, accommodation for homelessness and emergency housing;
- Additional hospital rebuilding and refurbishment ($1.3bn);
- $435m for Education (school classrooms and furnishings); and
- Rail asset replacement and modernisation ($349m).
Wellbeing
- Funding of $943m to asssit with disability support services, and to establish a new Ministry for Disabled People;
- Additional funding for dental support ($126m), increasing the support available to low income families to $1,000 per person; and
- Passing through child support payments to parents, to boost sole parent incomes ($334m)
Education
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Additional operational funding of $293m and $8m of capital to replace the decile system with the Equity Index;
- Increased funding of $184m for school operating grants (2.75% increase);
- $270m operating and $5m capital funding for pay parity for education and care, and kindergarten teachers; and
$855m in capital investment over 2 years, including $219m for replacing furniture and equipment, $385m for building and refurbishing 280 classrooms at more than 40 schools, $88m for the Christchurch School Rebuild, and $105m for Maori-medium kura.
If you wish to discuss how any of the budget announcements might impact your business or yourself, please contact any of the team at All Accounted For, advice@aafl.nz or 04-970-1182.
