Budget 2025: Govt looks to make promises add up

Otago Daily Times

21-05-2025

By Lilian Hanley of RNZ
"It feels like a kid robbing his mum to pay for his mates" says library assistant Alex Cass, as she prepares for the government to reveal Budget 2025.
New Zealanders will find out on Thursday just how much money will be cut from various services, as the government looks to make its promises add up.
Just how much is saved from the pay equity law changes - and where that money will be going instead - will also be revealed.
The Pay Equity Amendment Bill was passed on May 7 after being rushed through under urgency. The legislation means 33 equity claims involving hundreds of thousands of workers being negotiated will now have to restart the process under new criteria.
Cass was part of a pay equity claim scrapped due to the government's last-minute law change.
"It's unbelievably underhanded the way this process has been done. It was done lightning fast, with no chance for any of us to object. It's incredibly cruel, and it's a legacy of cruelty."
Cass felt the government was saying to those who are fighting for their work to be taken seriously, "you don't deserve better".
She would be on Parliament's lawn on Thursday afternoon to react to the Budget - money she said the government got from people who were "already massively underpaid".
But Finance Minister Nicola Willis said New Zealanders were "realistic" because the new scheme would still deliver a scheme protecting women against sex-based discrimination.
"Every single cent" reprioritised from money reallocated from those claims would go into "priorities for New Zealand", she claimed.
"I've had it with opposition politicians who keep promising they can 'do it all', that somehow they're gonna stick to the debt levels, they're not gonna have deficits but also they're not gonna make savings and they're gonna spend on everything - that doesn't add up.
"Our approach is different" she said.
"It's about prioritising your taxpayer money carefully and ensuring that we're actually nourishing the growth that ultimately delivers the jobs and living standards we all depend on."
For this Budget, the government's given itself only $1.3 billion of new money to use on day-to-day spending.
Already $2.5b is needed for yearly cost increases and more than $3b has been allocated in pre-budget announcements for health, defence, social investment, state abuse survivor redress and a screen production rebate.
"It's not a budget filled with rainbows and unicorns," Willis said, "It's a reality budget that will deliver genuine hope for the future."
She also called it a "no BS" budget - but would not specify what that stood for. Labour, Greens critical
Labour leader Chris Hipkins said "paying women properly" should not be described as "rainbows and unicorns".
"Making sure women who have been underpaid are paid what they're worth is something that a responsible government should prioritise - this government isn't."
Green Party co-leader Chlöe Swarbrick said it did look like a "BS" budget.
"The government has decided it is going to be cutting public services to the bone in order to pay for its landlord and tobacco tax cuts of the last budget."
Council of Trade Unions economist Craig Renney, who is also on the Labour Party's policy council, said the government did not have much to work with given it would not borrow more money.
"We're cutting government services at a time when we know there's increasing demand on those services. We have an increasingly elderly population. We have increasingly higher needs in terms of health and education."
Now is the time to invest in the economy and inject some confidence into the economy, he believed.
Despite the government saying it would not cut frontline services, Kiwis were finding it harder to access those frontline services, he said.
"It's not that there's a direct cut, but because these services aren't being properly funded for change, they're having to work harder and harder to deliver the same services with less real cash available to them."
In the Budget, he will be looking out for how the government has chosen to use the savings from stopping pay equity claims. He will also be looking at Treasury's estimates for what is happening to unemployment, wages and the cost of living.
"We've actually seen wages rising far less quickly than in the past, and we've seen two years of cuts to the minimum wage in real terms, and we've seen rising unemployment.
"If those trends continue, that will suggest that the medicine and the pain of economic change is really being borne by workers, in particular, low-paid workforces, rather than by others in the economy who might have broader shoulders."
He also will be looking to see if the government changes KiwiSaver settings, or begins means-testing for the winter energy payment or BestStart.
"If it tries to do all of those to balance the books, we'll be asking why is it that these workers are having to pay the price for the fact that the government hasn't been able to deliver its fiscal plan to date."
New Zealand Initiative chief economist Dr Eric Crampton said the government should focus on getting spending back down to pre-Covid levels.
He wanted to know where the government was planning on reducing expenditure to deal with its deficit.
"If it's simply tighter spending allowances over the next few years, you start wondering how credible it is as a path to get out of structural deficit.
"Pulling the government out of the provision of some services, or explicitly cutting the amount that's provided, would signal a more serious approach."
Crampton was interested to see Treasury's projections of future paths for government spending, and for productivity and GDP growth, as well as government spending priorities.
"I'm watching for the tweaks the government might make to align the budget with the economic growth agenda.
"There has been talk of changes in depreciation schedules to encourage private investment."
He also pointed to a coalition agreement promise between National and ACT to provide housing incentive payments to councils, asking if it would show up in the Budget "at least as a forecast for next year".
"The government would need to make fiscal room for it. But it is important if the government wants councils to welcome urban growth."
The Finance Minister has confirmed she will not be making any changes to superannuation.