Finance Minister Stephen Joyce delivered his first budget yesterday which “finally reaps the rewards of the Government’s fiscal patience” says PwC partner and budget leader Richard Forgan.
“Strong economic performance with good growth, modest inflation and shrinking unemployment, gives the Government options that it did not have before. And the response has been to provide something for almost everyone,” he said, noting the shifts to tax thresholds, which along with Working for Families, will boost the disposable income of a typical earning New Zealand household by $1,000 to $2,000 per year.
Another plus was the huge boost given to infrastructure and house-building, particularly in Auckland, he said which was also welcomed by the Property Council New Zealand, which scored Budget 2017 a seven out of ten.
“After years of underinvestment, we are particularly pleased to see Government attempting to beef up their funding and put in place some solid foundations for future growth,” said Property Council’s chief executive, Connal Townsend.
“As the largest economic sector, contributing 13 per cent of GDP, property is the foundation of the New Zealand economy. It supports the rest of the economy because it is the infrastructure of business and the homes that shelter us all.
“A decade of nearly continuous economic growth, requires further investment to keep economic growth sustainable. New Zealand simply cannot afford to get any further behind our already large housing and infrastructure deficit.”
The government will invest $2.23bn into the four-year Crown-land programme to turn 8,300 houses into 34,000 new residences for vulnerable families, first-home buyers and for the wider market. Also $11b of new funding will be pumped into infrastructure across New Zealand over the next four years.
But Townsend said the Budget’s investment is “only the beginning as New Zealand plays considerable catch-up” when it comes to funding and planning of its cities.
“More money is needed for infrastructure and buildings, but we recognise the current need is greater than can be accommodated in any one budget or even five budgets.
“Given the significant size of investment needed in bricks and mortar, money needs to go into new thinking and innovation around how we fund and deliver infrastructure. We also need to reform the wider planning and building systems so they deliver more effectiveness and efficiency for the economy,” said Townsend.
chief economist Cameron Bagrie
said the government has taken a “balanced approach” with the Budget but its missing link is savings.
“You see semblances of it through the growth strategy, responsible fiscal management, and resumption of Super Fund contributions,” he said, but stressed “the economy is entering a juncture where funding a domestic savings shortfall via international capital to meet our investment needs is becoming more challenging.
“More domestic savings is required to meet New Zealand’s investment needs or investment needs to fall. A more proactive stance towards saving is needed in the future or interest rates will need to move up further than would other be the case to do the job.”