Guest Post: The Budget we should have seen

A guest post by Alex Murphy from the Taxpayers Union:

Kiwis made it clear at the election what they wanted to see from this year’s Budget: real income tax relief, a much smaller state, and most importantly, public debt coming down.

Unfortunately, last week’s Budget fell well short of those expectations.
Not only has Treasury said we’ll be stuck in the red for at least another four years, but Kiwis won’t be getting the tax relief they asked for, and the state will remain just as big and greedy as it was when the Coalition took over.

Worse still, the Government is planning on spending more this year than Grant Robertson did last – $6,930 per household more to be exact. So much for ‘brutal cuts’, Nicola Willis’ Budget was practically a whole buffet!

Kiwis voted for fiscal restraint, though, not another budget buffet. So, what could the Government have done differently?
Well, for starters, it could have actually delivered Kiwis with the tax relief they deserved. 

As the Finance Minister said time and again before the budget, Kiwis haven’t a tax break in 14 years thanks to inflation stealing more and more of their real incomes by artificially forcing them into higher and higher tax brackets. 

The magic number we were looking for was a $49 per week reduction in tax for the average Kiwi worker. Anything less is only a partial catch up to the last 14 years of rampant inflation. Nicola Willis managed just $25 a week, taking us back to 2021. That isn’t tax relief, that is just shortchanging New Zealanders.

Had the Government actually taken the knife to public spending like it said it would, Nicola Willis could have simultaneously given Kiwis their $49 a week in tax relief and put the books back in the black.

Dare I say a chap from Argentina managed it a few months ago, and the Government certainly wouldn’t need to go as far as him.

Instead, by palming these savings decisions over to the department heads who presided over the last six years of expansion, it’s no wonder why the Government is now finding itself empty handed.

As far as staffing cuts go, the Government should have chopped public service numbers down by at least the extra 18,000 bureaucrats hired under Labour. The measly 4,000 reductions it plans to make simply won’t be anywhere near enough to carve out the enormous layer of fat brought in from the last six years of indulgence.

The Government has already taken a hammering in the media for barely plucking a few stray hairs. It may as well have ensured that its cuts were at least as drastic as they have been characterized to be.

And tackling the back-office bloat is just the start of what the Government should have done to find savings.

Take the billions of dollars’ worth of corporate welfare schemes, for instance, that continue to line the pockets of multinationals and other special industry groups.
Willis’ Budget not only keeps the corporate gravy train running, but dishes out even more favours, including nearly $200 million to the bigwigs of Hollywood , and a brand new climate-based ‘heavy vehicle’ fund that will see the biggest companies continue to milk the taxpayer,  for no environmental gain.

Again, this is not what New Zealanders asked for.
And further to ensuring there was no new corporate welfare, the Government should have also canned its existing corporate welfare teats such as Callaghan Innovation, NZTE, or the hundreds of other tax credits, grants and funds dished out by ministries every year.

But wait there’s more.

The Government could have also decided to pull the plug on its state media arm and sell it off. Seeing as polling continues to show that New Zealanders trust neither RNZ or TVNZ’s ability to provide balanced and impartial news coverage, the Government may as well have pushed them off its books now while they still might be worth something.
Not only would this have brought in some quick cash when the Government needs it most, but passing these organizations over to the private sector would have ensured that all news content from TVNZ and RNZ would be directly accountable to the consumers that fund them – not set by agenda-driven bureaucrats.
In short, had the Government listened to Kiwis, gone line-by-line through the finances, and actually cut out the waste, Nicola Willis could have quite easily delivered Kiwis with the tax relief they deserved, all while getting the books back into order.
Instead, we’ve been given a budget that shortchanges New Zealanders, keeps the state as fat as ever, and sees our debt continue to spiral out of control.

This really could have been the next mother of all budgets. Instead, it was the mother of all disappointments.

Alex Murphy is a Senior Researcher at the New Zealand Taxpayers’ Union

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