Our take on Budget 2018

SUMMARY

Budget 2018 was the first Budget for the Labour-NZ First-Green Government.  Predictably it was focused on health, education, and housing.  There were no surprises.

The Budget had plenty of aspirational language on ‘transformation’ and ending what the Government sees as ‘neglect’ of public services.  It wants to ‘turn the page on the ideology of individualism and a hands-off approach to the economy’.  This despite economic policies over the past three decades being very successful in turning around New Zealand’s long-term economic decline, dramatically increasing jobs and incomes, and making the economy more resilient to economic shocks.

There will be big increases in spending over the next four years but strong revenue growth means surpluses are forecast to grow and the Government will remain within its Budget Responsibility Rules. Much will depend though on the economy continuing to motor along and continuing drag in more tax revenue.

In terms of the primary industries, there were some crumbs.  Overall, the Ministry for Primary Industries will get an additional $38 million in new operating funding over four years.  This includes $15 million for the Sustainable Farming Fund, $9 million for strengthening biosecurity, and $5 million for enhancing OVERSEER.

On the other hand, two big-ticket items under the previous government have suffered from significant ‘re-prioritisations’.  The Primary Growth Partnership is being cut by $80.6 million over four years and the Crown Irrigation Funding is being cut by $68.1 million over four years.

There will also be more funding for combatting predators and biodiversity initiatives, and also the establishment of an ‘RMA oversight unit’ to ‘improve the consistency, effectiveness and transparency of council enforcement of RMA rules and decisions’.  This is in response to political concern that some councils haven’t been sufficiently vigorous in their enforcement of the RMA.

The Budget also provided $85 million for the current 2017/18 year for the response to Mycoplasma bovis.  However, there were no amounts provided for the coming 2018/19 year let alone for future years.  This will depend on decisions that remain to be made, such as on eradication versus long-term management.  The Minister of Finance certainly sees it as a risk that could impact on the Government’s finances.

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