Explainer: Nicola Willis’ pre-budget speech – what we learned

Finance Minister Nicola Willis made a Conservative lift of the lid on her May 30 budget in a speech to the Hutt Chamber of Commerce on Thursday, giving an idea of ​​what to expect.

It comes after the Coalition has already tabled three pre-budget announcements and has another scheduled for Friday.

On Monday, the Prime Minister and Corrections Minister announced a $1.9 billion investment in more beds at Waikeria Prison, better pay and more prison staff recruitment and rehabilitation for remand prisoners, and on Wednesday David Seymour announced $478 million dollars in limited-time funding for free lunches. In schools.

The previous week, Education Minister Erica Stanford announced more than $60 million for mandatory structured literacy in schools.

Bellies full after a pre-Budget breakfast, business leaders sat and listened to Nicola Willis promise not to present an austerity budget but send out plenty of pessimistic warnings about the country’s economic challenges and its “darkest before the end” financial situation. sunrise”.

This is what Willis laid out exactly three weeks before his big Budget reveal.

Tax cuts for almost everyone

Willis is not giving up on his central issue of tax relief, telling those gathered at Silverstream on Thursday morning that he knew how “devastating it would be if we gave up on overdue tax relief.”

The Finance Minister has confirmed her tax cut package will increase the net income of 83 per cent of New Zealanders aged 15 and over and 94 per cent of households.

“We will responsibly deliver these lower taxes to low- and middle-income families, fully funding them with a package of careful savings and targeted income measures,” he said.

Those not receiving tax relief are the 17 per cent of Kiwis who receive a benefit or pay no income tax.

There will also be changes to the current income tax thresholds.

As to whether those tax cuts will end up being inflationary, something economic commentators have long criticized, Willis says he has received new modeling from the Treasury that supports his belief that it will be “fiscally neutral tax relief.”

How much money is there to play?

Nicola Willis has committed to managing her budget with an operational allocation of less than $3.5 billion.

“That is less than the previous government’s allocation and will be honoured, for the first time in recent years. This has been made possible by our government’s willingness to redirect existing spending towards a better purpose,” he said.

To pay for those tax cuts, Willis says new priorities have been managed, specific revenue measures have been found and, as for the $1.5 billion in savings the Government needed to secure, Willis said: “Today I confirm that we have delivered that savings goal.”

The ministries safest from administrative sacrifice

While all ministries and government agencies were told to go out and find 6.5 to 7.5 percent in administrative savings, some have overdelivered and others have fallen short.

Both the police and the Ministry for Disabled People, Whaikaha, fell short of the target.

Willis said that in the case of the Police it was “for good reasons.”

“They were able to convince us that achieving their goal would potentially involve making changes that would undermine their frontline service delivery,” Willis said.

As a result, they were told they were safe from cost-cutting, as were some other agencies.

Whaikaha achieved some savings on consultant and contractor expenses and administrative efficiencies, but not the full contribution.

There has been speculation about whether Foreign Secretary Winston Peters skirted the savings target with his ministry, but on Thursday Willis confirmed that the MFAT had met the requested savings.

Putting social back into investment

Willis is changing the Social Welfare Agency, as Labor called it, and renaming it the Social Investment Agency, which was first established in 2017 by the last national government.

It was the brainchild of former Prime Minister and Chancellor of the Exchequer Sir Bill English, and Willis regained the role of Social Investment Minister when the coalition was formed in November.

The agency will come into effect from July 1 but the Social Investment fund will not be established until a later date.

The idea is that it will have commission powers and work with the community, non-governmental organizations and iwi providers to improve outcomes for some of the most vulnerable New Zealanders in the country.

One thing Willis says he is confident he will achieve is reducing the number of Kiwis receiving a benefit.