Date posted: 13/05/2021

A balanced Budget – NZ Government needs to be agile and bold

In next week’s Budget Chartered Accountants Australia and New Zealand would like to see the Government being agile and bold to deal with a mixture of pandemic-induced issues and old, often deep-seated problems, that have been allowed to fester for too long.

In particular Chartered Accountants Australia and New Zealand would like to see these attributes brought to bear to vaccinate the country’s population at pace to lead an economic recovery, the latter being the number 1 Budget priority in a survey of members.

We have set process agility and bold substance as our top two principles for Finance Minister Grant Robertson and his 2021 Budget. We recognise that agility and boldness are tricky concepts for governments whose machinery and inclination are set towards the safety of business as usual (with preferably minor modifications).

But BAU is not what the country needs at the moment.

The current Government’s pandemic policy programme, especially in the early days, revealed it could go against type and be agile and bold. Last year’s Budget met our expectations in many, but not all of the critical areas.

We gave ticks for the focus on jobs and fiscal policy (for example, no spending cuts or tax increases), mixed report cards for targeting of spending and joint policy development with business and other sectors, but fails on boosting productivity and digital expansion.

Agility in the 2020 Budget was a question mark, particularly around the quality of some of the quick-response spending that was announced.

This year we have added a number of new principles which we will use to score the Budget. These additions, such as problem definition and frameworks for measuring outcomes, reflect our focus on policy and spending disciplines which are at risk of lapsing.

Detail missing

A lot of policy detail has been missing from Government announcements. An example is the Government’s call for pay restraint in the public sector which had no real problem definition or revenue savings targets.

Planned DHB reforms and the removal of interest deductibility on residential investment properties, despite being bold, do not score well thanks to the lack of any robust, detailed problem definition and a framework for measuring successful outcomes.

A glaring omission in the latest Budget Policy Statement setting out the Government’s Budget 2021 priorities is any mention of the key role of the tax system, as presented so well by the Tax Working Group, along with an acknowledgement of the long-term challenges to the sustainability of the tax base.

"The need to be agile does not absolve the Government from doing the hard yards on policy. Detail is not optional or something that can be done later.”
Peter Vial FCA

Transport infrastructure, such as the Auckland light rail proposal and a fix to Wellington’s transport woes, are examples of the need for a more agile bureaucracy and bold political will. Action on climate change is similarly bogged down as time ticks away on our international commitments.

Obviously the Government is feeling the tension between a desire to be agile and a need to consult (and perhaps preserve political capital), but action needs to follow in a way that balances both urgency and ensuring the country’s long-term prosperity.

Our Budget scorecard

What we will look for in the 2021 Budget:

  1. Agility
  2. Boldness
  3. Clear and measurable targets
  4. Clear framework for measuring outcomes and commitment to post-implementation reviews
  5. Holistic approach that leverages interconnections
  6. Clear statement of obligations placed on businesses and employers
  7. Consultation with the private sector and the public
  8. Government commitment to its promises

Members call for focus on economic growth

Read more of what the CA ANZ advocacy experts say about the NZ Budget.

Search related topics