- Surplus of $3.7 billion for 2018/19, up from $3.1 billion now
- Economic growth expected to average an annual 3 per cent over next five years
- Tax incentive, giving eligible businesses 12.5 cents back for every dollar spent on R&D
A no surprises NZ Budget
The Coalition Government’s first Budget sets out a plan to shift the settings of the New Zealand economy to face the challenges of the future – lifting productivity, making a transition to a more sustainable low carbon economy, and adapting to a rapidly changing world of work.
Finance Minister Grant Robertson’s budget includes no surprises of any significance. As expected the focus is on increased spending on health, education and housing - with changes to the tax system deferred several years and boosts to social assistance already enacted last December and coming into effect on 1 July.
The forecast operating surplus for 2018/19 is $3.7 billion (up $600 million on this year’s $3.1 billion). The foreshadowed commitment to fiscal responsibility is reflected in good growth forecasts, a fall in unemployment, growth in wages, stable inflation and net core Crown debt falling to below 20% of GDP in 2021/22.
The Minister of Finance refers to the Budget as a plan – and here he means a long term plan – looking out 30 years – that will deliver economic, social and environmental transformation. Next year sees the change to a wellbeing budget – with more focus on non-traditional measures of wealth and income.
Does this Budget provide business with the certainty it needs to continue investing and innovating? The answer to that question depends on your faith in the ability of various Government appointed committees and working groups, like the Tax Working Group, to deliver definitive and politically acceptable recommendations.
For some that means the jury will remain out for a while longer. In the meantime the boost to R&D ($1 billion over four years) is welcome.