- The government will spend nearly $5 billion more (than last year) of taxpayers’ dollars.
- They are spending 33% of GDP, up from 27% when they first came to power.
- It has a few unexpected goodies, but it is reasonably restrained for an election year.
- Not everyone is happy, the National Party is now showing an increase in the polls, and critics claim the budget will worsen inflation.
They have a plan
The Government has released a new budget, and unveiled its plan to alleviate the pressure of the inflation driven cost of living problem for families.
A little extra
Budget 2023 includes $4.8 billion of extra spending which is largely dedicated to addressing inflation-driven cost pressures on existing services. There has been a slight reduction in terms of projected Government spending. The budget allocates $3.1 billion for constructing 3,000 new public houses by June 2025.
$1.2 billion over 4 years has been allocated to bolster the 20 hours of taxpayer-funded early childhood education to extend to two-year-olds . Some in the early childhood sector have pointed out this announcement was pushed through without any consultation with the industry and believe this may have unintended consequences of making industry conditions worse. There are a number of reasons, including staffing issues.
The government will eliminate the $5 co-payment for prescription medicines, costing taxpayers $618 million over four years, with the goal of enhancing accessibility to pharmaceutical drugs.
Many wonder why eliminate the $5 fee when, if it is a problem for you, it can be avoided with some chemists paying it for you. Also, it is capped at $100 for the year.
The budget sets aside $327 million to provide taxpayer funded travel for children under 13 years old and subsidized half-priced fares for individuals under 25 years old.
Will it help?
The Government presumes this will save up to $30 per week for the average two-child family and assist approximately 770,000 New Zealanders, in addition to the people made eligible for half-priced fares in the previous budget.
Transport Minister Michael Wood believes this policy will have broad benefits for the entire country, including improved access to public transportation and reduced road congestion.
The budget allocates $402 million to double the Warmer Kiwi Homes program, enabling 26,500 insulation and heating retrofits annually over the next four years.
Many of these policies support the agenda the Government already had in the name of the “cost of living”, such as the provision of centrally funded public transport, something the political left has always wanted.
In addition to these measures, the budget includes significant financial redistribution for other industries. This includes $160 million in subsidies for the gaming industry and $465 million for the construction of state houses. It will spend $120 million on vehicle charging technology, while the Government also suggests Kiwis take shorter showers to save money on power which is also running low.
Furthermore, a substantial $10.7 billion of capital spending is allocated to various infrastructure projects. The largest of these was the new National Resilience Plan, initially supporting cyclone rebuild efforts and later focusing much more broadly on the infrastructure.
It would appear that not everyone is happy with the budget. The National Party is showing increased support following the announcement.
Commentators have criticised the government, saying that the increased spending will be largely inflationary -pushing more money into the economy. This is thought to prolong the cost of living problem and to work contrary to the efforts of the RBNZ to reduce inflation.