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Highlights
- The NZ Federal Budget for 2022 has been positioned as a `Well-Being’ Budget
- The Finance Minister faces a tough challenge to bring together a Budget when inflation is at a new high
- Due to many challenges, the FM will have to do a fine balancing act
Is it going to be a well-being Budget during difficult economic times? In his pre-Budget speeches, Finance Minister Grant Robertson highlighted that the Budget would focus on healthcare and would move towards a high-wage, low-emissions economy.
Last year’s Budget was focused on the COVID-19 relief, vaccine rollouts and housing packages. Last year, the government’s main focus was on keeping New Zealand safe by ensuring that borders were safe.
This year, as it seems, the main themes would be recovery and consolidation against the backdrop of rising inflation and the high cost of living.
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Healthcare
It is expected that there would be substantial funding for healthcare. The FM had pointed out while he was hoping not to use the word COVID-19 as often this year, ‘the Pandemic is still not over’.
He also plans to streamline the current healthcare system to give maximum benefits to New Zealanders, especially in rural areas. Since district health boards have been running an annual deficit, they might receive some attention.
Also Read: Healthcare, climate change to be main focus in upcoming NZ Budget: Grant Robertson
Low-carbon economy
The government released the Emissions Reduction Plan on Monday and a funding plan has been readied for the same. While a fund has been created by revenue received from the Emissions Trading Scheme, the Budget 2022 would help businesses move towards low-emissions technologies.
Robertson had said that the government would work in sectors where emissions were difficult to handle. The government would help businesses’ decarbonisation. Private vehicles are needed to be decarbonised and the increased uptake of those would help NZ meet its emissions target.
Steps towards high-wage economy
In his pre-Budget speeches, the FM has said that New Zealand needed to move towards a high-wage economy. The Budget will give funding for lifting research, development and innovation.
There would be a focus on supporting businesses to access new markets, raise the capital they need and help provide a skilled workforce. This includes Industry Transformation Plans and Digital Boost programmes. All this will help in raising productivity.
Also Read: What is wage inflation and how is it different from consumer price inflation?
New Zealand would be attracting global resources and skills this year as last two years have restrained inward migration due to public health requirements. But this year, Prime Minister Jacinda Ardern had also said immigration rebalance would be achieved and for that, a green list would be prepared to open up residency for workers and skills in demand.
This is important to bridge the shortage of skilled workers.
Taxes
According to analysts, this year’s Budget may not be a great Budget from the tax’s point of view. While it will be interesting to see the FM deliver the Budget in a high-inflation environment while balancing the odds, taxes will be a low priority. However, a few unexpected announcements could be tax-related, say the analysts.
But there are usually a few unexpected announcements in the Budget and it’s just possible that one or two of those might have something to do with tax.
Bottom Line: It is expected that the government would focus on economic recovery and climate change in this Budget. As outlined by the FM in his previews, this year’s main focus will be climate change goals and healthcare.
