The 2022 budget receives a mixed rating in five categories and a fail in one
Support for business is light in a 2022 budget that walks a tightrope between addressing short-term cost-of-living pressures, longer-term inflation, climate change, and health challenges, according to Peter Vial, ANZ NZ country head at Chartered Accountants.
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Rated by CA ANZ against six measures, the budget was given a mixed score in five: agility, vision, certainty, outcomes focus, and quality spend, while boldness got a fail.
“There are important wellbeing elements in this budget but overall this strikes us as a crisis budget, with a focus on the big challenges: climate change, health reform, and the spiralling cost of living,” Vial said. “We wouldn’t call it a bold budget – the investments in health and emissions-reduction initiatives are significant, but they have been well signalled and are overdue.”
CA ANZ noted that while the government has demonstrated agility in responding to the cost-of-living challenges, “overall, the finance minister has been cautious rather than bold.”
“Investment in business and education needs more heft to make a significant difference to our productivity – a fundamental issue that New Zealand must address,” Vial said. “The $600 million opex package to support business growth will be spread thinly across New Zealand’s 530,000 SMEs. We all talk about being a high-wage, low-emissions economy, but then you’ve got a pre-budget announcement of $20 million for the $7.4 billion digital technologies sector – which is just the industry to help us achieve our lofty goals.”
CA ANZ found it unsurprising that the government has responded to the immediate challenge of high inflation and rapidly increasing cost of living through a $1.2-billion-dollar response for the squeezed low and middle-income earners.
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“However, we question what will happen when these measures are withdrawn, and the cost of fuel and living are still being pumped up by inflation,” Vial said.
A big announcement for business is the Business Growth Fund. Its equivalents both in the UK and Canada, which the budget cited as models, have made modest differences in their respective SME sectors.
“There is likely to be fierce competition to access New Zealand’s government-backed growth fund,” Vial said.
What CA ANZ didn’t find surprising what that tax hasn’t featured in the budget.
“The government has made some changes to tax over the last year, and any further changes need proper consultation, following the Generic Tax Policy Process,” Vial said. “We’ve seen what happens when we change tax on the hoof, and it’s not good.”
