By Phil Barlow – 25 May 2017

Having read the online news website “Stuff” today, apparently there has been a tradition introduced during Bill English’s time as Finance Minister to get his Facebook followers to vote on a “budget day pie”. For 2017, the vote was a standard “steak and cheese” pie. Was this an indication as to what was contained in today’s Budget?

The National Government has again used this Budget to build upon the platform they have created over the past few years.  The primary focus of spending in this Budget is firstly to invest in public services necessary for a growing economy.  Secondly to invest in infrastructure. Who were the main beneficiaries of this budget and how were the surplus funds allocated?

Public Services

  • $3.9 billion over 4 years for the Health Sector
  • $1.1 billion over four years in additional operating expenditure for schools and early childhood centres
  • $1.2 billion in new operating expenditure over four years for law and order.
  • $32.5 billion total to be spent on infrastructure over four years including $2.7 billion in housing
  • There are also various funds allocated towards social investment.


  • $4 billion in new capital funding across Education, Health, Defence, Justice, Housing, Primary Sector and Transport portfolios. This includes:

– $392 million for new schools and classrooms
– $1.8 billion towards the Transport portfolio
– $2.2 billion towards an Auckland Housing Programme (34,000 new      homes).

Other things of note:

  • A family income package changes tax thresholds, working for families tax credits, and accommodation supplement, costing $6 billion over four years.
  • Everyone earning over $14,000 a year will pay less tax as the thresholds for the lowest two tax brackets will be raised from 1 April 2018. People earning over $22,000 will get $11 more a week; and $20 for people earning over $52,000.
  • EQC premium rate to increase to help restore the National Disaster Fund.
  • The operating surplus is forecast to grow to $7.2 billion by 2020-21.

Whilst many will say a number of these spends were well overdue, it seems the Government has still missed the mark on some things.

Given the recent (and continuing) significant increase in net migration and the significant growth in tourist numbers, the Government has no choice but to dig deep and start rebuilding our public services and infrastructure.  One of the biggest concerns that Aucklanders are facing every day is the gridlocked roads and motorway systems.  This is costing both Auckland and New Zealand millions in productivity. Although this Budget provides for an increased transport spend, the projects identified do not appear to directly address Auckland’s transport issues.

Similarly, the new schools and classrooms may well plug a gap in resource going forward, but this does not help address the fact that many schools, particularly in Auckland, are now not able to find staff to cover many subjects.

Today’s Budget spend is clearly significant.  There is a significant allocation to public services and infrastructure (the steak).  In addition, under this Budget it appears nearly everyone directly gets something, (the cheese).  Anyone smell an election coming on?

Phil Barlow
Tax Director
T +64 9 414 5444