Six key questions for the Budget (2024)

Happy B’day! It’s that time of year where the Government loads up the piñata and hands the press gallery a stick.

This year won’t be the lolly scramble of years past, but the Government has been clear it will be directing a big injection into the front lines of health, education and justice. Some which will come from cuts and savings, and some new money.

Beyond that, the Budget centrepiece will be National’s income tax package.

The country will have to wait – just a little bit longer – to decide on the most fitting name for this year’s Budget. But given the difficult economic environment, high Crown debt, and stubbornly elevated interest rates, it will no doubt be a Basic Budget.

If there was any question of just how badly Finance Minister Nicola Willis wants to go back to basics this Budget, look no further than her bland pre-Budget photo op, featuring a picture-less document titled: The Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2025 – Economic Development and Infrastructure Sector.

“Our Budget tomorrow will be about substance,” Willis said.

“We’ve had six years of a Government that wanted to be judged by how snazzy its slogans were and how pretty its pictures were. We want to be judged by results.”

Beyond this there are sure to be a few surprises.

Here are six key questions ahead of Thursday’s big reveal.

Has National kept its tax promise?

When the National Party unveiled its tax plan ahead of the election it promised Kiwis up to $250 a fortnight in their back pockets.

Although it later became apparent that just 3000 households would be eligible for the full $250, there’s still a strong expectation that the cuts delivered in the Budget at least match what was promised during the campaign.

Willis has staked her career on delivering tax cuts, in response to one of the classic ‘would you resign?’ questions.

The question now becomes: What shape (and size) will those tax cuts take?

Some time in the past few months National’s online tax calculator was removed from the party’s website.

The Government has promised to replace it with a new calculator on the Treasury site, but it raises questions around whether the original calculator was removed because the savings it spits back are no longer correct.

On Tuesday, Prime Minister Christopher Luxon said there was “nothing sinister” in the decision to remove the online tool.

“There’s nothing funny going on there … When you see the tax policy on Thursday, and I just encourage each and everyone to jump on, put your numbers in and see what sort of tax relief you’re gonna get.”

Where are those public sector cuts going?

Nearly 3000 public servants will lose their jobs as a result of the Government’s public sector cuts, Willis announced on Monday, and another 1150 vacancies will go unfilled. All of that money has to go somewhere.

At least some of it, Willis has committed, will go to frontline workers, hiring more nurses, teachers, corrections officers and police. The total number of new hires will be about 2250, she said, though that could change.

Exactly how the cash will break down, however, remains a mystery. Some will go to the front line, but will education, health or justice get the most? Some will be needed to pay for the Government’s tax cuts as well. And then there are the myriad other little policies that crop up in every Budget that need funding.

That latter problem could be worsened by agitation from National’s coalition partners, Act and New Zealand First, as canvassed below. What’s clear is that, despite Willis’ rhetoric around fiscal restraint, there are a lot of demands on the Crown’s wallet – and that wallet will be a lot fatter thanks to all the public servants the Government is laying off.

What counts as a ‘big spend’ on frontline services?

This is the biggy. Throughout its promise to cut, slash and reprioritise, the Government has also committed to increase spending on the frontline.

While Willis has never managed to define the front line (or the back office for that matter), there are some things that are undoubtedly frontline: nurses, doctors, teachers, corrections officers and police.

Luxon and Education Minister Erica Stanford have both promised the new funding going into frontline education services will “dwarf” the $429 million in savings and cuts at the ministry. The Government has already announced $751m for education in pre-Budget announcements. But ECE and learning support have been notably absent from the announcements so far.

On Wednesday, both Luxon and Willis said “criminals” would be the group most disappointed by this year’s Budget – setting the scene for a significant spend in the law and order space.

The Government has already announced it will be funding 685 new frontline Corrections staff. This is being covered by $442m of savings found from 100 programmes. And according to the Police Association tracker, the Government needs to train 10,700 new cops between now and the 2025 deadline to meet the coalition commitment to train at least 500 net new cops. That commitment will need serious funding to back it up.

Also look out for money for youth offender boot camps and extra beds in youth justice facilities.

Meanwhile, the Government has promised significant investment in disability support services off the back of the ongoing debacle at Whaikaha. And Winston Peters has already announced $24m for Mike King’s I Am Hope charity – delivering on a coalition promise for youth mental health.

But so far there’s been nothing announced for nurses or “real doctors” as opposed to “spin doctors”. Look out for something for these frontline health workers, or detail on whether the plan for the third medical school lives on.

As always, the devil will be in the detail – not just in the specific size of the frontline spend, but also whether the funding is in the area that will make the most difference, and whether the correct frameworks and supports are in place to get bang for buck.

A good lesson came from the Labour-led coalition’s 2019 Wellbeing Budget, where it spent $1.9 billion on mental health, but without a solid pipeline to increase the workforce and scale up vital services, the Government didn’t see the outcomes it had hoped for.

Will there be a mega-tunnel?

Transport Minister Simeon Brown wants to dig himself a really deep hole. Namely, a four kilometre one that stretches from Wellington’s CBD to Kilbirnie. And while the “Megatunnel” may not eventuate, there will certainly be money for infrastructure in this year’s Budget.

National’s coalition agreement with NZ First made it clear they want to see 13 new Roads of National Significant [sic] and four major public transportation upgrades. The document also committed to cancelling Auckland Light Rail and Let’s Get Wellington Moving while reducing expenditure on cycleways. The Government’s dedication to roadbuilding is clear, but where that money will be coming from is less so. At least in the case of building a four-lane highway in the Brynderwyns, private finance was considered.

Meanwhile, leaders of New Zealand’s infrastructure sector have expressed support for fast-track legislation and RMA reform that would enable faster consenting of these major projects, but are primarily concerned with stability. Big projects are great until an incoming government decides to scrap them. Commitment and stability are their chief concerns.

Outside of a committed pipeline, what the industry sector really wants to see is water infrastructure projects (with responsibility and funding given to local councils), investment in rail and public transport (due to “concern for sustainable and efficient transport solutions that cater to urban density and environmental concerns”) and initiatives that will improve the economy “without relying heavily on real estate”. We’ll see how many of these priorities are echoed by the Government’s infrastructure budget.

Is there anything for climate?

Climate Change Minister Simon Watts made the unusual decision on Tuesday to foreshadow what the Budget might hold for emissions reductions outside of the context of an official pre-Budget announcement.

“I’m sure, in two days from now, we might see a little bit in the Budget in regards to climate,” he said.

However, the Budget is unlikely to contain a significant amount of cash for climate. Exactly why depends on whom you ask.

Watts suggested the arrival of the Emissions Reduction Plan in a month’s time makes it difficult to fund unannounced policies in the Budget. Labour’s Megan Woods said it was because the Government isn’t committed to climate action.

Then there’s the fact that the Government wants to rely more heavily on New Zealand’s carbon market, the Emissions Trading Scheme, to cut climate pollution. Doing so won’t require Budget funding, but it does have its own fish hooks.

What have coalition partners won?

Both Act and New Zealand First have made pre-Budget announcements about key coalition agreement commitments. David Seymour got to unveil $153 million for new charter schools, while Winston Peters (alongside Mental Health Minister Matt Doocey) celebrated $24 million for the Gumboot Friday counselling service.

The big question is whether any other coalition agreement pledges will be funded in this Budget – or whether the minor parties may have won any concessions that go beyond those agreements.

New Zealand First, for example, secured a commitment from National to give the IRD more money for audits and create a National Infrastructure Agency while Act was promised funding for more youth justice places.

Those don’t all need to be funded this Budget, but the coalition partners will want to have a decent amount to show their constituencies after their first Budget.

“I think everyone wins in this Budget,” Willis said, but wouldn’t specify whether there were additional wins for her coalition partners beyond what’s already been signalled in the agreements.