Finance Minister Nicola Willis has started to tease what people can expect from Budget 2025. Photo / Mark Mitchell.
This month, the Government will deliver its second Budget.
Finance Minister Nicola Willis is starting to tease what we could see from it. And basically... don’t expect much.
The government will reduce the amount of new spending with Willis slashing the operating allowance from $2.4 billion to $1.3b.
NZ Herald Wellington business editor Jenee Tibshraeny told The Front Page it’ll mean there’ll be a major reprioritisation across government.
“I think the theme of this Budget is really going to be cuts to public services. The Government has to find that money somewhere.
“We’ve been playing the guessing game and my best guess at the moment is that the Government might means test the contribution it makes to KiwiSaver members. As it stands, if you contribute a certain amount every year to your KiwiSaver, you get just over $500 a year from the Government.
“The idea behind that was to encourage people to contribute to KiwiSaver... But, that does cost about $1.1b a year.
“I feel like the Government can means test that. So, it could say, if you earn over a certain amount, you don’t need to get this free money from the Government,” she said.
Willis told the Herald in March she’s looking at upping the amount employees and employers contribute to their KiwiSaver accounts.
“I’m seeking advice and taking advice on where we take KiwiSaver in the future,” she said.
Willis wouldn’t detail the options she was considering, but said: “KiwiSaver is important to New Zealand’s financial security. As Finance Minister, it is something that’s on my radar”.
A recent Treasury forecast estimated the Government will spend $149.8b in this Budget, which includes a $58.5b spend on things like benefits, superannuation, and debt servicing. The rest is divided up.
How the Government will pay for the meagre operating allowance remains a mystery. One option off the table for now is a charities tax.
“Willis made the point that changing the rules around how much tax charities pay is really complicated. There are a lot of charities that do really good work for the community,” Tibshraeny said.
“In fact, the government does rely on charities a lot to do social work. For example, community housing providers. This Government, in particular, is relying heavily on them to build state houses.
“Then you have the controversial ones like Destiny Church or Sanitarium, charities that are kind of actually businesses.
“It sounds like differentiating between the two and changing the law in such a way that cracks down on the ones you want to crack down on, but supports the ones you want to support is really tricky.”
Listen to the full episode to hear more about what the government could cut, and whether there’s any room for surprises in Budget 2025.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.
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