Edmonds Judd

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The Budget 2024

Commercial, Health Issues, News, Your Own Business
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A no-frills outlook

Although it is clear the economic outlook is somewhat gloomy, in delivering the 2024 Budget, the Minister of Finance, Nicola Willis, said that savings across government have resulted in responsibly-funded tax relief. “Spending is targeted, effective and affordable.”

The government has promised targeted investments in public services, including healthcare, education, and law and order. Front-line services will be increased.  Having said that, the minister has admitted the Budget is “tight but realistic” and she intends to stick closely to these allocations.

 

Tax relief

The much-promised tax cuts have been delivered.

As previously signalled, the Budget will help what the government calls ‘the New Zealand squeezed middle income earner’. For the first time since 2010, personal tax brackets have been adjusted for New Zealanders earning up to $180,000 pa. Overall, average income households will have up to an extra $102 in their back pockets each fortnight.

Additional FamilyBoost payments will help around 100,000 families manage the costs of early childhood education with up to $150/fortnight.

These tax changes take effect from 31 July this year (a month later than promised) in order for payrolls to accommodate the re settings. Changes to FamilyBoost will apply from 1 July.

The government has reiterated the restoration of tax deductibility for interest on residential investment properties, as well as the adjustment to the bright-line test from 10 years back to two years from 1 July this year.

 

Health

Frontline health services have received a boost. Emergency departments, primary care, medicines and public health will get $8.15 billion additional operating and capital funding over the next four years:

  • $3.44 billion has been allocated for hospital and specialty services (including $31 million to increase security in emergency departments)
  • An additional $2.12 billion will be available for primary care, community and public health providers including GPs, Māori health services, mental health services and aged care services
  • Free breast screening will be gradually extended for 70–74-year old women (currently only available up to 69 year olds); an extra $31.2 million
  • Pharmac will receive additional funding of $1.77 billion over four years, which is said to just cover ongoing costs for additional medicines, and
  • The mental health initiative, Gumboot Friday, has $24 million to deliver services to young New Zealanders.

 

On the other side of the coin:

  • Free prescriptions have gone for most New Zealanders. However, free prescriptions will remain for those under 14 years old, people aged 65 and over and for Community Services Card holders, and
  • Promised additional funding for cancer drugs has not materialised. Since the Minister delivered the Budget, she has stated that the government aims to make an announcement on cancer drug funding this year.

 

Education

There will be increased spending on schools and early childhood education equating to $2.93 billion in extra operating and capital funding, including $440.8 million of reprioritisation. The government is allocating:

  • $1.48 billion to build new schools and classrooms and to maintain and upgrade existing school properties. This includes funding for kōhanga reo, play centres, kindergartens, kura kaupapa Māori, special schools, and intermediate, secondary and charter schools.
  • $516.4 million to support schools and early childhood education providers, plus $153.3 million to establish charter schools
  • $477.6 million to continue the Healthy School Lunches programme for the next two years
  • $67 million to support schools to use the new structured literacy approach when teaching reading, and
  • Funding is switched to allow a fees-free final year of tertiary study, rather than free fees in the first year.

 

Law and order

The government has reiterated its pledge to crack down on crime and keep communities safe. This includes:

  • Funding of $1.94 billion for more frontline Corrections officers, increased support for offenders to turn away from crime and increased prison capacity, and
  • $651 million allocated to support frontline policing (including increased pay) and for an additional 500 police officers and additional operational support staff.

 

Public services

$140 million is budgeted for an additional 1,500 social housing places, delivered by community housing providers.

$1.1 billion is allocated to ensure disabled people can access the essential services, equipment or support they need.

Hawke’s Bay and Auckland communities will receive $1 billion-plus for the rebuild and recovery from Cyclone Gabrielle and the Anniversary Day floods. $939.3 million of this is allocated for road repairs.

 

Infrastructure

The government, as it has previously signalled, is investing heavily in roading – $4.1 billion to accelerate priority roading projects including Roads of National Significance.

$200 million will be invested to support KiwiRail carry out maintenance and renewals on the national rail network.

 

Climate change

The government wants to support the country’s transition to a low-emissions economy and climate-resilient future. The minister said that around $2.6 billion of climate initiatives funded from the previous government’s Climate Emergency Response Fund will continue.

Later this year the government will consult on plans to deliver emissions reductions over the second emissions budget period. The minister confirmed that the Emissions Trading Scheme will play a vital role in reducing emissions.

 

In summary

While the Budget could not be considered an austerity plan, it is certainly a ‘no frills’ programme indicating the government will be running a tight financial ship over the next few years.

Treasury expects the economy to pick up later this year, including inflation returning to its target band of 1–3% and a fall in interest rates.

All things being equal, the government expects the country’s operating balance (before gains and losses) to head into surplus in the 2027–28 financial year.

In the meantime, however, we will all need to hold on to our hats and buckle our belts a little tighter over the next few years.

To read more detail about the Budget, click here for the Budget documents.

 

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.


Copyright, NZ LAW Limited, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Over the fence

Property, Rural
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Resource Management (National Environmental Standards for Freshwater) Regulations 2020 now amended

Wetlands have many environmental benefits; they can significantly reduce nutrient and sediment losses on farms, improve water quality, and provide a habitat for birds and fish.

In 2020, Resource Management (National Environmental Standards for Freshwater) Regulations were introduced. These regulations protected wetlands to preserve their environmental benefits. The initial regulations had limited consenting pathways and resource consents were not obtainable for the construction of any water storage facility that could adversely impact the extent or values of the wetland.

In January 2023, these regulations were amended to introduce new consenting pathways for the purposes of:

  • Urban development
  • Quarrying activities
  • The extraction of minerals and ancillary activities (with additional controls on coal mining)
  • Landfill and cleanfill areas, and
  • Water storage, ski area infrastructure and New Zealand Defence Force activities, that are included in the definition, and the existing National Environmental Standards for Freshwater provision for ‘specified infrastructure.’

There are certain ‘gateway tests’ under the new consent pathways that must be satisfied before consent is granted.

The effects of the activity must also be managed using the ‘effects management hierarchy.’ This addresses any adverse effects the activities may have on the extent or value of the wetland. There are also certain conditions imposed on the new consenting pathways, including the requirement that water storage infrastructures must provide significant national or regional benefits.

 

Affordable Water Reform replaces Three Waters Reform Programme

On 13 April 2023, the government announced changes to its Three Waters Reform Programme. Three Waters was introduced in 2022 to change the delivery of drinking water, wastewater and stormwater to ensure all New Zealanders have safe and reliable water infrastructure.

After a significant negative public response to the Three Waters proposal, the government has made key changes to what is now called Affordable Water Reform. These are:

  • Ten publicly owned specialised service entities rather than four
  • The entities will be based around the existing regions and will be connected to the communities that they serve
  • The entities will be owned by local councils and will be operationally and financially independent
  • Each entity will be governed by a professional board and local input will be enhanced through the regional representative group for each entity. There will be an equal number of mana whenua and council representatives on each entity’s regional representative group, and
  • The introduction of the entities will occur through a staged approach between early 2025 and 1 July 2026 at the latest.

The original Better-Off funding model was designed to support councils through the transition period and to manage the financial impacts of the reforms. The Crown will still provide Better-Off funding for the first phase ($500 million) but not for the second phase ($1.5 billion). The first phase of funding has been implemented to try to negate the financial implications that the councils face during the transition.

The latest amendments do not largely impact the Water Services Legislation Bill and the Water Services Economic Efficiency and Consumer Protection Bill currently before Parliament. The government intends to pass legislation to implement these new changes before the election in mid-October.

Reaction to the changes to the government’s revised water reform programme has, it is fair to say, been mixed. It will be interesting to see how these reforms progress over the next six months before the election.

 

Cyclone Gabrielle – animal welfare management

Cyclone Gabrielle had a significant impact on farms in the North Island and left many animals stranded and in danger. This has highlighted the importance of having a disaster management plan in place which sets out what is required to keep your stock and pets safe.

When preparing for a disaster there are a range of factors to consider including:

  • What items should be included in an emergency kit, such as necessary food, medicine and water
  • Where the emergency kit will be stored so that it is accessible in the event of a disaster
  • Evacuation routes
  • Where animals can be safely stored in the event of a disaster including high points and well sheltered areas
  • What will happen with the animals while your property is restored, and
  • How will your animals be cared for if your property is damaged?

When a disaster occurs it can greatly impact the health of your animals. They are often stressed from the disaster which weakens their immune systems and increases their risk of becoming sick. As medical supplies are usually difficult to obtain following a disaster, it is important to ensure that you always have sufficient supplies on hand to keep your animals healthy.

There is also the possibility that stock feed could be damaged as a result of the disaster. Following Cyclone Gabrielle, the floodwaters caused some feed to become contaminated with sewage, bacteria, chemicals and other toxins. Moisture also increases the risk of mould.

As a part of your disaster response planning you need to consider what will happen where there is limited feed, including what animals take priority such as animals that are pregnant or newly born animals that will be at the highest risk.

 

DISCLAIMER: All the information published in Rural eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Rural eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650