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Budget 2025

Budget & Taxation, Business & Investment, Economy & Finance, Politics & Government, Public Policy
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‘Fiscally conservative’?

On 22 May, the Minister of Finance, the Hon Nicola Willis, presented what she had termed a ‘No BS Budget.’ It is officially entitled ‘The Growth Budget.’

 

Described by the minister as being ‘fiscally conservative,’ public expectations were not high for a lolly scramble of funding for new initiatives.

 

In the weeks leading up to the Budget, the minister drip-fed announcements of about $1.9 billion of new spending and, amongst others, a significant ‘restructure’ to the pay equity regime. As a result,

it was anticipated that on Budget Day, there would be what the minister has called ‘reprioritising of spending.’

 

Over the past few years, New Zealand has experienced an extended period of high inflation, high interest rates and low growth. With this 2025 Budget and despite worldwide geopolitical and geoeconomic tensions, the minister has indicated New Zealand’s fiscal outlook will gradually recover, despite an initial period of retraction. The government now expects what the minister has called ‘a modest surplus’ by 2028–29.

 

Good news for business

Called Investment Boost, businesses can now write off 20% of the value of productive new assets such as machinery, tools and equipment from that year’s taxable income – in addition to regular depreciation rates. By encouraging investment, the government expects a 1% increase in GDP and wages by 1.5% over the next 20 years, with half of these gains being in the next five years.

 

Greeted positively by the business sector, these new rules came into force on 22 May, passed under urgency after the Budget was presented.

 

Intended to attract foreign investment to this country, the government has created a new agency, Invest New Zealand. The agency’s objective is to create a vibrant investment market in this country. Initially collaborating with New Zealand Trade and Enterprise, Invest New Zealand has a clear direction to attract international capital, ideas and expertise in order to lift wages and grow the country’s economy.

 

Additionally, the government says it will be easier for startups to compete for talent by changing how employee share schemes are taxed.

 

Supporting New Zealand’s strong position in the film industry, screen production rebates will be renewed.

 

Government cuts contributions to KiwiSaver

The government’s contribution to KiwiSaver accounts is to be halved. Until now, KiwiSaver account holders have received $521 a year from the government; this is to be cut to $260.72.

 

In addition, the threshold for the minimum ‘default’ rate of employee and matching employer KiwiSaver contributions is to be increased from 3% to 4%; this is to be a two-step process over the next three years. This will be optional; KiwiSaver account holders may opt to stay at 3%. With many KiwiSaver balances ‘modest,’ the minister says this change should encourage New Zealanders to save more for their retirement.

 

More positive news for New Zealand’s younger taxpayers is that 16 and 17-year-olds will start to receive government contributions to their KiwiSaver from July (currently there is no contribution). Requirements for employers to match these deposits will start in 2026.

 

Benefits

Jobseeker and emergency benefits to be means tested: Not anticipated by pundits, 18 and 19-year-olds will have their Jobseeker and emergency benefits tested against their parents’ incomes, although there are some exemptions. The threshold against which these benefits will be measured is yet to be decided.

 

Medicine prescriptions: The length of a prescription is to be extended from three months to 12 months.

 

Working for Families: Targeted at low to middle-income families with children, the family income threshold and abatement rate will increase by an average of $14/fortnight. The additional cost for this will be funded by extending the income testing for the Best Start tax credit to include the first year after having a child, as well as the current situation of means testing for the second and third years. Payments will cease when a family’s income reaches $97,000 a year.

 

SuperGold card: A rise in the income threshold will allow a rates rebate for 66,000 additional lower income households with a SuperGold cardholder.

 

Disability Support Allowance: $760 million has been allocated to support the disability sector. The government has called this a ‘seismic shift’ in funding.

 

More . . .

Already announced and included in Thursday’s Budget is more funding for health, education, law and order, and other frontline public services. This includes:

  • Significant additional funding for the education sector for children with additional learning needs, schools/early childhood education and tertiary operational grants; additional help with maths skills; and lifting school attendance,
  • Nelson Hospital is to undergo a much-publicised need for redevelopment, together with Wellington’s emergency department. Auckland hospitals are to be upgraded,
  • After decades of underinvestment, the country’s rail will receive a $460 million upgrade to the metro and regional rail networks, and
  • The Defence Force will receive significantly more investment to boost New Zealand’s capabilities for the army, navy and air force, and in cyberspace.

 

To read the Budget in more detail, click here for the minister’s Budget speech.

 

If you would like to discuss the implications of the government’s business incentives, please don’t hesitate to contact us.

 

Major changes ahead for New Zealand’s financial landscape.

DISCLAIMER: All the information published in Property Speaking 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 Property Speaking 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

 

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

School boards of trustees

Kids, News, Uncategorized
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Significant obligations and responsibilities

Every three years, state and state-integrated schools hold elections for parent and staff representatives to join the governing bodies for their schools – the board of trustees (BoT).

School trustees are, however, sometimes confused or unsure about their role, and their obligations and responsibilities. The BoT is not like the PTA committee that co-ordinates parent helpers, organises school events, fundraises, etc.

A BoT role is like that of a company director. Although a school is not a commercial business, it should have robust governance processes in place that align with those of a well-run commercial business.

Health and safety aspects

The BoT is responsible for the governance and management of the school. It has discretion to manage the school within the parameters of the laws of New Zealand.

Alongside this governance approach, the Education & Training Act 2020 (E&TA) sets out the BoT’s obligations under the health and safety workplace laws. The Ministry of Education advises that:

School boards and early learning organisations are considered a PCBU (Person Conducting a Business or Undertaking) and must, so far as is reasonably practicable, provide and maintain a work environment that is without health and safety risks.

(Ministry of Education website)

A BoT is the legal entity that is the PCBU. If there is a health and safety failure at a school, the BoT could potentially face prosecution by WorkSafe under the Health and Safety at Work Act 2015 (HSWA).

The best possible policies, and rigid adherence to them, may still not prevent accidents or injuries from occurring. The potential always exists that actions may be taken that do not comply with the policies and issues that arise. In this situation, it would be fair to say that responsibility would fall on those responsible for those non-compliant actions if the obligations of the BOT are shown to have been fulfilled.

Even if the BoT delegates responsibility for these policies, it has over-arching responsibility for the school staff who are operating under those policies. The BoT must take an active role to ensure that any people under its control are safe, and that suitable guidelines are in place to identify and mitigate the risks being faced. Ultimately, it remains an obligation of the school and BoT to be responsible for their students’ safety.

EOTC risks

Out of school activities or education outside the classroom (EOTC) should be managed and controlled by reference to the BoT-approved health and safety policies.

To be effective, the policies must have measurable risk assessment components. For example: what are the risks and how serious is each risk? What is the likelihood of students and accompanying adults being hurt? How can these risks be managed by the activity leader? Does the school’s policy have a tool for assessing risk and the seriousness of the risk?

When things go wrong on an EOTC trip and a participant is badly hurt, there will be investigations by the police and WorkSafe and, if someone dies, the coroner. It is equally possible that, as the result of those investigations, charges could be laid if breaches have occurred.

Prosecutions

Two recent cases[1] have shown that even with a successful WorkSafe prosecution, the fines awarded have either been reduced to $0, or set at a notional figure and payment has not been sought.

Regarding personal liability of BoT members, both the E&TA and HSWA contain exclusions of personal liability for board members provided that any act or omission was carried in good faith with the performance, or intended performance, of the BoT.

Trustees must fully understand their role

The BoT role is not one to be considered lightly, although training and guidance is available so trustees fully understand their responsibilities. BoTs are full of amazing and dedicated people who are doing their best for their community. A crucial part of that role is ensuring the everyday safety of the students and employees at their school.

Trustees must be aware that with the role comes responsibility and accountability. BoTs must manage their duties accordingly and fulfil all legal requirements.

[1] WorkSafe v Tauraroa Area School Board of Trustees [2022] NZDC 21558 and WorkSafe v Forest View High School Board of Trustees [2019] NZDC 21558

 

DISCLAIMER: All the information published in Fineprint 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 Fineprint 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

Budget 2023

Commercial, Health Issues, News, Your Own Business
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Key points

With the country expecting a no-frills Budget to match the Hipkins’ government’s bread-and-butter focus on issues for 2023, this year’s Budget had few surprises.

The government has a tightrope to tread in trying to deal with inflation, supporting the recovery from the Covid pandemic, and managing the significant economic effects of the Auckland Anniversary floods and the devastation from Cyclone Gabrielle. The Minister stood by his earlier statement that there would be no tax cuts in this Budget, but there would be increased cost of living support.

Already announced over the last few weeks have been a $1 billion flood and cyclone recovery package, funding for climate change initiatives, and additional funding for education and the New Zealand Defence Force.

On the afternoon of Thursday 18 May, the Minister of Finance, the Hon Grant Robertson, presented the Wellbeing Budget 2023 – Support for today, building for tomorrow.

The Minister focused on four themes:

  • Supporting New Zealanders with the cost of living
  • Delivering the services New Zealanders rely upon
  • Recovery and resilience, and
  • Fiscal sustainability.

We summarise the key points of this year’s Budget.

 

Cost of living support

There is to be free public transport for children under 13 years old, and permanent half-price fares for those under 25 years old. The Minister said, “This will help passengers meet the cost of public transport and encourage increased use, while also supporting New Zealand to achieve its climate change goals.”

The $5 co-payment for prescriptions will be removed from 1 July.

The government has pledged to lower households’ energy costs. It has expanded its Warmer Kiwi Homes Programme providing around 100,000 new heating and insulation installations; 7,500 hot-water heat pumps; and five million LED light bulbs.

For early childhood education, eligibility criteria for 20 hours’ Childcare Assistance has been extended to cover two-year olds, as well as three-to-five year olds. The subsidy rates will be increased. This comes into effect on 1 March 2024.

 

Delivering more reliable services

The government has acknowledged the need to make significant investments to protect and improve public services for Kiwis.

Housing: There is increased funding to deliver 3,000 new state houses.

Education: As announced a week ago, there is a commitment to boost skills, improve achievement, reduce class sizes and increase teacher pay. There will be 6,600 additional student places, and new classrooms and schools to fit them in.

Health: The government is to focus on the effects of winter on the health system; the urgent need for more medical staff (including 500 nurses), and to reduce the massive waiting lists.

There is a commitment to spend more than $1 billion to increase the pay rates and boost staff numbers, and $20 million to lift Covid immunisation and screening for Māori and Pacific peoples.

The Budget includes a range of investments to support Māori and Pacific peoples. These include:

  • Investment of $223 million to improve housing outcomes for Māori. This includes $23 million for an extension to the Te Ringa Hāpai Whenua Fund and $200 million to increase the supply of Māori housing and to repair homes in Māori communities.
  • Supporting whānau and tamariki by expanding Whānau Ora services and support for wāhine hapū in the first 1,000 days of life for their pēpi, and
  • $143 million has been set aside to foster Māori and Pacific language and culture.

 

Recovery and resilience

The government has already announced its package for the recovery and its investment in regional resilience from the Auckland Anniversary floods in late January and Cyclone Gabrielle in February.  There is a commitment for $71 billion across the next five years for new and existing infrastructure investment (schools, hospitals, public housing, rail and road networks), in addition to funding set aside for projects that are still in the planning stage.

Acknowledging the need to rebuild New Zealand’s crumbling infrastructure, $6 billion over a 10-year period has been allocated for a new National Resilience Plan. Initially focusing on ‘building back better’ from the effects of the floods and cyclone, it will also fund the country’s long-term infrastructure deficit, and develop a credible pipeline to support the plan.

 

Fiscal sustainability

Whilst the Minister held fast on his promise not to raise income tax, the trustee tax rate (currently at 33%) will increase to 39% from 1 April 2024 bringing it into line with the top personal tax bracket. The Minister says this will create fairness and remove a potential loophole.

Whilst the Minister confirmed that the country’s economy has emerged from the three years of Covid in a ‘solid position’ – the economy expanded by 2.4% over the 2022 calendar year and modest growth is anticipated for this year – there are headwinds. The continuing impact of the war in Ukraine, and worldwide inflation will affect New Zealand’s economy.

Although inflation peaked at 7.3% in June 2022 and eased to 6.7% earlier this year, rising immigration to this country and the government’s investment in infrastructure projects will increase demand. This may put more pressure on the Reserve Bank to contain inflation.  Whilst New Zealand is not in a recession, recovery from the knocks of the past few years may take longer than anticipated. The government expects the books to return to surplus in 2025–26, a year later than Treasury’s December 2022 forecast.

The 2023 Budget is very much what the government had said it would do – no huge surprises and keeping a firm hand on the tiller to make New Zealand a better country in which to live. The proof, however, will be in the pudding as the year proceeds.

 

To read more detail about the Budget, click here for the Minister’s speech.

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