As your average New Zealander struggles to pay the bills, the Government’s 2025 Budget piles austerity on the least well-off, and misreads the public mood. Recent polling commissioned by the Better Taxes for a Better Future campaign showed the vast majority of New Zealanders supported increased spending on public services, and only 3% were in favour of cuts.
By limiting its operating allowance to $1.3b to reduce debt, following the introduction of unaffordable tax cuts last year and the failure to advance other meaningful revenue gathering options, the Government has manufactured the need for cuts in spending on public services that New Zealanders rely upon on a daily basis.
“The most significant contributor to the Government’s $5.3bn in savings required to reach its arbitrary operating allowance are the lowest paid working women through the scrapping of the pay equity settlements,” says Glenn Barclay, Better Taxes campaign spokesperson.
“Many other good programmes have also been sacrificed to allow the Government to get away with such a miserly operating allowance.”
“The total cost to mainly low paid working people from scrapping pay equity of $12.8bn over 4 years represents one of the largest wealth transfers in modern history, and will have a real cost for the lives of some of the least well off in New Zealand.”
Other items in the Budget are worth commenting on.
“While a modest increase in the abatement threshold for Working for Families is to be welcomed, it will be paid for by increasing the abatement rate and means testing the first year of Best Start payments. Here we see the Government giving to young families with one hand, while taking away with the other.”
“The flagship Investment Boost allowing for accelerated depreciation on new assets to be deducted from taxable income, while a useful tool to grow GDP, implemented in this untargeted way stands to benefit monopolistic companies like supermarket chains, electricity generators and banks at the expense of the collective revenue pool,” says Glenn Barclay. “With the substantial cost of $1.7 billion per year, it would have been much better to use this tool to focus on areas such as advanced manufacturing or green technology.”
“Similarly the halving of Government contributions to KiwiSaver is shortsighted, when we ought to be supporting lower income earners and young people to grow their retirement savings. On the other hand the Government has significantly expanded the ability for SuperGold card holders to claim rates rebates. It looks like a case of valuing the priorities of older property owners over the future retirement savings of today’s workers.”
“The Budget reflects choices about what the Government values and how it’s going to pay for those things. This budget shows the government does not value the work of the least well-off in New Zealand, who are paying for its austerity,” says Glenn Barclay.
“It is inescapable that we need to generate more revenue to pay for the public goods New Zealanders value, like public healthcare, education, transport and housing. It is wrong to pretend that we can deliver the kind of society New Zealanders want now and in the future by constantly reducing the collective pool,” says Glenn Barclay.
“Successive governments have failed to ensure we’re collecting enough revenue to meet our needs and ensure those who can afford to contribute more, make that contribution. Polling indicates New Zealanders want increased investment in public services and think that the wealthy should be contributing more,” says Glenn Barclay.
“Today’s Budget fails to grapple with that challenge to respond to what the New Zealand public wants. With this Budget the government continues to ask more of those who have the least.”
“We call on the Government to consider common sense taxes that many other countries already have, like a capital gains tax and a wealth tax, so we have enough revenue to allocate to the public goods that enable all New Zealanders to thrive.”
The Better Taxes for a Better Future Campaign is a coalition of over 20 organisations led by Tax Justice Aotearoa.
We believe that tax reform is the only solution to the current challenges facing Aotearoa NZ. We need the tax system to:
be transparent
raise more revenue to enable us address the challenges we face
make sure people who have more to contribute make that contribution: that we gather more revenue from wealth, gains from wealth, all forms of income, and corporates
make greater use of fair taxes to promote good health and environmental health
address the tax impact on the least well off in our society.
