Did your eyes immediately glaze over when the Budget announcements started rolling in yesterday afternoon? Yeah, same.

But given those Budget decisions can affect our day-to-day lives, I figured we should probably look at what it all means. 

Unfortunately, everything I know about economics could fit on the back of a postage stamp (or something else very small that people still use).

So, this dumbass went and spoke to an economics expert. Here’s what I learned. 

There were no real ‘big ticket’ items in the Budget

Professor Matt Roskruge, Massey Business School’s Associate Dean, Māori, says this year’s Budget was restrained.

“I don't think there's going to be a single Minister happy with their portfolio today,” he says.

“Nobody got a big win. Nobody got what they wanted.”

But there are some ‘quality of life improvements’ on the cards

Stop me if you’ve heard this before, but the cost of living is quite fucked right now.

Roskruge says some of yesterday’s Budget announcements will be much-needed quality of life improvements, but he doesn’t think they’ll make a huge difference to the overall cost of living.

Much of the Budget’s focus was on cheap transport for people under 25, scrapping the $5 fee we currently pay on prescriptions, and extending the 20 hours of free early childhood education to two-year-olds.

“We're talking about relatively small contributors to the overall cost of living, and for a relatively small proportion of the population,” Roskruge says.

“They're still important and good quality of life benefits to get. [But] I don't think they're going to shift the needle too much.”

The cost of food has been a big talking point leading up to this year’s Budget but there are no moves to remove GST from any of it.

Finance Minister Grant Robertson says removing GST from food is a “very indirect way of supporting low- and middle-income New Zealanders” and that the Budget needs to focus on other initiatives that won’t increase inflation.

Grant Robertson gives us his spending plans. Photo / Ana Tovey

Yes, we’re going to talk about inflation, sorry

Roskruge says the Government is walking a careful line not to push our current inflation rate even higher, which is why this Budget also doesn’t include tax cuts.

“The argument is that there's too much money chasing too few goods [at the moment],” he says.

“So we pay more and more for the few things that we're trying to buy. That along with natural disasters, a tough growing season, freight [still being] a mess, it's all pushed up that cost of living. 

“What [the Government] didn't want to do is put more money in your pocket [with a tax cut], because that’s probably just going to be more money chasing the same amount of goods.”

Roskruge says that’s why the Budget looked at lowering the cost of some items, like prescriptions and public transport.

“You're sort of reducing the cost side and you're not increasing the amount of money chasing those goods.”

Speaking of tax though…

The Government did say it’s planning to raise the trustee tax rate from 33% to 39% from April 1 next year.

A trust is a legal entity that can hold money or assets like property. 

When the Government raised the top personal tax rate to 39% a couple of years ago, it said it would monitor such trusts to see if they were being used to pay a lower tax rate. 

It looks like they probably were, hence the lift in the trustee tax rate yesterday.

That all sounds like the tax system equivalent of “fuck around and find out” to me, but Roskruge explains it a little more elegantly.

“It seems like people who have had significant wealth have been putting their income through a trust and that way they pay a lower tax rate than if it was personal income,” he says.

“So what [the Government has] done is close a loophole, basically. Now, regardless of whether you put your money through a trust or through your personal tax, you have the same tax rate.”

Roskruge says yesterday’s trustee tax hike wouldn’t have come as a huge surprise to tax lawyers or advisers though. 

“It’s been on the cards for a while,” he says. “But I think it’s a good tax that’s closing a loophole for high earners.”

The Government wants more gamers

The Budget also includes a 20% tax rebate for video game developers in Aotearoa. 

Roskruge says such investments in the tech sector brings the country more in line with what Australia is already doing. 

He says the Government is keen to move New Zealand’s focus away from primary product manufacturing and more towards tech jobs, but he’s not convinced it’s hugely realistic.

“The primary sector got nothing [in this Budget] and that's probably realistically where a lot of … young people are going to and can be looking for really good work,” he says.

“There's always that dream of being a sort of a high end digital economy [and] maybe we'll get there one day. But I guess we can't ignore what we do well at the same time.”

Te Matatini is getting a funding boost! But… maybe don’t get too dazzled by those numbers

Funding for kapa haka festival Te Matatini is getting a significant cash injection.

The event received nearly $3 million in funding previously, but will now get $34 million over two years.

“Te Matatini is more than just an event that takes place every two years. It is a reason for Māori to connect to their culture and support their wellbeing,” associate minister for Arts, Culture and Heritage Willow-Jean Prime said in a statement yesterday.

Roskruge agrees, saying the increase in funding is huge and will mean great things for Māori.

“[That funding is] going to enable some really big things to happen in the regions … I think it’s a really, really important thing.”

Oh, but there’s a but.

“I do worry a little bit that we’re being dazzled by what is a really important but actually a comparatively small spend at $34 million,” Roskruge says.

“It's kind of dazzled us. But when you look at the overall investment in Māori [in this Budget], it's really poor.”

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