Taxpayers Union assessment of Robbo’s mini-budget

The Taxpayers Union has a say over Robbo’s mini-budget:

The new Government has used the process to effectively launch a post-election ?mini-budget?. The Secretary of the Treasury commented to media in the lock-up that this was the first time his officials had a HYFEU after a change of Government ? clearly a lot of midnight oil has been burned.

There is much for us to work through, but in summary, the key announcements are:

  • The introduction of a Winter Energy Payment to all pensioners and beneficiaries of $450 a year for single people and $700 for couples
  • A ?baby bonus? of $60 a week per child to all families with children aged under three years old
  • The 2017 Budget tax cuts passed by the previous National Government will be repealed (we knew this was coming)
  • The reintroduction of the Independent Earner Tax Credit of $520 to those who earn between $24,000 and $48,000 a year (based on previous years, very few of those who qualify actually take it up)
  • A movement away from using GDP as a measure of success to a broader, and more politically based, ?wellbeing? metric
  • Significant increases to working for families payments

While the policies being delivered as part of the new Government?s coalition agreements and are not one?s we think offer value for money (for example, a?universal?winter energy payment for rich-listers to heat mansions is silly when the money could be much better targeted) over the longer term, this mini-budget suggests that Mr Robertson will be running an?extremely?tight ship.

Our Co-founder, David Farrar, has also been in the lock-up with the team.?He has blogged that if Mr Robertson delivers on today?s numbers he?ll be the most fiscally disciplined Minister of Finance since Ruth Richardson.

David?s reasoning is that there is no enormous tax grab forecast and uncommitted operational spending (i.e. new spending not already committed as part of Labour?s election manifesto and coalition agreements) is only $6.6 billion.? Spread over the forecast term out to 2022 ? that?s only $660m per year ($660m in 2019, cumulating to $2.64b by 2022). That is only about half what National has delivered in new spending over recent budgets, and some money will need to be found for the coalition agreement policies that are not already costed and factored into the books.

Of course, the policy direction could change ? the Tax Working Group could offer Mr Robertson with a chance the ramp up taxes. That?s why we are calling on Mr Robertson to task the Tax Working Group with finding ways to reduce existing taxes to compensate for the costs of any new taxes it suggests (see our media releases below). If Labour mean what they say in today?s numbers, that shouldn?t be a problem.

You can read our media releases here:

Overall, today?s announcements are the inevitable results of an MMP election with a major party having to buy the support of others. In the short term there is a big spend up, with promises of more fiscal restraint tomorrow. As a taxpayer group, our job is to make sure that tomorrow actually comes?

I don’t think the mini-budget is going to be Labour’s saviour at all. There is simply no room for contingencies.

If you really believe that Grant Robertson will be more fiscally disciplined that Ruth Richardson then you need to take better meds.


-Taxpayers Union