The Government’s Mini-Budget announced

The new Finance Minister, Nicola Willis announced savings via redirected funds and exiting projects in the government’s mini-budget.

The new Finance Minister, Nicola Willis has revealed the government’s mini-budget, alongside Treasury’s half-year economic and fiscal update in Wellington. In its executive summary, Treasury that concluded that ‘although economic growth is expected to be stronger in the near term than in the Pre-election Update, high-for-longer interest rates mean we are now forecasting a more delayed recovery in activity’. Read the full update here.

The Finance Minister summarised some immediate decisions around savings plans ahead of Budget 24. She announced that her government has found $7.47 billion in savings and extra revenue over four years and has directed government agencies to find $1.5b of savings per year.

The savings announced in the budget are as a result of halting projects and redirecting funds. The details of these are as follows:

Projects that will be exited

• Exiting the planned extension to 2-year-olds for the 20 hours early childhood education initiative. ($1.18b)
• Stopping work on ‘Let’s Get Wellington Moving’. ($525m)
• Ending half-price fares on public transport for under 25 year olds. ($265m)
• Stopping work on resource management reforms. ($302m)

Tax and income changes

• Removing commercial building depreciation from April next year. ($2.3b)
• Indexation of main benefits to CPI inflation from 1 April 2024, rather than wage growth. ($676m)
• Returning the brightline test for rental properties back to two years from 1 July 2024 – Properties sold after 1 July 2024 will only be subject to the rule if owned for less than two years. ($180m)
• Nicola Willis confirmed that her government would also restore interest deductability for rental properties. The details on how and when, would be announced in the new year.

Redirecting funding from Climate initiatives

• Reclaiming of forecast cash proceeds from the Emissions Trading Scheme. ($2.047b)

Details around promised income tax reductions will not be announced until the next year’s Budget in May 2024. We will keep you updated once Budget 2024 is announced.

‍