On the Tiles: Economists on What Should Be in the 2022 Budget

Policy

Finance Secretary Grant Robertson. Photography: Mark Mitchell

There is less than a week left for the government to present its budget for 2022 – but what will Finance Minister Grant Robertson reveal on Thursday?

For a discussion of what to expect, join On the Tiles host and chief political journalist Thomas Coughlan Eric Crampton, chief economist for the New Zealand Initiative, and Craig Rainey, economist and director of policy at the New Zealand Trade Union Council.

While the country is still more than a year away from the next general election, Rainey says this is the budget that will have an impact on how people vote next year.

“What you do now is actually going to be in place by budget time, unless you do something, you know, really fast through budget 23. So what you do now is what is going to be out there in general and what will be in general have been invested by the time that comes In it the electors to tick a small square.”

Robertson previously indicated that the government would do little to change tax rates this time around – something Rainey supports, despite his desire for more equity in the system.

“We have a lot of uncertainty around Covid, about the general economy, right now. Changing the tax brackets and spending the same amount of money would be inflationary because you’d be pumping more money into the economy.

“Taking that out of operating expenses, the allowance for operating expenses would again be inflationary if it was going to high-income earners who spent that on goods and services that are imported into New Zealand in particular.”

However, Crampton says we’ve seen “a lot of bracketing creep” over the past decade, and he expects that to eventually be broken — and warns that taxes are political for now.

“Whatever you think is fair, just put in an automatic indexing so people who are in the 20th percentile don’t end up in a higher tax bracket just because the Reserve Bank isn’t doing its job.”

It’s one of Crampton’s top budget wishes, as well as splitting the emissions trading scheme’s revenue five million ways and giving each household a carbon dividend from the carbon payments.

“[That will] Help secure support for higher carbon prices so we don’t end up in a mess later.”

Crumpton also talks about the “cash for old cars” scheme, helping low-income families trade their highly polluting cars for cash, and the “massive problems with value-for-money assessments of everything in the budget.”

Rainey wants to see tackling child poverty, where 10 percent – or 125,000 – of children live without material needs, something he describes as a “sin” in a rich country like New Zealand.

“This is not just a measure of housing cost before and after, but a measure that actually measures whether or not children are wearing a winter coat or a pair of shoes, whether or not they are able to heat their house, whether they miss family doctor visits, that kind of thing “.

On the Tiles is the NZ Herald podcast.

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