Budget 2015: Business leaders react
Business leaders are rubbing their hands over boosted research and development funding, housing development plans, and the prospect of tax cuts, but say Budget 2015 was a missed opportunity for bolder reform.
On Thursday afternoon the Government confirmed it had abandoned attempts to reach surplus this year, with the Treasury forecasting a deficit of $684 million, and a wafer-thin surplus next year.
BusinessNZ chief executive Phil O'Reilly said moves to free-up more Crown-owned land for new housing in Auckland were a step in the right direction, as were ACC levy cuts and an additional $80m for R&D growth grants.
But he said it was a pity bolder reform in areas such as the age of eligibility for superannuation and interest-free student loans had been ignored.
"These issues will not go away by doing nothing," he said.
"While the Government's gradualist approach to economic reform continues to deliver fruit, there is a risk of being left behind other countries that have much more ambitious reform agendas."
KPMG executive chairman Ross Buckley said businesses would welcome the stability of the Budget, in stark contrast with Australia.
"New Zealand is in a robust fiscal position, with clear frameworks and targets. Australia has real challenges, and has needed to put a substantial stimulus package towards its SME businesses."
Several leaders were particularly pleased with the Auckland housing initiative.
Almost 500 hectares of land, currently owned by education, defence and transport agencies, has been earmarked for residential development, with $52m set aside to fund the plan.
Property Institute chief executive Ashley Church said the move was "hugely significant" and would make a big dent in the supply problem.
"The 4,500 to 10,000 homes which could be built on this land will go a long way toward meeting pent-up demand and helping to resolve the Auckland housing market crisis."
However, Church said it would take years to build the homes, and warned home-hunters should not expect prices to drop.
PWC partner Richard Forgan said the initiative was another tool in the kit, but the underlying issue was population growth.
"Auckland's population is surging on the back of movement from the regions and as the preferred destination of immigrants and returning Kiwis."
Westpac economists said the Budget contained few surprises, but questioned whether the Government's medium-term economic outlook was realistic.
Ever-rising surpluses were being projected at a time when the bank expected the wind-down of the Christchurch rebuild to be a significant drag on growth.
The economists also questioned what was being done to deal with longer-term challenges such as the aging population.
Despite the failure to return to surplus, the Budget has no immediate impact on New Zealand's credit rating.
Standard & Poor's analysts said while the budget contained some write-downs to revenue growth over the next four years, the impact was relatively modest.
"We continue to expect the country's general government net debt to remain low."
Fellow ratings agency Moody's said the Budget showed "a continuing positive trend" in the Government's finances, reflecting relatively good economic fundamentals.
New Zealand's government debt was low in comparison to other Aaa-rated sovereigns, and its relative position was likely to improve, Moody's said.
While the core numbers came as no surprise, the focus of unexpected new spending initiatives has incurred the wrath of the lobby group that represents taxpayers.
Kiwi beneficiaries are set to see the largest boost to their incomes in more than 40 years, a move which the Taxpayers' Union decried.
Executive director Jordan Williams said the adjustments to welfare went further than anything Helen Clark had done.
"Paying more for beneficiaries to have children isn't a step forward in terms of ensuring more children aren't brought into the poverty cycle," he said.
Williams was also critical of increased "corporate welfare" hand-outs, and a new departures and arrivals tax that will be imposed on travellers.
"This Budget will shock those who voted for National to fend off a big spending Labour-Green government," he said.
"From a taxpayer perspective, this is [Finance Minister Bill] English's worst Budget."
Williams did however approve of the scrapping of the $1000 KiwiSaver kickstart, saying taxpayer money should be used to help those most in need.
Bankers Association boss Kirk Hope said removing the kickstart was understandable from a cost perspective, but he called on the Government to commit to beefing up rules around enrolment.
Hope said the missed surplus and reduced tax revenue showed the country's economic growth story was still relatively fragile.
"The government needs to remain prudent in its expenditure and continue to exercise restraint," he said.