Latest news with #RegulatoryImpactStatement
Scoop
5 days ago
- Business
- Scoop
Please Explain! The Proponents Of The Retrospective Law Change Need To Front Up
Those responsible for pushing a retrospective law change that could wipe out the rights of tens of thousands of New Zealanders must now front up to provide a formal 'please- explain'. That's the call from Scott Russell, the lawyer leading the Banking Class Action against ANZ and ASB, who has formally written to Cameron Brewer, MP as Chair of Parliament's Finance and Expenditure Committee urging him to call key decision-makers and proponents of the Credit Contracts and Consumer Finance Amendment Bill to publicly explain the rationale for this extraordinary intervention. The Committee has the power to compel individuals to appear and a more clear-cut case for using that power would be hard to imagine. 'The Government is rewriting the law half-way through an active legal case to benefit two powerful Australian-owned banks – and no one seems to be taking responsibility for making the decision,' said Russell. 'Hon Scott Simpson, Commerce Minister says the banks didn't ask for it. The banks haven't commented. MBIE won't release the documents. And the public is being asked to accept it all on blind trust. Enough. It's time for answers.' Russell's submission urges the Select Committee to summon the following to 'Please Explain': The Chair and Chief Executives of ANZ and ASB to explain their role in the process; Senior MBIE officials to justify the sudden shift to retrospective legislation following private meetings with the banks; The Reserve Bank to provide any evidence backing claims that the law change is needed to protect financial stability. 'If their rationale is sound, let's hear it. Because right now, no one has offered a credible explanation for why a law change ruled out during the public consultation stage was suddenly resurrected behind closed doors – and timed perfectly to potentially limit the liability of two banks in a live court case.' The Government has refused to release unredacted versions of the Regulatory Impact Statement and delayed key OIA responses until after the public submission period closes on 23 June. The Ombudsman is now investigating. 'The Select Committee process cannot be allowed to rubber-stamp a law change that overrides consumer rights and undermines public trust – especially when those responsible won't even show up to explain it,' Russell said. 'If this is in the public interest, let the public hear why.'
Newsroom
09-06-2025
- Health
- Newsroom
History's verdict is already in on van Velden's safety reforms
Analysis: Death at work usually comes violently, and it is always avoidable. It is commonly preceded by the warning signs of threadbare health and safety practices: near-misses, previous incidents, worker anxiety, production pressure, shabby management. Often the signs are nuanced and hard to see: incurious and complacent company directors, a bullying culture, delusions of competence, grandiosity, arrogance. The path to catastrophe is generally marked with some or all of these interacting factors. Running a workplace that's safe for those who work there is complex. It requires good systems, a clear understanding of risk, diligent monitoring, self-reflection, honesty, the ability to genuinely listen to workers, and a willingness to act when they report failings and shortcomings. Generally, those who run safe workplaces are also, by association, running good businesses. As a 2024 report from the Business Leaders' Health and Safety Forum noted, '[F]or well-run businesses, health and safety is simply part and parcel of a tidy house, a well-performing business and a confident workforce.' The Minister for Workplace Relations and Safety, Brooke van Velden, wants to reduce the burden of health and safety compliance for businesses. She wants WorkSafe, the regulator, to shift from a 'safety at all costs mentality' to a focus on 'helping duty-holders do what is proportionate to the risks' and 'rooting out over-compliance'. She wants the regulator to focus on 'critical risks', although this is not defined. She has visited 11 towns and cities and received feedback from 1000 people, and reports that some businesses feel frightened of WorkSafe. She has heard the regulator is 'punitive' and not 'supportive'. She has heard businesses feel uncertain, and that they want the regulator to tell them how to be compliant. In other words, they are not sure how to keep a tidy house, and want WorkSafe to stop being scary and to offer them a guiding hand. The minister thinks a key solution to businesses' anxiety is to 'rebalance' WorkSafe's focus away from enforcement and towards advice. It's not clear from van Velden's recent Cabinet Paper how she thinks her new approach will reduce the number of workers killed on the job, who suffer life-changing injury, or whose lives are shortened by diseases caused by exposure to workplace harms. She says improved outcomes are 'expected', but offers no evidence to support this. Nor is there a Regulatory Impact Statement with further insight on the changes she announced last week; the Ministry for Regulation, overseen by Deputy Prime Minister David Seymour – van Velden's Act party leader – advised an RIS was not needed. Nor does her Cabinet paper reflect on the fact the rate of workplace death in New Zealand is 60 percent higher than Australia and 500 percent higher than the UK, or that our rate of serious injury is 35 percent and 330 percent higher respectively than those two countries. Instead, the focus is on making WorkSafe friendlier, more collaborative, and more helpful to business. In many years of writing about workers killed at work, I've seen no evidence that a kinder and less punitive regulator would have helped keep those workers alive. Indeed, there is considerable evidence that such an approach contributes directly to the avoidable deaths of workers. The ID cards of the 29 men whose bodies remain in the Pike River Mine now form part of a memorial. The leading example is, of course, Pike River Coal Ltd. Pike killed 29 workers in 2010, a tragedy that led to the creation of WorkSafe in 2013 and a major overhaul of health and safety law in 2015. Would a supportive, collaborative and non-punitive regulator have helped Pike keep a tidy house? Would it have prevented the violent deaths of 29 productive workers (not to mention the destruction of $340 million in capital)? We are able to answer this question with a high level of confidence because Pike had just such a regulator. The two mines inspectors who worked at different times with Pike invariably took a kindly approach with the company and its driving force Peter Whittall, as well as with the many mine managers who came and went with great frequency in the short benighted life of the project. The inspectors were approachable, and Pike often raised concerns and sought input from them. They took a low-level compliance strategy, seeking negotiated agreements with Pike. The inspectors preferred a voluntary approach, even when they could – and should – have used their statutory powers to shut the place down. Certainly, the inspectors never gave Pike cause to be fearful or anxious, and there is no evidence that Whittall experienced such discomfort. He and Pike's board of directors remained at liberty to run an outfit that repeatedly exposed workers to catastrophic risk, routinely broke with long-established rules of safe underground coal mining practice, and ignored incidents and serious concerns reported by workers. Quite correctly, van Velden wants to see more codes of practice and industry guidance. When the Health and Safety at Work Act was passed in 2015, it was intended the legislation would be underpinned by more detailed regulations. One of the most vital parts of that regulatory framework was to be a set of rules for protecting people working with tools and machinery and working at heights (plant and structures). On average 54 workers a year die while working with machines, equipment and structures such as scaffolding. Officials started six years ago to modernise the rules and provide clear, effective, proportionate, and durable regulations. But officials and governments – including the previous Labour government – dragged their feet, and work on the regulations had not been completed by the time van Velden took over the portfolio in late 2023. And, despite her stated desire for clearer guidance for businesses, van Velden last year put work on the plant and structures regulations on hold pending her current overhaul. The $5.6 million allocated for this work was clocked as a saving in the 2024 Budget. It's impossible to know whether the electrocution of experienced 28-year-old Auckland scaffolder Jahden Nelson would have been avoided if the regulations had been in place by 2022, when he went to work for a small company owned by Claire Attard, who had come from the fitness industry. Attard was an SME (small and medium enterprise) battler, striving to do her best and no doubt wanting to contribute to economic prosperity. There was no red tape stopping her from getting into the scaffolding industry, despite her inexperience in the sector. And she wasn't 'sweating the small stuff' – a phrase van Velden often uses – when it came to being an employer, as she treated Nelson and other workers as self-employed contractors. They owned their own tools, paid their own tax and ACC levies, and when there was no work there was no pay. Attard met Jahden Nelson for the first time at her company's yard in early February 2022, and he started work for her at 7am the next day. There was no contract signed. He was initially on $25 an hour, later rising to $27, and worked 10 hours a day for Attard's firm. Although there were no plant and structures regulations in place when he and his crew went to work on April 19, 2022 to dismantle scaffolding previously erected by a different group of Attard's workers, there were clear rules for working near powerlines. WorkSafe also had 'good practice guidelines' for scaffolding. Possibly Attard, like the anxious and uncertain business owners from whom van Velden has been hearing, had wanted more support from WorkSafe on how to run her business safely, but there is no evidence of that in the available documents. She had a suite of health and safety documentation stating that her company strove for health and safety excellence and provided training and instruction. The rules governing work near powerlines said the workers who had been briefed and consented by Mercury's field service provider to assemble the scaffolding must also be the ones to dismantle it. No one else was permitted to work in the consented area in the vicinity of the power lines. However Attard didn't know this, and she tasked a different crew to take the structure down. Nelson was a member of that crew. There was no discussion about the powerlines or the consented area before they got stuck into their work. Nelson did the first lift of the day, and the 6.5m metal pole he was holding touched a power line. There was a loud explosion and large fireball that travelled down the pole to his body. He didn't die, but when he emerged from a coma a month later both arms had been amputated to save his life, he had suffered a heart attack and kidney damage, had severe burns to 30% of his body, and couldn't walk. He subsequently endured 40 operations. When I was welcomed by Nelson and his partner Santana Tierney into his room at Middlemore Hospital's burns unit in late 2022, the father of three young children talked about his his pain and trauma, his love of and need to work ('I don't like not working. I can't sit still,' he told me), and his struggle to come to terms with his profoundly life-altering disability. WorkSafe investigated, and among its findings observed that Nelson and his co-workers had contributed to the incident. However, this was considered minor compared with the overall failure of Attard's company to manage health and safety risks. None of the workers was prosecuted by WorkSafe, but Attard's company was. It pleaded guilty. Enforcement decisions like this may be different under van Velden's revamped health and safety regime. Although she wants WorkSafe to 'rebalance' its focus from enforcement to advice for businesses, she also wants to see more workers prosecuted. She says businesses have told her that workers repeatedly ignore instructions, yet she hasn't heard of WorkSafe prosecuting any. 'I will set an expectation that WorkSafe strengthen its approach to worker breaches of duty,' she states in the Cabinet paper. Van Velden also wants to introduce 'safe harbours' of deemed compliance. The violent death of 39-year old Misha Tremel in 2022 provides an opportunity to consider what that approach might look like. Tremel was at the end of a chain of SMEs harvesting a woodlot in Clevedon, South Auckland. The forest owner had contracted forest management company Pulley Contracting, which had contracted logging company Turoa Logging, which had contracted Tremel's small company (he was the sole worker) to do manual logging with his chainsaw. Again, it's not known whether Turoa or Pulley had fretted over how best to run their companies safely or whether they had longed for more support from WorkSafe. As with the scaffolding industry, there is considerable guidance available in the forestry sector, including an Approved Code of Practice (albeit long overdue for update) and best practice guidelines produced by WorkSafe. The industry also has a template to help analyse the risks of working on steep slopes like the one Tremel was tasked with logging. Tremel was felling wind-wrenched trees, which present additional risks because tension and compression builds as they grow. When such trees are cut these forces can be released. WorkSafe and the forestry industry strongly recommend they are harvested by machines, not by chainsaws. Another factor in the incident was that Turoa had been using a mechanical harvester to fell trees into the stand that Tremel was cutting with his chainsaw. Misha Tremel and his wife Bronwyn. Photo: Supplied Tremel sustained blunt force trauma when a wind-wrenched tree broke and fell. He died at the scene, leaving his partner and two children bereft. WorkSafe prosecuted Turoa and Pulley, who were fined $300,000 earlier this year. Under van Velden's reforms, with safe harbour guidance and WorkSafe sheeting more responsibility back to workers, the regulator may take more lenient approach to the two companies and instead focus its interrogation on Tremel's role. He was, after all, an experienced and skilled manual feller who understood the risks. He was confident and willing to undertake the work, for which he was paid by the hour. Perhaps the minister's refocused regulator would conclude that Tremel was the architect of his own demise? There would be nothing new in that. The history of death in the forestry industry is littered with instances where the regulator has investigated incidents and concluded – in the face of ample evidence of production pressure, poor conditions of work and slack monitoring – that the dead worker had only themselves to blame. This reluctance of the regulator to prosecute contributed to a scandalous record of death and harm, triggering a major inquiry in 2014. As demonstrated by the deaths of Tremel and 39 others in the forestry industry in the past 10 years, the lessons have still not been learned. WorkSafe – depicted by van Velden as punitive and frightening – has prosecuted in only 13 of those cases. On November 19 it will be the 15th anniversary of the tragedy at Pike River Mine, an event that shocked the nation and led to a broad tripartite consensus that underpinned the introduction of the Health and Safety at Work Act in 2015. No one is satisfied with the slow progress that has been made since in bringing down the toll of death and injury at work, nor with the estimated $4.9 billion annual economic cost of lost lives, lost earnings, the burden of workplace related illness on the health system and of serious injury to ACC. Business leaders and unions have repeatedly urged successive ministers and governments to complete the roll-out of the supporting regulations and guidance that were intended as part of a coherent health and safety regime. But the minister, van Velden, risks setting the scene for further tragedies by instructing WorkSafe to go easy on businesses and by promoting the idea that workplaces are currently over-policed by a fearsome regulator focused on trivia. This is a myth: New Zealand has 31 percent fewer health and safety inspectors than Australia, on whose regime the 2015 Act was based and which does a far better job of protecting workers' lives. As Francois Barton, director of the Business Leaders' Health and Safety Forum, commented last week after van Velden's announcements, WorkSafe makes 80 percent fewer workplace visits than its Australian equivalent, issues 90 percent fewer infringement notices and 50 percent fewer improvement notices. 'You are more likely to lead or work in an organisation where someone has been killed at work than you are to be prosecuted,' wrote Barton on LinkedIn in response to van Velden's announcement. 'I know which of those outcomes I worry about the most.'
Scoop
26-05-2025
- Business
- Scoop
New 'Non-Financial' Benefit Sanctions Begin Today
New "non-financial" benefit sanctions starting today are about having "more tools available" than the current options, says the minister for social development. But the Greens spokesperson for social development says it's "misleading" to label them as non-financial, because the impacts of those sanctions will be financial. Ricardo Menendez March also criticised Louise Upston for going ahead with the change, despite a note by officials it could risk increasing financial hardship, a statement the Minister rejects. From today, two new sanctions can be applied when someone on a main benefit does not meet their obligations. The first was 'Money Management,' where someone who did not comply would have half their benefit put on a payment card for four weeks. "The card can only be used at approved shops for groceries, transport, health, and education-related items," said Upston. People would still get the remainder of their benefit, as well as any supplementary assistance, directly into their bank account. Upston called 'Money Management' a "non-financial sanction" and said it would only be available to clients for their first offence, if they are in "active case management" or have dependent children. Those who do not meet that criteria would have a regular financial sanction imposed as before. The other new sanction - 'Community Work Experience' - meant those who did not meet their work obligations might have to complete at least five hours per week for four weeks of work with community or voluntary sector organisations. Ministry of Social Development staff will consider a client's circumstances before deciding on and imposing the new sanction to ensure it is the best option for a client. "These very fair and reasonable sanctions will allow clients to continue receiving their full benefit, instead of the 50 per cent reduction they would have experienced with a financial sanction," Upston said. Upston said she had heard people were concerned, particularly if there was a household with children, if a benefit was reduced. This legislation provided more options, she said, and the new sanctions stay in place for four weeks, "which will support their efforts to find a job." The Regulatory Impact Statement for the legislation had outlined a payment card "exacerbates the risk of a client facing hardship". But Upston "utterly rejects" that, "because if you have 100 percent of your benefit with 50 percent of it on a card, that is still better than only getting half your benefit or no benefit" - referencing the previous sanction options available. She called it a "sensible move" and said the new measures will "encourage people off welfare and into work," but couldn't say exactly how many people would move into work as a result of this policy. "The new sanctions will ensure accountability in the welfare system for people who don't meet their obligations, while also recognising that reducing benefits isn't the answer for everyone." But only about 1.2 percent of beneficiaries are currently not complying - about 4000 people at the end of April 2025 - and Upston said there are "only 288" children affected within those 4000 people. It was not possible to know exactly how many people would have these new sanctions imposed because it depended on decisions by case managers, but the intention is to get people into work, she said. "I want them to realise we're serious about them taking the steps to find a job, and if they don't, there's a consequence," said Upston. "At the end of the day, we want fewer people on welfare and more people in work." When asked how many of those not complying would likely move into work as a result of a new "non-financial" sanction, Upston referenced numbers from the past year showing an increase in the number of people leaving the benefit for work. "It's up 11 percent on the same time a year ago" she said, which was "great news", but was not able to quantify how this policy would make a difference. Green MP Ricardo Menendez March has ridiculed the changes. "The minister has been misleading the public around the impacts of this sanction not being financial, they are financial, and they will cause harm in our communities, which is why the Greens will repeal it as soon as we get into power." He said people would not be able to access financial assistance such as hardship grants, and the "end result will be families unable to afford their rent, their bills and potentially leaving countless of families at risk of homelessness". RNZ reported in March that government data had showed beneficiaries sanctioned with money management cards will often be unable to pay rent, putting them at risk of homelessness. March raised this issue, saying the average person on the job seeker benefit paid more than 50 percent of their income on rent, and those impacted by the sanction would be "unable to afford to keep a roof over their head or put food on the table". Upston acknowledged some people may get supplementary financial assistance as well, to cover rent that was more than half their income, and if that was the case, "they will not be an appropriate candidate for money management". She said Community Work Experience might be a better option for them and those decisions were for MSD case managers. March referenced the Regulatory Impact Statement for the Bill outlining the changes and the potential for hardship to increase, saying the Minister's heart was "rotten to the core" for going ahead with the changes. "She knows benefit sanctions do not work. "She has been told by her own officials that things like compulsory money management can risk increasing hardship, has been told by beneficiaries that these kind of policies don't work, and she does not care." Upston said in response she did care for people, their futures and their opportunities. "I'm very committed to ensuring more New Zealanders are in work than on welfare. And I care deeply. "I don't want to see people trapped on welfare. I want to see them and their families get ahead. And that is because I care." In regards to the Community Work Experience sanction, Menendez March said community organisations did not support it. He said being subjected to these sanctions put people under more stress and made it harder for people to enter into employment. "This just shows that sanctions like community work experience are all about cruelty and stamping down on the poor, rather than supporting people into employment." Labour leader Chris Hipkins also criticised the move, saying it was "mean and petty" to impose sanctions on people in order to try and get them into jobs that "don't actually exist". "Actually, they [the government] should be focused on creating jobs, rather than punishing people for not taking jobs that aren't there." He said things were "getting harder under this government," pointing to the Treasury forecasted unemployment getting higher. ACT leader David Seymour, whose party campaigned on the policy, said the benefit is "there for bad times, not for a long time," and if someone wants the freedom to spend cash "get a job like the other five out of six working age New Zealanders". Seymour said he was proud to see his party's policies reflected in the government's agenda, showing if you "campaign hard" and release ideas and policy throughout opposition "you really can make a difference". Seymour said no country can succeed with one in six working age people on a benefit, and ACT had long campaigned on giving "money in kind instead of cash". "We've got to start introducing mutual obligation if you don't show up and actually look for work, we'll stop giving you cash, and we'll start giving you the things you need in kind on a plastic card. "If it's not acceptable to stop the benefit altogether, then in kind payment is one way of sending the message: if you want the freedom to spend cash as if it's your own, then you should earn it yourself." Seymour acknowledged there should always be support if someone is facing a challenging time, but he expected people to "meet the taxpayer who's paying for all this halfway". Also from today, some people and their partners will have to have a completed Jobseeker Profile before their benefit can be granted, and an obligation "failure" will now count against a person for two years rather than one.
NZ Herald
22-05-2025
- Business
- NZ Herald
Budget 2025: Budget-night papers reveal effective 0.5% tax hike on 180,000 families, KiwiSaver changes may undermine growth agenda
As Parliament enters its traditional Budget-night urgent session, officials tabled papers on policies included in the Budget, revealing what they think about the Government's plans. Working for families One of the cost-of-living initiatives the Government unveiled in the Budget was a $205 million change to Working for Families tax credits (WFF). Working for families gives low-income families who work a tax credit, increasing their incomes. However, those tax credits get withdrawn when the family begins earning a certain amount. The Government has lifted that threshold, known as an abatement threshold, allowing families to keep more tax credit as their incomes rise with inflation. Officials reckon 142,000 families (85% of whom have incomes below $100,000) will receive an average increase of $14 a fortnight. However the Government also upped the rate at which it takes some of this money back, known as the abatement rate, which was lifted from 27% to 27.5%. The Regulatory Impact Statement (RIS) does not make clear the extent to which these change. The rate is the amount of money the Government takes off a person's tax credit when they earn above the threshold. It acts like an extra rate of tax - which is how officials describe it. IRD officials said changes act like a 0.5 percentage point increase to the marginal tax rate of 180,000 families. Officials said lifting the abatement rate had a 'negative impact on income adequacy and debt mitigation as entitlements abate at a quicker rate'. Officials also said the change would discourage work. 'A higher abatement rate also results in a higher effective marginal tax rate, which might have a negative impact on work incentives'. Officials quantified this saying there were about 180,000 families earning above the threshold who would face an effective marginal tax rate of 0.5%, resulting in a small negative impact on work incentives. The abatement rate was set at just 20% in 2007, meaning for every extra dollar earned, the family would lose 20 cents. Under the current system, a family would lose 27.5 cents for every extra dollar earned, which officials think dis-incentivises work. Finance Minister Nicola Willis reading her Budget speech. Photo / Mark Mitchell Other options The Government looked at an enormous 40% super abatement threshold for families earning over $100,000 or $120,000. The also looked at enormous $5000 or $20,000 increases to the abatement threshold, which would have allowed families to keep far more of their tax credits. The Government opted against these options citing cost. The regulatory impact statement also said the Government had begun a broader review of the WFF system, with a view to making it more sustainable over the long term. Best start means testing The Government is means testing the $73 a week Best Start payment, which is currently universal in the first year. Officials said that doing this might have a negative impact on some families getting the tax credit support they're entitled to because they would no longer be automatically enrolled in the scheme. '[F]ewer families may apply due to increased compliance costs in the application process, resulting in fewer families being identified as eligible for other Working for Families tax credits,' officials said. 'Higher wages, employment' - Officials like Investment Boost, considered 5 percentage point tax cut for businesses One of the major announcements of Budget 2025 is the Investment Boost. It's a tax incentive that allows a business to immediately deduct 20% of the cost of a new assets – on top of depreciation – leading to a lower tax bill. The Regulatory Impact Statement reveals officials considered that incentive against a company tax rate reduction. Ultimately, it preferred the expensing regime, with the Investment Boost aligning with that recommendation. The analysis looked at reducing the company tax rate by 5 percentage points from 28% to 23%. This was considered as having the equivalent impact on the cost of capital and therefore GDP as the 20% expensing regime. However, it was found to be considerably more expensive. The expensing regime would cost $6.6b over the forecast period, compared to $10.8b by reducing the company tax rate. Officials also said that partial expensing was targeted towards new capital investment, whereas a company tax cut benefited both new and sunk investments. 'This targeted approach means fiscal resources are used efficiently to stimulate new investments, rather than providing windfall gains to existing investments,' the analysis said. 'This targeting is the key driver for why [partial expensing] has large macroeconomic impacts for a given fiscal cost than a cut in the company tax rate.' Another impact discussed by officials was equity. The analysis found the majority of the increase in national income from partial expensing would flow to workers. 'This increase would come from a combination of higher wages and higher employment. We therefore expect that the benefits of partial expensing will be spread broadly across a wide range of New Zealanders,' they said. KiwiSaver changes risk undermining 'growth agenda' Officials warned the Government halving its contribution to people's KiwiSaver accounts risked undermining its 'growth agenda' by imposing greater costs on businesses. From July, the Government will reduce by half its annual contribution to $260 and stop giving it to people earning more than $180,000, saving about $3b over four years. In further changes, the Government contribution would be extended to 16 and 17 year olds while also increasing employer and employee contributions up to 4% by April, 2028. Finance Minister Nicola Willis promoted the changes as shoring up the retirement savings of a population that lives longer. However, Inland Revenue officials warned it was 'unclear' the benefits of imposing higher contribution rates on employers would outweigh the costs. In its regulatory impact statement concerning the changes, Inland Revenue had recommended deferring the decision, given it would likely increase short-term labour costs for employers. This increase would reduce profitability for many businesses, potentially diverting funds that could otherwise be used to support capital investment. 'This could risk undermining elements of the Government's growth agenda,' the officials said. Economic growth was so central to the Government's priorities, Willis had named Budget 2025, the Growth Budget. Labour appeared to support the Government's moves to increase employer contributions, leader Chris Hipkins saying his party was broadly in favour of upping contributions to boost savings. However, Hipkins has railed against halving the Government's contributions. Inland Revenue's analysis found this change would be beneficial. It noted the payment was untargeted and as such, was collected by people on higher incomes. About 52% of the Government's contributions went to people on more than $70,000 per year. About 8% of people who received it under the current scheme earned more than $180,000.
NZ Herald
22-05-2025
- Business
- NZ Herald
Budget 2025: KiwiSaver subsidies & Best Start payments slashed, enormous $6.6b business incentive
Willis' business incentive, will allow firms to deduct 20% of a new productive asset's value from their tax return. But any return on that investment might be a long time coming for New Zealand's workers. While Treasury advised that ultimately the incentive would be good for growth, it revised up its unemployment forecast and revised down its wage forecast, prepping New Zealanders for another year with the unemployment rate over 5%. Willis also announced how the tax incentive, along with other parts of the Budget would be paid for, revealing the amount of money the Government would be saving by reforms to the pay equity regime: $12.8b over four years (a figure that includes changes to how the government approaches the funded sector). The grand total of cuts in the Budget was $21.4b over four years, meaning more than half of the cuts in the Budget have come from changes to pay equity. Willis said pay equity costs had 'blown out' saying that in 2020, the Labour Government's pay equity regime was expected to cost just $3.7b over the forecast period. In the Budget lockup, Willis launched a broadside on Labour alleging the cost of the blowout was 'hidden' by the last Government from the public in order to preserve commercially sensitive negotiations. How much money Willis has left for new pay equity is also sensitive, so the Government has not revealed how much it has set aside to fund claims brought under the new regime. Bigger cuts than last year - $4.8b a year Elsewhere, the Government announced a sweep of initiatives to hack back at the growth of Crown expenses – cuts that are even larger than last year's. Including the pay equity savings, the Government is 'saving' $4.8b a year from cuts. Last year the equivalent figure was $3.8b or $4.4b if you include the Emissions Trading Scheme. Student loan borrowers will also start paying more, with the Government freezing the repayment threshold, which usually (though not always) rises with inflation, saving $64m. Every dollar a student loan borrower earns over $24,128 will pay 12 cents off their student loan. Investment Boost Treasury estimates the centre piece of the Budget, the depreciation changes will actually lift New Zealand's growth, increasing GDP by 1% and wages by 1.5% - but that lift takes place over 20 years (although half the growth occurs in the next 5). The new rules will begin today, passing under urgency. The effect of the tax changes will be to encourage businesses to bring forward investment, stimulating the economy. Willis quoted from a Regulatory Impact Statement on the change that a large amount of the benefit of the credit would flow through to workers, although Treasury's forecasts show that this has not been enough to stop it from revising work-related changes. KiwiSaver reforms – Government cuts contribution, asks savers to raise theirs Alongside the cuts to KiwiSaver, the Government will try to get KiwiSaver users to front up more money themselves, lifting the default rate of employee and matching employer KiwiSaver contributions from 3 % to 4%. This will be optional, people can opt to stay at 3% if they choose. The new rate will be phased-in. Next year it will go to 3.5% and on 1 April 2028 it will go to 4%. Younger people will be able to contribute with eligibility extended to 16 and 17 year-olds, who will be able to get employer and Government contributions. The Government is keen to personalise these changes and has launched a calculator on the Treasury website that calculates what they will mean to people's savings over their lifetime. FOLLOW OUR LIVE BLOG Do you have questions about the Budget? Ask our experts - business editor at large Liam Dann, senior political correspondent Audrey Young and Wellington business editor Jenee Tibshraeny - in a Herald Premium online Q&A here at at 9.30am, Friday, May 23.
