Budget date unveiled: Questions remain over whether higher taxes will be needed to pay for rebuild

The Government’s annual Budget will be released on May 18.

Finance Minister Grant Robertson made the announcement when appearing before Parliament’s Finance and Expenditure Committee to talk about his Budget Policy Statement, released in December.

Robertson suggested the amount of money earmarked for capital expenditure, like infrastructure, would increase due to Cyclone Gabrielle and flooding in the upper North Island.

He said the capital allowance was “clearly under strain”.

In December, Robertson pencilled in $12 billion of new capital expenditure across Budgets 2023 to 2026. This was a decent jump from previous expectations.

Robertson, in December, also suggested there would be $4.5b of new operational expenditure in Budget 2023.

While he didn’t specify, in the meeting, how the weather events might affect this allowance, he was clear there would be an impact.

National’s finance spokesperson Nicola Willis tried to get Robertson to rule out introducing new taxes in this term of government, saying it would be “irresponsible” to impose further costs on New Zealanders.

However, Robertson said it would be “irresponsible” to take options off the table while the costs of the disasters were still being assessed.

He said people shouldn’t read anything into him refusing to rule options in or out, as decisions simply haven’t been made around whether the response and rebuild will be funded by new revenue streams, additional borrowing, or a mix.

“Our job is to be nimble and flexible,” Robertson said.

However, he expressed his view on one type of tax, which the Green Party supports: a tax on windfall profits reported by fossil fuel companies.

Asked by the Green Party’s finance spokesperson Julie Anne Genter whether the Government would consider imposing such a tax, Robertson said, “I am wary of windfall taxes because of the exact word that sits in there – what is and what isn’t a “windfall”?”

Furthermore, Robertson was unconvinced high-emitting energy companies had been posting windfall profits of late.

Robertson again stressed government ministers were going through a reprioritisation exercise when it came to their focus and spending.

“We have continued to take a careful and balanced approach to manage our finances responsibly and help take pressure off inflation. It means that as we respond to the rebuild we will have to prioritise the projects that are proposed and some will not be funded or have to be delayed,” he said.

Robertson said the cost of living crisis and cyclone and flooding recovery would be the focus of the Budget.

“We are committed to working with local communities to get affected families, farmers and businesses back on their feet and their regions back moving. The economic and fiscal impact is not yet fully known, but we know the rebuild will be in the billions of dollars.

“The Government has taken action quickly to provide certainty and assurance in these early stages of the recovery and further support is coming.”

On the cost of living, Robertson noted the Government has already extended the fuel tax reductions and half-priced public transport fares to the end of June.

He said it was considering further support to “lighten the load” on households and businesses.

“This budget will be delivered in a volatile and uncertain global environment, which will affect our prospects,” Robertson said.

“The Government books are in solid shape thanks to our strong economic and financial management. Our debt levels are among the lowest in the world and we are well positioned to handle the impacts of Cyclone Gabrielle and further economic shocks…

“The Government has committed to investing heavily in the strong public services that New Zealanders need, in hospitals, schools and housing. We will continue to address climate change, with a focus on adaptation as the extreme weather events that we have experienced become more frequent.”