Editorial: Budget 2022 - What New Zealanders will be looking for

All eyes will be on Finance Minister Grant Robertson today. Photo / NZME

Editorial

EDITORIAL:

New Zealanders facing their own budget constraints will be hoping to see something in the Government's Budget that could ease their financial pressures.

Finance Minister Grant Robertson has $6 billion in operating allowances - new money to spend on its priorities.

Already there have been pre-Budget announcements for some of that: $100 million to fund specialist mental healthcare over the next four years, $164.6m for new Tactical Response police and $20m on information technology.

The Government has signalled climate change and health will be top of its list.

On Monday it announced $2.8b towards reducing carbon emissions but that will be largely funded by the Emissions Trading Scheme.

New Zealand's creaking health system is in much need of a funding injection, although economists are predicting a lot of the health spending could go into wiping the deficits racked up by district health boards in a bid to clear the books before the Government's centralisation plans.

Better access to healthcare and people being able to get operations or treatments sooner is obviously a good thing.

But it won't put money in the back pockets of Kiwis who are being pressured by rising fuel and food prices.

Last week fuel prices hit an all-time high of $3.15 a litre for 91, nullifying any gains made by the temporary 25c-a-litre tax cut the Government made in March.

That tax cut was set for an initial three-month period, meaning it would expire halfway through next month.

The Government could address this by extending the fuel tax discount and half-price public transport fares through the Budget.

Doing this would have the double benefit of encouraging workers back into the office and into city centres where retail and hospitality desperately need their financial support after a tough two years.

The cost of living crisis has now become top of mind for Kiwis, rating far above worries about Covid-19 despite the pandemic showing no signs of disappearing.

Labour also knows the cost of living is a political hot potato that opposition parties will continue to win points with if it goes unaddressed.

The other factor weighing on the $6b in new spending is that the Government can't afford to be frivolous or spend in a way that continues to drive up inflation.

Annual inflation is at 6.9 per cent - the highest rate since June 1990.

The Reserve Bank is tasked with tackling this and has already hiked the official cash rate from 0.25 per cent to 1.5 per cent. Economists predict a further rise to 2 per cent next week.

The pain for mortgage holders will roll through the rest of this year as those re-fixing will have their rates jump up.

The Budget is a chance for the Government to help ease the pressure on everyday Kiwis while keeping an eye on managing the longer-term impacts of climate change.

Keeping both the short and longer-term view in mind will be the key to winning over the public.