Budget 2021: 'It's not a lolly scramble' this year, Deloitte CEO says

Thomas Pippos, chief executive of Deloitte New Zealand. Photo / NZME

This Thursday's Budget won't be a "lolly scramble", says Deloitte NZ chief executive Thomas Pippos.

"It's not an election year," he says. "I think everyone's got to stand back and recognise the challenges that the country and the globe have gone through and be realistic about what can actually be achieved in this next period of time."

Pippos - who has been New Zealand CEO of the "big four" accountancy firm for 10 years - says he'll be looking for signals around the recovery path from Finance Minister Grant Robertson.

"Clearly the New Zealand economy has performed much better than expected during this Covid period which gives the Government and the minister options," he says.

"My pre-disposition is probably to run a more conservative level of debt than some others."

Pippos says he has concerns with the inflation and interest rate risk which is starting to build around the globe.

"That could have a more negative bearing on the future than some of these other challenges that we're facing," he says.

"I don't think we're necessarily going to be in an environment where high levels of debt are an optimal long-term scenario."

That doesn't necessarily mean you have to put your foot down [on debt] at this particular point in time, he says.

The big spending will always be there on social services, health and education.

"The way I look at it, and the way business looks at it, is we live in a world of limited resources. Decision need to be made in terms of how to allocate in that world," he says.

"Sometimes it's more about the different constituent parts of the economy being equally unhappy as opposed to happy."

Business will probably be more interested in the track for debt and understanding what that will mean for monetary policy, he says.

"Sure, if there are initiatives that are targeted towards business they'll be well received.

Beyond that there are plenty of policy areas that business is taking a keen interest in - borders re-opening, immigration and employment law.

But Budgets, recently at least, don't really lend themselves to new policy announcements, Pippos says.

"The challenge when announcing detailed policy in the Budget is that there will be limited amounts of opportunity to consult with the private sector and honing or finessing that policy."

Meanwhile it is almost certain that the New Zealand wil keep a tighter rein on spending the Australian Budget.

Last week the Liberal Government delivered a massive stimulatory Budget allocating more than $300 billion of new spending which wil keep the crown accounts in deficits for a decade

It doesn't make sense to compare the New Zealand and Australian Budgets too closely, Pippos says.

Prime Minister Jacinda Ardern with Finance Minister Grant Robertson during a pre-Budget lunch hosted by Business NZ, held at Eden Park, on May 13. Photo / Dean Purcell

"They're coming up to an election there. And they've probably also had a harder Covid period than what New Zealand has," he says.

"So they're effectively looking to project an air of positivity and sell the future harder to the electorate in Australia than what the current Government is in New Zealand".

The Labour Government here "more than any other government I can remember has largely just been managing the crisis", Pippos says.

"My sense is that we're not really out of crisis mode for at least the rest of the year.
Getting back to business as usual is probably something for the next Budget rather than the current Budget."

The local economy has been the real hero for t through Covid, Pippos says.

"A lot of businesses have actually performed very well. The trajectory is quite positive because as economies around the world continue to open the attractiveness of New Zealand not only as a tourist destination but also as a trading destination will open up."

• Watch the Budget live from 2pm on Thursday at nzherald.co.nz. Full coverage with commentary and analysis.