Budget 2024: Christopher Luxon delivers pre-Budget speech in Auckland

Prime Minister Christopher Luxon has stared down critics of the Government’s spending and tax cuts, saying the Government was elected on a promise to lower taxes.

“We were elected on a platform of delivering tax relief to those families and I don’t plan on breaking that promise,” Luxon said while laying out his vision for the economy in a pre-Budget speech to business leaders in Auckland today.

“Kiwis struggling with the cost of living – the squeezed middle – deserve support,” he said.

Last week, Finance Minister Nicola Willis promised 83 per cent of New Zealanders over the age of 15 and 93 per cent of households would benefit from tax relief in the forthcoming Budget.

The Government has come under pressure to justify the tax cuts at a time of fiscal restraint. It justified them by saying they will be funded by new revenue tools and spending cuts.

Luxon made the remarks at his first pre-Budget speech hosted by the Auckland Business Chamber. The Chamber’s chief executive Simon Bridges is a former caucus colleague of Luxon’s. The Prime Minister needled Bridges for his new haircut.

Luxon defended this year’s spending cuts.

Christopher Luxon delivers his pre-budget keynote speech at the Cordis Hotel today. Photo / Ben Dickens

“I acknowledge that the savings programme has been difficult for those affected.

“But, above all else, the first priority of government must be to achieve the best possible outcomes for the money we collectively spend on behalf of taxpayers – the best hospitals, the best schools, and the safest streets.”

Luxon used the speech to sketch a long-term vision for the future out to the year 2040, arguing the Government and business had an “obligation” to leave a positive legacy for the generation that will inherit the country in that year.

“Kids born this year will turn 16 in 2040 – the year we will mark 200 years since the Treaty of Waitangi was signed and the bicultural foundations of New Zealand, as we know them today, were established in law,” Luxon said.

He said New Zealand faced opportunities and challenges out to 2040 in the form of a “global economy shifting its weight from the Atlantic to the Indo-Pacific”, the costs of climate change, and an “increasingly diverse New Zealand full of both the challenges and opportunities that come from a more multi-cultural society”.

Luxon said that in 2040, New Zealanders would have a “more dynamic and productive economy” where New Zealanders returned from overseas, rather than leave; better public services, and a “comprehensive response to climate change, both on track to achieve our ambitious emissions targets, and resilient to the challenges of a more volatile world”.

Christopher Luxon talks to media after delivering his pre-budget keynote speech. Photo / Ben Dickens

Luxon took time to discuss what he thinks might be the mandate given to him by the electorate this last year.

“New Zealanders voted for us last year to do three things – rebuild the economy, restore law and order, and deliver better public services,” he said.

Responding to questions from Bridges, Luxon pledged not to deliver an austerity Budget, arguing there was sufficient money to continue increasing some departments’ Budgets.

What business leaders want

With the economy in recession and business confidence in the doldrums, business leaders will be looking for reassurance that the May 30 budget and longer-term Government policies can safely steer the economy through this re-balancing cycle.

The Government has come under pressure - from the left and right - for plans to deliver personal income tax cuts while the Crown accounts are in deficit.

While it was unlikely Luxon would offer up more detail around tax changes today, he was expected to lay out his case for the cuts and the logic behind their funding.

It is not yet clear what new initiatives the Budget will deliver for business given the strict constraints it has around new spending.

In her first pre-Budget speech, Nicola Willis confirmed the Budget would include adjustments to income tax thresholds, but did not specify how much. National campaigned on lifting tax thresholds by 11.5 per cent to compensate for some of the inflation witnessed since the last time brackets were set in 2010.

“We will responsibly deliver these lower taxes for low and middle-income families, by fully-funding them with a package of careful savings and targeted revenue measures,” Willis said.

In early May, MYOB survey canvassed the expectations and concerns of more than 1000 business owners and decision makers ahead of Finance Minister Nicola Willis’ maiden Budget on May 30.

Business wants to see this year’s Budget focus on tax relief, reducing red tape and support for upskilling, according to a new poll [see above graphic].