Nick Stewart: Budget a 'shift of the economic dial to the left'

Nick Stewart of Stewart Group says Thursday's Budget's measures for sustainability "feel token". Photo File

By Nick Stewart

The Government has outlined a pleasing financial position in contrast to the doom and gloom forecasts by many during 2020. The economy has been far stronger than Treasury had expected and this has flowed strongly through to a stronger tax take.

A budget surplus is in sight but not for another six years and debt will peak at 48 percent.

Much of the Budget represents a further shift of the economic dial to the left with a rejigging of tax and transfer payments. Covid emergency measures are being expanded or entrenched. Further new taxes in the form of a mooted 'unemployment insurance tax' won't go down well with the business community already suffering from three years of low business confidence.

Surprisingly there is little in the Budget for business, overall productivity which has been languishing for two decades or the much-lauded push for a greener economy and overall sustainability.

The measures for sustainability feel token and will likely not move the needle far enough to meet our obligations over and above what is already covered by the existing ETS.

Many will hope the economy continues strongly to support the new budget spending plans laid out today, and some will question whether the stronger tax take is merely a mirage and purely a function of the largest one-off fiscal stimulus ever seen in God's Own Country.

The former British Chancellor of the Exchequer Gordon Brown's comments come to mind when he prophesised that the stronger fiscal position he found himself in was the new normal and set to continue indefinitely.

* Nick Stewart​ is a Hawke's Bay financial adviser .