On the Tiles: Economists on what should be in Budget 2022

Finance Minister Grant Robertson. Photo / Mark Mitchell

There is just under a week to go until the Government delivers its budget for 2022 - but what exactly will Finance Minister Grant Robertson unveil on Thursday?

To discuss what to expect, On the Tiles host and senior political journalist Thomas Coughlan is joined by Eric Crampton, chief economist at the New Zealand Initiative, and Craig Renney, economist and policy director with the New Zealand Council of Trade Unions.

While the country is still more than a year away from the next general election, Renney says this Budget is the one that will have an impact on how people vote next year.

"What you do now will actually be genuinely in place by the time of the Budget, unless you do something, you know, really rapid through Budget 23. So what you're doing now is what will generally be in place and what will generally have been invested in by the time voters come to tick a little box."

Robertson has previously flagged the Government won't be doing much to change tax brackets this time - something which Renney backs, despite wanting more fairness in the system.

"We have lots of uncertainty around Covid, around the general economy, right now. Changing the tax brackets and spending the same amount of money would be inflationary because you'll be putting more money into the economy.

"Taking that from opex, the opex allowances would again be inflationary if it were going to higher-income earners who then spent that on especially goods and services that are imported in to New Zealand."

However, Crampton says we've seen "so much bracket creep" over the past decade, he expects that to break eventually - and warns taxes are political right now.

"Whatever you think is fair, just put in an automatic indexing so that people who are on the 20th percentile don't wind up in a higher tax bracket just because the Reserve Bank isn't doing its job."

It's one of Crampton's top "pie in the sky" desires for the Budget, as well as splitting the Emission Trading Scheme revenues five million ways and giving every household a carbon dividend out of their carbon payment.

"[That will] help lock in support for rising carbon prices so that we don't wind up in messes later on."

Crampton also talks about the "cash for clunkers" scheme, helping low-income households swap their high-polluting cars for cash, and "massive problems in value-for-money assessments on everything in the Budget".

Renney wants to see child poverty tackled, as 10 per cent - or 125,000 - of children are going without material needs, something he describes as a "sin" in a country as wealthy as New Zealand.

"This is not just the before and the after housing cost measure, but the measure that actually measures whether or not children have a winter coat, two pairs of shoes, whether or not they're able to heat their home, whether or not the family misses trips to the doctors, that sort of thing."

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