New Zealand 2024 Budget Highlights

Delivered during a period of economic decline, the coalition government’s first budget includes the long-awaited changes to personal tax thresholds.
While the government had hinted at tax relief for New Zealanders, the specifics were unclear until now. These changes, aimed at helping those struggling with the cost of living, are detailed below. Our Budget Summary includes information sourced from Wolters Kluwer.

The tax relief is expected to cost $2.57 billion dollars annually and will be funded by savings, spending reprioritisation and new revenue measures.

The independent earner tax credit will be extended to an additional 420,000 people by increasing the income limit to $70,000 from 31 July 2024. Currently, those earning between $24,000 and $48,000 are entitled to the credit.  The in-work tax credit will also increase by up to $50 per fortnight from 31 July 2024.

The FamilyBoost childcare rebate, which was announced ahead of the Budget, will deliver up to $75 per week to families to assist with the costs of childcare. The rebate will be administered by Inland Revenue.

The government is also boosting Inland Revenue’s audit and investigation capabilities by committing further funding over the next 4 years. The additional funding is expected to strengthen audit activity with particular focus on the hidden economy and debt collection. 

Other key announcements include:

Education  

• $1.48 billion in funding to build new school and upgrade existing ones.
• new funding of $153.3 million for 35 existing and 15 new charter schools over 4 years to improve educational outcomes for students.
• $477.6 million of funding for the school lunches programme for the next 2 years
• implementation of a structured literacy programme ($67 million over 4 years).

Health 

• $24 million invested over the next 4 years towards mental health counselling services for young New Zealanders.
• $1.77 billion in additional funding for Pharmac.

Housing 

• additional funding of $140 million to go towards 1,500 more social houses to be provided by social housing providers, partly funded by the scrapping of the First Home Grant.

Corrections 

• $1.94 billion in funding for frontline correction officers, prisoner rehabilitation programmes and increasing prison capacity
• $424.9 million towards better pay for frontline police officers and new police vehicles.

Transport 

• $4.1 billion of Crown funding for the National Land Transport Fund and $1.2 billion for the new Regional Infrastructure Fund.

Defence 

• the defence force will receive an additional $571 million ($163 million towards remuneration improvements and $408 million towards equipment and infrastructure upgrades).

Economic outlook

Treasury’s Budget and Economic Fiscal Update notes that: 

• Economic growth has been weaker than previously predicted in the Half Yearly Update Economic and Fiscal Update (December 2023).
• The Budget tax package, easing inflation and a recovery in tourism is expected to improve the economy gradually over the second half of 2024.
• GDP growth is expected to increase to 1.7% in the year to June 2025, and average 2.9% per annum over the remaining forecast period.
• The Operating Gain Before Gains and Losses (OBEGAL) is expected to return to a surplus of $1.5 billion by 2027/28.
• Unemployment is predicted to peak at 5.3% by the end of 2024 and will gradually ease thereafter.

Lynch & Associates are well placed to assist you in understanding how any of these changes specifically impact upon your business and we are here to help.

We are always available to assist you with any questions, queries or help you may need – please do contact us if you need any help.