Budget 2022: The Lockup Lowdown

Head of Advocacy, Katherine Wilson attended today’s budget lock-up and gives you the run-down of what is in Budget 2022.

Today’s budget is all about economic security, with focussed spending on health, climate change and cost of living. But what does this mean for the property sector and why were critical issues such as transport, urban development infrastructure and housing virtually left untouched?

Key points for the property sector:
  • $4.7b package of new capital investment.

  • Extend the Apprenticeship Boost scheme ($230m operational fund) until the end of 2023 to support an expected 38,000 apprentices.

  • Increasing the house price caps for First Home Grants and removing First Home Loan caps.

  • Affordable Housing Fund of $50m for non-for-profits to deliver affordable rental housing in Auckland, Tauranga, Rotorua, Napier/Hastings, Wellington and Nelson/Tasman.

  • Establish a fund for the development of the National Planning Framework and for local authorities to develop the first Spatial Planning and NBA plans.

  • A new Business Growth Fund to support small and medium sized enterprises to grow.

New Zealand’s economy at a glance
  • Net debt peak at 19.9 per cent of GDP in 2024.

  • A return to surplus predicted in 2024/2025.

  • Unemployment rate projected to remain at record lows.

  • Closing the Covid-19 Response and Recovery Fund.

  • Largest ever investment in health of $11.1b.

  • Targeted cost of living support for low- and middle-income New Zealanders.

  • A further two-month extension of the fuel excise duty reduction and half price public transport fares.

  • A $2.9b investment from the Climate Emergency Response Fund to focus on immediate decarbonisation and energy security (as announced on Monday).

  • $61.9b investment in infrastructure over the next five years focusing on health, schools and rail.

How did the Budget stack up against Property Council's priorities?

Increase funding and financing for local infrastructure to support incoming density rule changes.

Partially

Investment in hospitals, schools and rail. Continue Housing Infrastructure Fund to increase the pace and scale of housing delivery and helping fund critical infrastructure needed for development. Still a lot more work required in this space.

Resource reform – central government funding to support development of regional spatial plans.

Yes

A $178.7m programme to help Council’s develop their first Natural Built Environment and Spatial Plans.

More support and resource for local councils to speed up the consenting process.

Partially

Extending the Fast-Track Consenting Programme for an additional year. However, skills and resource continue to remain a major pressure for local government and extra resources are required.

Alternative funding and financing mechanisms for future major transport projects.

No

Possibly too early to announce. Government working on alternative funding and financing models for projects such as Auckland Light Rail.

Ensure our tax system is fair and equitable and doesn’t place unreasonable proportion of taxes onto the property sector.

No

No interest deductibility changes or changes to the tax system.

Establish an asset class for build-to-rent, introduce interest deductibility and Overseas Investment Act changes to ensure BTR thrives in New Zealand. 

No

Despite Build-to-Rent being signalled throughout the last six months by the Government. No announcement was made for the private sector. Instead, there is an over reliance on the public sector to deliver affordable housing and rentals within this market. We will have to wait for details around what the second tranche of the Affordable Housing Fund will cover.

Allow for tax deductions for retrofit strengthening, environmental refits and service fits to encourage commercial property owners to undertake work that will reduce overall emissions.

No

This will be of great importance for the built environment over the next couple of years.

Political analysis

While the media and voters have shifted their focus towards issues such as crime, cost of living and the economy. Budget 2022’s response is a list of cash promises in areas of wellbeing as an attempt to tackle rising costs of inflation pressures for low and middle-income New Zealanders.

Housing continually remains a challenge for this government. While the Government has changed New Zealand’s approach to zoning, not enough government investment and delivery for supporting core infrastructure has occurred. We already saw $1.4b announced for Auckland, to prepare more land for housing last month. But we know a lot more cash is required to upgrade core local infrastructure to meet New Zealand’s new density rules which will see a minimum of six storey buildings within city centres. 

Property Council is once again disappointed to see that the Government has missed an opportunity to unlock the Build to Rent (BTR) sector for the private market. It is almost inconceivable that the Government has overlooked ‘quick wins’ in terms of legislative changes that could open up the private sector Build-to-Rent market.

Property Council earlier this week launched our missed opportunity calculator which identifies that for the month of May 2022, 1,002 homes could have been completed or been in the planning stages if the Government had acted early in their term to unleash BTR. That’s 2,706 Kiwi’s that have missed out on a BTR home so far.

On Monday, the Government released its Emissions Reduction Plan. This provided little information on funding proposals to ensure the built environment can make the necessary changes to adapt. We are disappointed to see that no announcement on tax deductions for retrofit strengthening, environmental refits and service fits was made today. There is a part for both central and local government to play in encouraging commercial property owners to undertake work that will reduce the built environment’s overall emissions.

On the resource management side of things, one small win for local government was the announcement of a $178.7m programme to help develop the first Natural Built Environment and Spatial Plans. This is something that Property Council has called for and supports. Although in the larger scheme of things, we know there is a long road ahead. We will continue flying the market flag, convincing the Government that the private sector should be at the table to ensure the delivery of plans.

Although today’s announcements are beneficial to the average voter, there is little of significance that relates to the property sector. This is Labour’s attempt to regain lost momentum in recent polling. 

Budget 2022 is about “securing the future”. But will it secure Labour for a third term? 

The pressure will be on for Budget 2023, to pull an election win out of the bag.

Author | Katherine Wilson

As Property Council’s Head of Advocacy, Katherine is tasked with leading our advocacy campaigns at both a regional and national level.

Level-headed and engaging, Katherine has both a law degree from Otago University and an arts degree (majoring in politics) from Auckland University. With solid experience as a policy analyst and advisor in Wellington and Auckland, she has extensive networks and solid analytical skills.

Katherine is hugely dedicated, highly intelligent and committed to ensuring the voice of our members is heard at all levels of governance. She’s also relentlessly positive and enjoys a good chat.

katherine@propertynz.co.nz

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