Today’s “responsible” budget focused on six key themes:
- A fiscal responsible Budget that delivers on the Government’s commitments.
- Tax relief that gives average-income households up to $102 per fortnight plus FamilyBoost childcare payments of up to $150 per fortnight.
- Targeted incentives in public services, including healthcare, education and law and order.
- Savings across government to fund tax relief and boost frontline services.
- Infrastructure investments for growth.
- Fiscal discipline to get back to surplus and lower debt.
But what does this mean for the property sector?
Key points for the property sector
- More than $68 billion is forecasted to be spent on infrastructure over the next five years.
- $140m for 1,500 new social houses to be provided by Community Housing Providers.
- $150m to establish new Charter Schools and convert 35 state schools in 2025-2026.
- $4.1bn for the National Land Transport Fund (a $1bn increase than previously signalled).
- $1bn to rebuild and recovery of communities affected by Cyclone Gabrielle and the 2023 Auckland Anniversary floods, including $939.9m to repair roads.
- $1.2bn for new Regional Infrastructure Fund to invest in resilience infrastructure and regional projects that support economic growth.
- $200m to support KiwiRail maintenance and renewals on the national rail network.
The New Zealand economy at a glance
- The Government early signalled a self-imposed cap of $3.5bn for all new spending and the Budget has an operating allowance of $3.2bn – the lowest since Budget 2018.
- Treasury forecasts inflation returning to the target band of 1 to 3 per cent later 2024, and interest rates falling.
- The Government intends to return the operating balance to surplus (before gains and losses) in 2027/28.
- The Government intends to reduce core Crown expenses towards 30 per cent of GDP.
- The Government aims to stop the increase in net core Crown debt, then reduce to between 20 per cent and 40 per cent of GDP.
How did the Budget stack up against Property Council’s priorities?
Property Council Priority
Property Council Recommendation
Government Response
Environment and sustainability
Introduce tax deductions for retrofit strengthening, environmental refits, and service fits to encourage commercial property owners to undertake work that will reduce overall emissions.
- No announcement in Budget.
Housing
Support community housing providers to delivery more social housing.
- $140m for 1,500 new social houses to be provided by Community Housing Providers.
Infrastructure
Increase funding and finance for regional and national infrastructure projects that will support housing.
- More than $68 billion is forecasted to be spent on infrastructure over the next five years.
- $1.2 billion for the new Regional Infrastructure Fund to invest in resilience infrastructure and regional projects that support economic growth.
- More than $1 billion for the rebuild and recovery of communities affected by Cyclone Gabrielle and the 2023 Auckland Anniversary floods, including $939.3 million to repair roads.
- $200 million to support KiwiRail to carry out maintenance and renewals on the national rail network.
Resource Consents
Establish a National or Regional Consenting Authority to speed up resource consents.
- No announcement in Budget.
Seismic
Reinstate depreciation for seismic work on buildings.
- No announcement in Budget.
Transport
Announce alternative funding and financing mechanisms for future large-scale transport projects.
- $4.1 billion of Crown funding for the National Land Transport Fund – a $1 billion increase to the amount previously signalled – to accelerate priority projects including the Roads of National Significance.
- $939.9m to repair roads damaged by the Auckland Anniversary flooding and Cyclone Gabrielle.
Tax
Make changes to residential depreciation and overseas investment rules for Build to Rent.
- No announcement in Budget
Political analysis
The change of Government means a change of direction – but what does Budget 2024 mean for the property sector?
Budget 2024 is being marketed as fiscally responsible, with the Prime Minister labelling it as “a responsible Budget” earlier in the week.
Tax cuts
The Government has cut programmes and spending to follow through on their election promise of personal tax cuts which will take effect from 1 July 2024. This process has seen more than 240 programmes reprioritised, mostly towards frontline services and tax cuts. Tax cuts have been signalled repeatedly, with the Government announcing the rise of tax brackets to provide $3.68bn of relief.
The increase to income tax thresholds will see a single person with no dependants on the average wage of $53,040 receive an annual tax saving of $1,262. A household with the average income of $125,000 will save an estimated $102 per fortnight ($2,652 per annum).
Infrastructure and transport
Infrastructure spending was the winner of the day – on the proviso that projects can be delivered.
The Government laid out its plans to invest more than $68 billion in infrastructure over the next five years. Labour’s 2023 Budget announced $71bn infrastructure funding over five years, today’s announcement reducing this by $3bn with project priorities changed.
The National Policy Statement on Land Transport back in March 2023 signalling a $7bn per annum required from the National Land Transport Fund and around $1.5bn from local government. The Budget announced $4.1bn for the National Land Transport Fund (a $1bn increase than previously signalled).
More important than funding announcements is the ability to deliver. Time and time again we have seen various governments make large infrastructure and transport announcements only for the project to remain on paper.
Housing
Investment in infrastructure and housing are closely linked. New Zealand’s housing supply continues to remain low, yet immigration numbers remain high. The supply of housing will continue to worsen without intervention. The Government’s Fast-track Approvals Bill is one tool to increase housing numbers. However, more can be done to closely link infrastructure, transport and housing and we hope to continue to engage with the Government in finding solutions.
Today’s Budget saw $140m for 1,500 new social housing to be provided by Community Housing Providers.
Regional Infrastructure Fund
$1.2bn was dedicated towards the new Regional Infrastructure Fund to invest in resilience infrastructure and regional projects that support economic growth. However, without alternative funding and financing mechanisms such as user pay systems, we are simply pushing today’s infrastructure issues onto future generations. We support the Government continuing to investigate alternative funding and financing mechanisms to encourage regional growth.
In summary
Infrastructure is the largest spend with $68 billion to fund infrastructure over the next five years.
The trust and confidence of the public sector’s ability to deliver infrastructure is critical to providing certainty for the property sector. We know that the delivery of infrastructure is closely followed by private sector development.
If we want to resolve New Zealand’s challenges, we need to continue to work cohesively to ensure promised projects are delivered.
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.
