Where’s My Slice Of Bread?

Janet Xuccoa
May 26, 2023

If you’re asking where your slice of the Bread & Butter Budget is, you’re not alone.  Primarily, business per se weren’t the recipients of much Budget assistance. Those two thirds of the SME Community polled pre-Budget release certainly didn’t have their expectations dashed. That in itself was hardly surprising, given this was a Budget presented by a Labour Government who traditionally don’t favour the business community.

Undoubtedly, set against a backdrop of economic, social, environmental challenges, underpinned by COVID and disastrous weather events, New Zealand’s Finance Minister had his work cut out. Adopting what Grant Robertson termed ‘a balanced approach’, attempting to find savings and reprioritise spending whilst contemporaneously easing the costs of living, making investments that grow the economy and managing inflation, are no easy tasks. Only time will reveal whether the 2023 Budget manages to achieve these laudable aims.



  • $1.2b: To go towards expansion of childcare subsidiaries.
  • $619m:  Abolishment of the $5 prescription fees changed to every New Zealander for medications.
  • $327m: To fund free transport for children under 13 and permanent half price fares for those under 25 years old.


  • $804m: To repair infrastructure affected by Cyclone Gabrielle eg: tele-communications, power, roading, homes, schools.
  • $250m: For immediate repairs to state highways, bridges and local roads.
  • $120m: Funding to protect communities from future climate events so havoc does unfold if future weather events strike.


  • $1.9b: Directed solely toward emission reductions and adaptation measures.
  • $403m: Channelled towards extending and expanding the Warmer Kiwi Homes Programme, expecting to result in a refit 100,000 homes with new heating and installation.


  • $1.0b: Intended to increase staffing levels permitting recruitment of an extra 500 nurses and pay rates for those in health care.
  • $864m: For implementation and operation of disability support services.
  • $20m: Channelled towards improving outcomes for Maori and Pacific peoples.


  • $3.6b: To build 3000 new state houses.
  • $456m: For meeting operational costs of managing public housing.


  • $451m: To establish three new public and private multi-research research and technology hubs in Wellington.
  • $160m: The 20% rebate on expenditure video gaming developers enjoy.
  • $30m: Focusing on improving the innovative horticulture technology industry.
  • $27m: For a digital skills package aimed at address tech skills shortage.


With all Budgets there are winners and losers. Counted amongst this Budget’s crust recipients are families with young children. They’ll be pleased the childcare subsidiary eases their costs. One wonders how effective the spend will be however given difficulties envisaged in procuring places at day care centres. National said it would have paid the funds directly to families, enabling them to allocate money to childcare responsibilities as they saw fit. If demand outstrips supply of day care centres and staffing, this approach may prove sensible.

The same can be said for the $327m spent on free and reduced transport cost. Increase usage of public transport will necessitate extra transportation drivers who are current short on the tracks. That aside, those looking to take up driving seats should find procuring work much easier with the fund allocation in place.

Likewise, increased money supply will make it easier for nurses to enter the workforce.  Patients will also be winners through this Budget spend, as nurse-to-patient ratios become less strained. Whether the allowance will be sufficient to alleviate current pressures or to retain skilled healthcare professionals when foreign shores with much larger salaries beckons, only time will tell.

Whilst on the subject of health, those involved in delivering initiatives under the Warmer Kiwi Homes Programme will be pleased that funds allocated should result in their work pipelines becoming full. Consequential savings in the form of monthly reduced power bills should serve to please power consumers too.

Talking of heating, many of those in the construction industry have departed for sunnier places as a result of the sector suffering a downturn recently. Those remaining will be hopeful the Budget spend culminates in building the envisaged 3,000 new state houses.  Despite good intentions and gold coin, one does have to question whether the spend will prompt employment of labour as other Government housing schemes haven’t resulted in many bricks nor mortar being laid.

Scientists involved in the likes of health, environment, climate and energy industries should be feeling buoyant at the slice of the loaf they have been fed, as should the gaming sector with the 20% rebate they’ll receive on expenditure. Will these allocations lead to meaningful developments in knowledge and growth in exports. One hopes so.


The groups that predominately missed out on receiving any breadcrumbs in Budget 2023 are those with funds in Trusts, borrowers paying home loans, and the majority of small and medium size business owners.

Anyone working in the Trust arena and those with Trusts can’t have been surprised at the increase made to the Trustee Income Tax Rate from 33% to 39%. It was a foregone conclusion Labour would make this move when it increased the highest marginal income tax rate for individuals to 39% back in April 2021. Will this affect the desirability of Trusts?  Doubtful. Asset protection and inheritance transference are the main reasons Trusts are set up these days. Any tax benefit a Trust bestows is the icing on the cake rather than the whole 3 tier cake itself. Will the effect take place on 1 April 2024? Maybe. Remember this change occurred previously, only to be repealed by the National Government that took up residence in Parliament house. That said, should the increased rate prevail, Trustees and Beneficiaries are unlikely to welcome its introduction because it will negatively affect the quantum of funds retained and paid to Beneficiaries.

Despite Government intending to spread its spending over the next four years, it’s hard to see how the Budget won’t be fiscal stimulating. Basic 101 economics tells us Budget spending is likely to have an effect of pushing inflation upwards. This will be transpiring at the same time as the Reserve Bank is hammering hard on the Official Cash Rate door, increasing the internal rate, in a bid to get inflation under control and in its 2-3% box. Mr Orr has already reacted to the Budget, increasing the OCR. Banks have immediately provided their response in the form of increased borrowing rates thereby driving loan repayments up for many. Whether that is the last increase to the OCR we’ll see is anyone’s guess. What is certain however is those with loans repayments to make won’t be happy with this Budget because of the increased financial pressure they’ll experience.

One of the most significant groups hardest hit by Budget 2023 are small and medium size business owners. For sure, this sector missed out of receiving its quota of bread. Certainly, this Budget had done little to ease growing compliance, labour and other running costs businesses face. This was to New Zealand’s detriment. Much could have been done to give a helping hand. A decrease in compliance costs, some relief in the form of accelerated depreciation allowances and potentially a lowering of the company tax rate would have been welcomed. Remember businesses employ people so benefits are consequential – they help a business owner remain in operation and keep people employed.


On the basis Labour’s Budget hasn’t provided, here’s a couple of strategies that may assist businesses facing difficulties and finding the going tough.

  1. Get your financial accounts up to date. You can’t manage a situation if you’re not familiar with the numbers.
  2. Look at influencing your cash flow. May be lower inventory levels, reduce extensions of credit you offer to customers, negotiate better terms with suppliers and increase margins.
  3. Talk to your accountant and form a plan.  This might involve approaching your lenders and switching to interest only repayments for a while or implementing some other loan cost reduction strategy. Irrespective of solutions envisaged, dealing with the issue and moving forward starts with a conversation.


Treasury has told New Zealanders we’ll miss the much-touted recession but will suffer inflation and higher interest rates for longer than previously anticipated. Not having to endure a recession is likely to be cold comfort to those facing financial pressures and even less to businesses, many who are occupying Struggle Street right now. In this respect, if you’re a business finding waters choppy, contact us. We’re here to help. This Budget can’t be accused of helping many. Ultimately, for the reasons discussed, the benefits it bestows may be nullified by the increased cost of living we’ll all be contending with. Still … 14 October 2023 isn’t that far away and what one Government decrees, another can override.

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