The House that Grant Built
The numbers look good. In fact they look surprisingly good. The Labour led coalition with NZ First, has produced a budget which is built on a strongly performing economy but shows prudent restraint with its spending. The message for business is clear. Keep calm and carry on doing what you do best and keep the economy on a growth plan to fund additional investment in housing, health, education and the environment.
At a Glance - Key Points
- Economic growth of 3% pa is expected to deliver a budget surplus (operating balance before gains and losses) of $3.1 billion for the year to 30 June 2018. Continued forecasted growth is expected to produce a surplus to $3.7b in 2018/19 rising to $7.1b by 2021/22.
- Increase in health, education and environmental spending including specific funding for capital projects as the Government seek to label the Budget as “fiscally, socially and environmentally responsible” - a Triple Bottom Line Report for the accountants.
- No fundamental changes to the tax rates.
- The commitment to the ring-fencing of tax losses on rental properties is confirmed. The impact on residential property investors will be significant and follows on from the extension of the bright line test from two years to five years and restrictions on non-residents being able to acquire residential land.
- A Research and Development tax credit of 12.5% on expenditure over $100,000 for businesses.
- The collection of GST on low value goods under $400 imported by consumer from offshore suppliers.
The Budget is labelled as Foundations for the Future. All builders know that a good building needs good foundations and Budget 2018 appears a solid start for the House that Grant Robertson is building.