There are few surprises in the government’s 2018 Budget presented on 17 May, the first from Minister of Finance, the Hon Grant Robertson.

Treasury has forecasted economic growth of about 3% per year on average to June 2022, with our economy projected to grow at a rate faster than that expected for New Zealand’s major trading partners.

The Minister has played safe with cautious spending in key sectors, buoyed by its inheritance from the previous government of a strong fiscal position.

Operating from a healthy economy, the government has focussed its spending in the health, education and housing sectors.

Kiwi health is a Budget winner

As expected, the emphasis in this year’s Budget is on the health and wellbeing of New Zealanders, with a strong focus on lifting a large percentage of Kiwis out of poverty. This includes:

  • Significantly more funding for the district health boards to help rebuild ageing hospital and health infrastructure. There is particular emphasis on core services such as maternity services, disability support, air ambulances and bowel cancer screening.
  • Free GP visits will be extended from those under 13 years old, to cover those under 14 years. This will be available from December.
  • Community Service Card holders will get cheaper visits to their GP.
  • Eligibility is to be extended for the Community Services Card to include anyone living in state housing, receiving the accommodation supplement or income-related rent subsidy.


  • There is new funding of $395 million over the next three years for new schools and hundreds of additional classrooms. Christchurch gets a considerable chunk of this with $62 million being allocated to the rebuilding of its schools.
  • The Ongoing Resourcing Scheme (ORS) and other learning support initiatives for students who have very high and/or complex learning needs are to receive a funding boost.
  • Early childhood education gets more funding to meet the increasing demand of New Zealand’s growing population.


The government has indicated a significant investment in public housing.

  • More than 6,000 state houses will be built over the next four years.
  • Funding will be provided to implement the Healthy Homes Guarantee Act 2017 that will regulate healthy home standards such as heating, ventilation, draught stopping, drainage and moisture.
  • A new four-year programme has been established, to be known as Warmer Kiwi Homes, to help make the homes of lower-income New Zealanders warmer and drier. The first year of the programme will focus on ceiling and underfloor insulation. From 1 July these lower-income home owners can access grants to cover up to two-thirds of installation costs. The second year grants will cover the installation of a heating device.

Business and tax

The business sector will benefit from $1 billion that will be available over the next four years for tax rebates from the R&D tax credit (12.5 cents/dollar which was announced in April). This will be available from 1 April 2019.

The Budget holds few tax initiatives. Rather, the government is relying on the anticipated findings of the Tax Working Group chaired by Sir Michael Cullen which is reviewing the current tax regime. It’s expected the Group’s recommendations will be available by the end of this year, with any new major tax policies being part of the government’s 2020 election manifesto.

Already signalled by the government is the so-called ‘Amazon tax’ where overseas businesses that ship goods valued at less than $400 to Kiwis will need to pay GST.

For property investors, the government has already indicated it will ring fence investors’ tax losses on rental properties; this is expected to net significant tax revenue. Earlier this year, the government announced the extension to the bright-line text, see more on that here.

The Minster for Revenue, the Hon Stuart Nash, says that the government is committed to a tax system that is simple, balanced and fair.

To read the Minister’s presentation of the Budget to the House, go here.

We acknowledge the source of some of this material from The Treasury’s Budget-at-a-Glance document.

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