A tax expert wants next week's Budget to deliver details on funding the first stages of the Government's ambitious $2 billion, 100,000-house KiwiBuild plan.
Bruce Bernacchi, a KPMG tax partner, hopes further information about funding, timing and location will be released next Thursday, revealing more about the huge affordable house-building plan.
"The official MBIE position is that the Government has committed $2 billion to KiwiBuild but when is that going to be spent and will Labour be able to keep its pre-election of ensuring debt to gross domestic product does not exceed 20 per cent? It's part of a broader question we have about this Budget. There are a lot of spending promises and the Government needs to provide further detail around this," he said.
But one Parliamentary source said the Government's half-year economic and fiscal update out in December included the $2b of capital funding needed for the policy, spread over three years. Therefore, it did not need to include any further funding for KiwiBuild in next week's Budget.
Start your property search
The Government expected to recycle the $2b many times over in order to build the 100,000 houses.
"In other words, the first batch of houses would be built with the $2b, finished, and then sold to the new home-owners. With the proceeds of the sales, this would fund the second batch of houses. As so on and so forth until the 100,000 are completed, recycled above 25 times over the next 10 years to fulfil the policy," the source said.
Bernacchi said infrastructure, free tertiary education, regional development and hospital spending had all been announced "but can we afford all this? We need to have confidence the Government is fiscally responsible. We see a lot of promises around spending but we're wanting to understand if we can really afford this. There's a massive lolly scramble going on but we need to keep within the debt parameters the Government said it would hold itself to," he said.
Last week, Prime Minister Jacinda Adern and Housing Minister Phil Twyford made a pre-Budget housing announcement of $100m to fight homelessness, with $37m allocated to finding 1500 new places by the end of winter and the remaining $63.4m spent over four years to expand and sustain the Housing First programme, adding 550 more places and keeping 900 established households going.
Bernacchi thinks the Budget will contain few surprises.
"We expect that the lion's share of spending to be allocated to already-announced measures in the Government's 100-day plan," he said, citing transport, housing, tertiary education and regional growth.
"We see this as very much a balancing act for the new Government," he said, stressing the need to counter the desire to increase social and infrastructure spending against being fiscally responsible.
"The Government must balance housing and infrastructure spending in Auckland and other major centres against needing to be seen to be meeting the needs of the regions," he said.
Yet it also needed to ensure the Budget was satisfactory for the Labour Party, NZ First and the Greens.
"It won't be as simple as simply rolling out the Labour Party pre-election manifesto," Bernacchi said.
"This will be a traditional Budget but we also expect it to be the beginning of more of a focus on wellbeing, bringing in themes from Treasury's 2017 Living Standards Framework," he said.
