23 May 2016

Business Budget wishlist 'relatively modest'

2:46 pm on 23 May 2016

The government's annual Budget is released this Thursday and expectations have already been largely shaped by a plethora of pre-budget announcements.

John Key (left) and Bill English on their way to announce the 2015 Budget.

Photo: RNZ / Alexander Robertson

Most significantly for the broader economy was the Minister of Finance's recent speech, in which he took tax cuts for next year off the agenda.

But the government has signalled increased social spending to cope with pressures on services from higher immigration, while planning to use future expected budget surpluses to cut the debt level, as well as have more substantial resources to offer bigger tax cuts down the track.

ANZ chief economist Cameron Bagrie said he was expecting health and welfare to be the winners in this Budget, which he thought would give the economy a little more stimulus in the near term.

"The more the government sort of spends up front, the less scope they have to spend money sort of down the track, so yes support of the Reserve Bank on hold in the near term, but also support of interest rates remaining lower for longer over the next two to three years," he said.

Meanwhile, the head of Business New Zealand Kirk Hope has a relatively modest Budget wish list.

"We'd like to see the government's continued focus on paying down debt and an on-going commitment to invest in infrastructure to get it up to scratch - that's got quite a way to go, but there has been a considerable investment, we'd just like to keep seeing that path," he said.

"The other thing we'd like to see is an increase in personal tax thresholds to reflect some of the economic growth that we've had and we are planning for," Mr Hope added.

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