Finance Minister Grant Robertson’s 2021 Budget received luke-warm reviews from New Zealand’s business community which lamented the opportunity to invest more in economic growth.
And in the words of Retail NZ CEO Greg Harford, “there’s not a lot in it for retailers”.
The main headline from the government’s spending agenda in the year ahead is a $3.3 billion increase in boosting benefits, which will rise by up to $55 a week for each individual – and more than $100 a week for many families – by April next year. At first glance one might assume that some of that might trickle down to retailers, but the reality is that increased rents – reflecting surging house prices across the country and a shortage of rental stock – will take a large chunk of that.
Harford told Inside Retail that the key issue for retailers right now is skyrocketing costs resulting from the increased minimum wage, 10 days sick leave for all employees – including those who work as little as one day a week – and the direction of “the so-called fair Pay system”.
“It’s increasingly hard for retailers to absorb these costs, and it would have been good if some kind of offset had been provided for them in the Budget,” he said.
The government – backed by economists at home and abroad – signalled that the nation’s economy is in a much stronger position than was expected at the height of the Covid-19 crisis when lockdowns stemmed spending and borders were closed, devastating the income of the tourist, retail and education sectors, especially.
Business NZ CEO Kirk Hope said reducing child poverty, supporting Maori and Pasifika and tackling climate change are worthy targets for investment, but the needs of business and the economy should have had more attention.
“Additional investment in infrastructure, and training and digital skills will be appreciated, along with the plan to develop a scheme to help support unemployed people find new jobs,” Hope said.
“However there is little else directly focused on building the economy or easing the burden on businesses.”
Among the more minor commitments was a $44 million allocation to expanding the Digital Boost Training Programme that will offer up to 60,000 small businesses with digital skills training. “Digital commerce contributes to a higher wage, higher productivity and lower carbon economy and builds our brand as a safe and secure place to live, invest, trade, visit and do business,” said small business minister Stuart Nash.
A further $10 million has been allocated to boost internet connectivity in rural areas during the next two years.
Business “got nothing”
Auckland Business Chamber CEO Michael Barnett said business “got nothing” in the budget.
“I don’t have difficulty with the government fulfilling its election promises to address child poverty and incomes. It is right to help those people who cannot work and create the environment to get people working,” he said.
“But with lower than forecast unemployment and more jobs than people, it is disappointing that the Budget gave no relief to tourism, hospitality and accommodation operators who need working holiday and seasonal worker visas extended urgently to employ the labour needed now to deliver the quality of service and experience to visitors, their lifeline to survival from the opening of the Trans-Tasman bubble.”
However, Deloitte CEO Thomas Pippos cautioned this was the first of a three-year budget program from a government emerging from crisis mode after the pandemic.
“As a consequence, Budget 2021 has seen a plethora of material spending. It’s hard to believe that a year ago economists were talking about being in the midst of an economic and social calamity akin to the great depression of the 1930s,” said Pippos.