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Budget ALERT 2021 - Challenges and Opportunities for Business
As the first Budget since last year’s election as well as all the pandemic chaos, maybe it’s not surprising that Budget 2021 is a cautious one, emphasising wellbeing and aiming to stimulate sufficient activity to drive growth, spending, and confidence.
Tagged ‘securing our recovery’, welfare support is highlighted. For business, a bundle of economic recovery measures unpack into training, infrastructure, and transformation plans in targeted industry sectors.
Changes affecting New Zealand businesses and investors are largely off-stage of the Budget. Some have already happened with more to come. The minimum wage increase and the new 39% tax rate on income of $180k+ had the spotlight until changes to property investment took centre stage, extending the bright-line test period and phasing out mortgage interest deductibility on residential investment property. For employers, the Matariki public holiday is waiting in the wings, along with upcoming changes to sick leave (increasing employer-funded sick leave from 5 days to 10).
The debt we shouldered to get through the pandemic will be part of the scenery for the foreseeable future, although it must be said that the foreseeable future is not very far ahead just now. In a pre-Budget speech in early May, Minister of Finance Grant Robertson commented on global supply chain issues saying, ‘The ongoing economic impact is uncertain and most forecasts continue to emphasise the likelihood of continued volatility.’
Businesses facing supply constraints may view improvements to wages and conditions as more items on the cost side of the balance. But across the Tasman, the Australian budget has just injected significant amounts into construction and infrastructure and their mining industry’s back in boom. A possible skills drain overseas makes labour another potentially tight resource in the supply chain.
The challenge may be to secure sufficient human resources and/or realise productivity gains to stay competitive.
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