But these days the Budget is also a political exercise. There’s no question the Budget is still a very big deal as these things can have a very real effect on our lives in terms of mortgage rates and the cost of living. The Budget can also influence the extent to which the Reserve Bank (RBNZ) will need to adjust the Official Cash Rate (the interest rate the RBNZ sets for borrowing and lending between banks). Since then, big spending plans and other policy changes like tax cuts or hikes have had to be signalled in advance in pre-Budget announcements.įinancial markets will factor new details about the Government’s debt track into their equations on the outlook for interest rates and currency.įor that reason, the Budget can make the Kiwi dollar rise or fall (although not as much as it did before 1989). The Budget also offers an outlook for the next year, but also spending over four years - something that can often make the big multi-billion dollar announcements look more generous at first glance.īudgets aren’t what they used to be in the 1970s and 1980s.īack then, the public watched with bated breath for tax announcements and then queued to buy petrol, cigarettes and alcohol before price changes took effect at midnight.įor financial markets, the process was even more harrowing, so in 1989 the Public Finance Act was introduced. The accounts can show a surplus where the Crown has taken in more revenue than it spent, or a deficit where it has spent more than it earned.īudgets are a political battleground because they reveal the choices the Government is making about how much to tax, how much to borrow, how much to spend and where it will be spent. It lays out how much the Government expects to take in through tax revenue and investment, how much it expects to spend and how much it intends to borrow. There’s no shortage of hype building for Thursday’s Budget, which will be delivered at 2pm by Finance Minister Grant Robertson in a 40-minute speech to Parliament.Īs a set-piece political event, it’s probably only topped by an actual election night.īut what is the Budget and why does everyone get so excited about it?Īt its most basic the Budget is a document that outlines the Government’s spending plans each year.
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