Retail NZ is not as optimistic about the newly released Budget 2025 from the New Zealand Government.
According to the national peak body, the struggling retail sector will see little immediate prospect of an uplift in consumer spending.
“There is little in the Budget to suggest that we will see any quick improvements in consumer and business confidence,” Retail NZ advocacy manager Ann-Marie Johnson said.
“There will be no economic growth without retail growth. Until consumers feel confident about their future, they will continue to be careful about spending their discretionary dollars.”
Of interest to retailers, some of the key policies included in Budget 2025 include the establishment of an Investment Boost tax incentive to encourage businesses to invest, grow and lift wages. The policy allows for 20 per cent of the cost of new assets to be deducted immediately from taxable income (on top of normal depreciation).
There is also cost-of-living relief, which involves delivering an average $14 extra a fortnight to 142,000 low to middle-income families, delivering rates rebates for up to 66,000 SuperGold cardholders, and extending prescription periods. The latter is expected to offer savings to patients on long-term medications and new funding for community-based food banks.
The Budget also includes increasing the KiwiSaver balances of New Zealanders by phasing in an increase in default employer and employee contribution rates to 4 per cent, as well as extending the scheme to 16- and 17-year-olds.
Meanwhile, the NZ Government is planning to spend an additional NZ$1.1 billion across law and order. This includes NZ$480 million to support frontline policing and NZ$246 million to reduce court delays.
Retail NZ welcomed the Government’s continued focus on combating crime, with the increased spending on policing, serious youth offenders and cutting the backlog in NZ courts.
Johnson added that the new Investment Boost policy will no doubt be of value to retailers who are looking to invest in their businesses.
“However, only yesterday, Smith + Caughey’s confirmed it will close, with the loss of almost 100 jobs,” Johnson said. “This is just the latest retail business closure that we are aware of. Many more retailers will struggle to make it through the winter.
“Our members will need to continue tightening their belts in anticipation of slow sales until confidence returns to the marketplace. The light at the end of the tunnel is still a long way off.”
Speaking on the Budget 2025, NZ finance minister Nicola Willis said the Treasury is forecasting growth will accelerate over the next four years, bringing 240,000 additional jobs, rising incomes, stable inflation, lower interest rates, a return to balanced government books, and an end to rising debt.
“New Zealanders are depending on this recovery, but we cannot take it for granted,” Willis said. “Nor can we shirk responsibility for addressing the underlying issues our country faces.
“Budget 2025 responds to New Zealand’s long-term challenges with initiatives to boost growth, investment and savings; targeted investments in the essential services and infrastructure New Zealanders rely on; and reforms to fix financial holes in the government’s books.”