The Government is facing scrutiny over its handling of a $2.9 billion tax break for landlords, which it claims will ease pressure on the rental market and deliver savings to renters.
The cost of reinstating full interest deductions for residential property will be spread over the four-year forecast period, however it is more than $800 million more than what National had originally budgeted for — according to data from the Government.
The overrun meant landlords wouldn't be able to claim the expenses retrospectively, as initially indicated.
Meanwhile, everything from free school lunches to school rebuilds were being reviewed as ministries faced financial pressures, with wheelchair users among those feeling increased uncertainty.
"We've been undercut, and underfunded for many years but we've been trying to catch up and with the new ministry we finally had in there a dedication in what we're needing, services and supports," said Disability Advocate Huhana Hickey.
"But now, of course, they're under pressure as every other department is to cut when we haven't had time to catch up," she said.
The tax break meant landlords would soon be able to claim 80% of their interest expenses from April 1, 2024, and then 100% of those expenses from April 1, 2025.
'No evidence it will achieve anything'
Academic Max Rashbrooke told 1News he believed the reinstated tax deduction was "absolutely the wrong decision," and said there was "no evidence that it's going to achieve anything".
"It's probably not going to lead to lower rents; it's not going to build more houses; and, at the same time, it's been funded by making life harder for people on benefits."
He said the Government should look to spend their money on lifting the skills of those on benefits who needed retraining in order to get back into work.
"There's a lens we should put across every decision the Government makes, which is: What would this do for the most vulnerable?" he said.
Economist Eric Crampton said the Government should be looking to bring spending down in any way it could to "get back to surplus".
"Governments should be getting spending back down, regardless of what's going on with tax settings for landlords," he said.
"Ideally, they are trying to get a better value for money for every dollar that they are spending. So getting back to having value for money assessments in line-by-line spend will be really important."
'Relief for landlords will put downward pressure on rents'
Speaking on Breakfast this morning, Prime Minister Christopher Luxon was adamant his costing figures during his campaign were "rock solid" and defended the desired outcome of the tax cut.
"[We] looked at our economic conditions, looked at what we can afford and what we're delivering is relief to landlords. So they can put downward pressure on rents," he said.
Labour’s Finance spokesperson Barbara Edmonds has said bringing back interest deductibility was a "tax advantage for the wealthy" and "shows where the coalition Government’s priorities are”.
“It’s not lunches in schools, the smokefree generation, or continuing the Cook Strait ferries — it’s mega landlords.
“This is yet another example of the coalition Government making decisions that solely benefit the wealthiest New Zealanders.”
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