Newsroom Pro's 8 things at 8 am: It's Budget week

Steven Joyce and Bill English will effectively fire the starting gun for the September 23 election campaign when they unveil the Budget on Thursday. Photo: Lynn Grieveson

It's Budget week, and in today's email we ask what that might mean.

1. Show us the money

Steven Joyce and Bill English will effectively fire the starting gun for the September 23 election campaign when they unveil their first Budget as Finance and Prime Minister this Thursday at 2 pm.

They have already signalled the outlines of a Budget that is not going to throw the fiscal kitchen sink at the electorate, but instead emphasise building a buffer for some unknown future calamity by reducing debt.

But everyone is expecting some sort of Budget day surprise that pivots National into the centre-left's territory in the same way the Key-English combination was able to in the 2014 Budget (free doctor's visits for under 13s) and the 2015 Budget (first real benefit increase in 30 years).

Before he left in December, Key was talking up the prospects of a 'families package' that included some sort of tax cut (possibly through an increase in the tax thresholds) and potentially some help for lower income families through the accommodation supplement and Working For Families.

Joyce has since also indicated the potential for threshold changes, while English and Paula Bennett have talked about a review of the Accommodation Supplement. Joyce has also suggested changes in Working for Families could be in the works.

But the free doctor's visits and real benefit increase announcements came completely out of left field - literally - so we could easily see something else unexpected. The government will have wanted to keep its powder dry on something.

Plenty has already been announced. The key things we already know are:
The government has reduced its net debt target to 10-15 percent of GDP by 2025 from the previous 20 percent by 2020.
It has increased its capital spending allowance for the next four years by $2 billion to $11 billion since the December half year update.
It plans to spend $2.23 billion over four years to jump start a house building programme, although it would be funded from Housing NZ's balance sheet and $1.1 billion of borrowing.
It will boost funding for Pharmac by $60 million over four years.
It will grant an extra $26.7 million in operating funding and $63 million for capital spending for irrigation investments over the next four years.
It will spend $321 million on social investment spending.

2. More tweaks?

Working For Families could be a key focus on the Budget so Newsroom's Shane Cowlishaw has taken a deep dive into how the package of tax credits works and how could it could be changed.

Shane finds the policy has been tweaked in recent years in ways that squeezed inflation-adjusted incomes and increased marginal tax rates. He examines whether the policy is failing and if it could be given a boost in the Budget.

See Shane's full piece on Newsroom Pro.

3. An energised PM

Our Foreign Affairs and Trade Editor Sam Sachdeva returned from his trip with the PM to Tokyo and Hong Kong over the weekend. He interviewed English in Hong Kong before returning and found him energised and challenged by the new role.

Here's Sam's full report from that interview on Newsroom Pro, and his assessment of the successful aspects of the trip, particularly around the TPP.

He also points to English's quiet concerns about the chaos surrounding the Trump Presidency, and any potential affects on the global economy.

“We wouldn’t want to see all these domestic policy issues have an impact on economic confidence in the US, because they play an important role pulling the world economy along, nor would we want to see them distracted from their broader defence and security interests," English said.

Trump’s struggles to get his diplomatic appointees confirmed have also made life difficult, with English saying it is “a bit hard to connect with them directly”.

4. Sensitive investments

Bill English spent time in Hong Kong with the territory's biggest investor in New Zealand - CK Hutchison - and talked up the potential for more foreign investment to help New Zealand solve its infrastructure deficits.

“We are particularly focused on infrastructure investment because we believe that New Zealand can be a growing economy with a growing population and we can invest in sufficient infrastructure to make all that work," English said.

However, he was quick to say he did not see any fundamental changes to central and local government “overwhelmingly” funding New Zealand infrastructure.

See Sam's full report on English's comments
after the meeting with CK Hutchison deputy chairman Victor Li on the 70th floor of the firm's Hong Kong HQ. CK Hutchison owns one in nine of the high rise buildings in Hong Kong.

5. TPP 11 on track

There appeared to be more good news for the TPP over the weekend with Trade Minister Todd McClay announcing the TPP 11 made a joint statement after their meeting in Hanoi over the weekend expressing some sort of commitment to proceed without America.

"It demonstrates a commitment from all 11 countries to implement the agreement which is extremely valuable for New Zealand and sets a clear path to a meeting of leaders in November of this year," McClay said.

However, the Reuters report from the meeting was less clear about the commitment.

"Although the TPP members kept the trade agreement alive, they fell short of a wholehearted commitment to advance immediately with a deal," Reuters reported, noting one of the biggest challenges was getting Vietnam and Malaysia on board, given they had signed up on the assumption America would be a part of the deal.

6. While you were sleeping

The chaos around the Trump Presidency deepened over the weekend with the announcement that fired FBI Director James Comey would testify before the Senate Intelligence Committee in two weeks time.

The New York Times also reported that Trump had told the Russian Foreign Minister the day after firing Comey that the FBI director was a "nut job," and that removing him had reduced the pressure on him from the Russian issue.

Also, the Washington Post reported that the probe into links between Trump's campaign and Russia had now extended into the current White House because a current official had been identified as a "person of interest." Others identified the official as Trump's son-in-law Jared Kushner.

7. Coming up...

Cabinet is due to meet today and Prime Minister Bill English is scheduled to hold his weekly news conference this afternoon.

Parliament resumes after a one week break on Tuesday.

The Budget is due to be delivered on Thursday afternoon at 2 pm.

8. One fun thing

Donald Trump did a little dancing with his Saudi hosts during his visit there over the weekend. Here's his mild shuffling set to The Clash's Rock the Casbah. You will laugh.