Reviewing the 2025 Budget
Budget Day has been and gone for another year, with National’s Finance Minister Nicola Willis announcing what was officially known as the Growth Budget but also referred to by her as the “No BS Budget” on Thursday, May 22nd. We published a quick summary of the details in our LinkedIn newsletter but in case you missed it here are the key points.
Three of the big things that might impact the for-purpose sector were actually announced pre-Budget Day.
#1 No taxes for charities - yet
Although previously expected, there won’t be any changes to charity tax rules.
At least not yet.
Nicola Willis had originally signalled that changes were coming in this budget that would impose new taxes on charities which had business arms. But following a backlash, lots of discussion and a public consultation, that plan has been shelved while more work is done. The Finance Minister said the consultation had revealed two things - one that the potential revenue for the Government is fairly small and that there is more complexity around the rules and definitions than previously anticipated.
That’s not to say, of course, that changes won’t be back on the table in future.
#2 Pay equity claims scrapped
A couple of weeks before the budget, ACT MP and Workplace Relations Minister Brooke Van Velden announced huge changes to the pay equity legislation were being pushed through under urgency, and all existing pay equity claims scrapped. You’ll find more details on this in our last newsletter.
#3 New Social Investment Fund details announced
The Social Investment Agency (SIA) was set up following an announcement in last year’s Budget that the Government was looking at new ways to fund social services. The new funding methods include more robust assessment of projects applying for funding and increased data gathering and evaluation to evidence measurable outcomes.
This year, the first funding of $ 190 million from the Social Investment Fund, overseen by the Agency, was announced. The first initiatives receiving funding are:
Autism New Zealand’s early screening and intervention programme that provides services and support for family/whānau, caregivers and professionals.
Ka Puta Ka Ora Emerge Aotearoa’s evidence-based approach to tackling youth offending and truancy that will help at least 80 families each year to address youth offending and truancy; and
The He Piringa Whare programme with Te Tihi o Ruahine, an alliance of nine hapū, iwi, Māori organisations and providers, that will support 130 families at a time with a wraparound service that delivers stable housing, education, training and employment, and other services.
In addition to this, there is
$20 million for programmes that strengthen parenting in the first 2000 days of a child’s life, reducing harm and setting children up for better long-term outcomes; and
$25 million to help prevent children and vulnerable adults from entering state care, as part of the Crown’s response to the Royal Commission of Inquiry into Abuse in Care.
What else is on the table?
Here are some of the other funding changes that make up this year’s Budget
Another year of support for community-based food banks with $15m to be managed by the Ministry of Social Development (MSD), the New Zealand Food Network and partner agencies.
Changes to the way emergency services respond to 111 calls from people experiencing mental distress. There will be $ 28 million invested to move away from a police-led response and towards a mental health response with a multi-agency focus.
An increase in funding for Māori Wardens, Pasifika Wardens and the Māori Women’s Welfare League, with a total of $ 14 million over 4 years
Large investments to fund a range of primary and community health care improvements, including the expansion of urgent care and after-hours services.
Proposals to change prescriptions for some common long-term medications to 12 months.
$ 646 million to support children with additional learning needs, including early intervention support.
Changes to Working for Families that will raise the family income threshold and increase the abatement rate, but the Best Start scheme will become fully means-tested.
18 and 19-year-olds will now have their Jobseeker and emergency benefits tested against their parents' incomes.
The government contribution to KiwiSaver is being extended to 16 and 17-year-olds. However, the Government contribution for everyone is being halved to 25 cents for each dollar contributed by individuals to a maximum of $260.72 per year. The individual and employer contributions will rise from 3% to 4% over the next three years.
So what does it mean?
There are lots of little highlights in the budget with funding increases in some areas. But when that’s compared to the reduction in funding in other areas and the huge savings most government agencies have been asked to find over the past couple of years, it doesn’t feel like a huge boost.
A number of for-purpose organisations have reacted with disappointment and concern.
Forest and Bird said the lack of funding for the environment was deeply concerning, while social agencies like Presbyterian Support North lamented the cuts to government funding, which had knock-on effects on their own initiatives. The Salvation Army said the Budget had “positive steps” but showed a “lack of ambition to effectively meet Child Poverty reduction targets”.
Hui E! Community Aotearoa also questioned whether the announced increases counteracted funding shortfalls elsewhere.
Overall, the for-purpose sector could be in for another tough financial year. But we know that organisations within the sector will continue to work hard for those who need it and to create positive impact for our planet and its people.