Budget offers ‘no surprises’, but possible good news for lawyers and clients alike

by Mackenzie McCarty16 May 2014
“Prudent, pragmatic, steady [and] unexcitable.”

That is how, in the firm’s official post-Budget briefing, Chapman Tripp partners Geof Shirtcliffe and Casey Plunket described Bill English’s statements.

“English can point to the impending achievement of his two fiscal objectives – bringing the budget back into the black, and beginning to unwind the debt legacy of the Government’s GFC and Christchurch responses – but the Budget tone is downbeat, even dull,” wrote Shirtcliffe and Plunket.

However, Russell McVeagh partner Craig Shrive told NZ Lawyer that no (unexpected) news is essentially good news. “A key feature of this government is ‘no surprises’,” he said. “It has tried to build confidence and trust by saying what it will do and then doing it. It is also about steady incrementalism rather than big bangs. This Budget fits that mould.”

When it comes to clients – and indeed law firms themselves – Shrive says most businesses shouldn’t feel a direct impact. “Some of the announcements – such as extending parental leave – will have a varying impact on our clients,” he says, “but most businesses will no doubt be focussing on the bigger-picture, good-news story around the overall economic and business environment … Overall, we are looking for an environment where our clients are confident doing business and obviously if they do more that has an impact on our dealings with them.”

Shirtcliffe and Plunket had one specific concern.
“Given that capital markets are one of the six policy areas under the Business Growth Agenda banner, it was disappointing to see that they received so little policy attention in the budget,” they wrote. “Chapman Tripp, for example, would have liked movement in the Budget on the outdated restrictions in the Income Tax Act over the amounts employees can borrow from a company under an IRD-approved share purchase scheme. The current limits are extremely low and have the potential to frustrate provisions in the Financial Markets Conduct Act to encourage employee share offers as a way for start-up or early-stage companies to retain skilled staff when they cannot compete on salaries against more established competitors.”
CLANZ CEO, Helen Mackay, meanwhile, told NZ Lawyer that in-house lawyer numbers have grown at a rapid rate over the past few years and that she hoped the trend would continue now that the government has announced its first Budget surplus in six years.
Budget highlights:
  • For the first time since 2008, the Government announced a surplus (of $372m) and this is forecast to reach $3.5bn by 2018
  • Economic growth is expected to average 2.8% over the next four years, topping at 4% in 2015
  • Paid parental leave is to be extended from 14 to 18 weeks and eligibility is likewise extended to cover part-time, seasonal workers and those who have recently changed jobs
  • A $480m cut to ACC levies
  • An increase in parental tax credit from $150 a week to $220 – and an extension to the payment period, from the first eight weeks of the baby's life to the first 10
A $375m interest-free loan for New Zealand Transport Agency to accelerate Auckland transport projects