Just shy of a month ago, Finance Minister Nicola Willis delivered the National-led Coalition Government’s first Budget. It was a Budget of few surprises. That the tax cuts National had campaigned on would be slightly delayed and smaller was signalled well in advance. Likewise, reductions in spending across Government agencies were well in train as evidenced by the now more than 6,000 job losses across the public service.

The ongoing tough economic climate too had been foreshadowed repeatedly both by the Budget Policy Statement in March and in subsequent speeches by senior Government ministers.

The message was clear: beyond the tax cuts to ease some cost-of-living pressures, don’t expect much else from the Budget.

In fairness to Willis, this Budget was entirely consistent with her criticisms of her predecessor. For example, in opposition she would frequently critique Grant Robertson for not sticking to the expectations he set around the operating allowances (new money for new initiatives) that he would outline for each Budget. So it came as no surprise that Budget 2024 was largely predictable.

Speaking of no surprises, for the culture and heritage sector that meant that the ongoing cuts were reflected in the Ministry for Culture and Heritage’s funding dropping from $414.9m in 2023/24 to $373.6m in 2024/25 a nearly 10% reduction, with a 16.2% reduction when considering changes to multi-year appropriations.

The decision to not continue with the Regional Culture and Heritage Fund leaves a gap in the capital funding of last resort for the sector that will need to be filled, with increases and changes to the International Visitor Levy being one possible source of funding depending on the Government’s appetite to use this mechanism to address funding shortfalls.

Likewise, for the sector’s major funder – local government – there's scant relief on the horizon in the Budget for its growing cost pressures, especially with the three waters reforms having been axed and the delays in developing and implementing National’s alternative water solution, leaving steep rates increases for another round of long-term plans as the only option.

One surprise was the omission of funding for 13 new cancer drugs, which had been National’s way of trading off their commitment to re-introduce the $5 prescription charge that the previous Government had axed. To say the Government was slammed for this would be an understatement, and it didn’t take long for the backtracking to begin with a commitment being delivered by Prime Minister Christopher Luxon that the drugs would be funded this year, a comment which seemed to be at odds with the responses made immediately after the delivery of the Budget by both his finance and health ministers.

For a Coalition Government that has developed a reputation of being somewhat immune to buckling to public pressure as they’ve plowed ahead with spending cuts and repeals, the rapid backdown over the non-funding of cancer treatments was a rare moment that does speak to a challenge they’ll increasingly face in the months ahead. As they run out of regulation and legislation from Labour’s time in office to repeal and need to start developing and implementing their own policies, it’s likely that the political tensions in the Coalition will present more opportunities for public pressure and outcry to force changes.

Which brings us to the years ahead where Budget 2024 has indicated more years of tight spending. Indicative operating allowances for Budgets 2025, 2026, and 2027 have been slashed by $1.1b, $850m, and $600m respectively. If economic conditions track better than forecast, we may see some loosening of the fiscal belt. However, with so many international variables and uncertainties at play expecting such an upside seems optimistic at best. It seems more likely that we can expect tight fiscal conditions for a while to come.

Authored by Heft Communications for Museums Aotearoa 2024