Most Read Contributor in New Zealand, September 2016
Finance Minister Bill English's seventh budget is a
The English "brand" is there in the
steady-as-she-goes fiscal and economic management and in the finely
targeted policy interventions.
The talking points will be the benefit increase, the new
passenger departure levy and the removal of the $1,000
"kick-start" payment to encourage the KiwiSaver habit (a
decision which is expected to save the Government more than $500
But business may be disappointed in the paucity of
initiatives to support the Government's Growth
Economic and fiscal overview
The growth forecasts have been wound back since Budget 2014 as
the stimulus created by low interest rates, strong population
growth and robust investment activity is off-set by sluggish global
demand and the inhibiting effect of the high exchange rate on
GDP growth in March years is expected to reach 3.3% this year
before tapering back to 3.1% next year, 2.8% in 2017 and 2018, and
2.4% in 2019.
The budget deficit has been chopped back from $18.4 billion in
2010 to a projected $684 million this year but the promised surplus
is still a speck on the horizon – not so much because of its
distance (it is forecast for the 2015-16 financial year) but
because of its size; a tiny $176 million.
And this assumes that Treasury's central scenario for
commodity prices holds. If it surprises on the downside, the
surplus will be deferred until the June 2018 year.
The political focus in the budget media pack was front and
centre, the "hardship reduction" package which will put
more money into the lowest income households while also increasing
the incentives to work.
a $25 a week net increase in benefits for families with
children, from 1 April next year (the first increase above the
annual inflation adjustment since 1972)
a $12.50 a week increase in Working for Families for households
earning $36,350 a year or less. Those earning between $36,350 and
$88,000 will also get an increase but it will be smaller and will
be calibrated to their income. But those on incomes over $88,000
will sustain a small cut, averaging around $3 a week per household,
an increase in Childcare Assistance from $3 an hour to $4 for
up to 50 hours a week per child.
reducing the point time at which sole parents and their
partners must seek part-time work to when the youngest child is
three (down from five currently)
increasing the part-time work expectation from 15 hours a week
to 20, and
requiring sole parents to reapply each year for their
Treasury is forecasting continuing rapid house price inflation
in Auckland this year, noting that the housing supply response
"remains muted". Against that background, the Budget did
not devote much time to the Auckland property market issue but that
was because most of the new policy measures – the two year
rule and the search for Crown-owned land for residential
development – had already been announced.
The Budget has allocated $52.2 million to this purpose, and the
Government hopes to have the first development agreement signed
within six months.
These are modest and include:
$25 million over three years to support the establishment of
new, privately led Regional Research Institutes outside Wellington,
Auckland and Christchurch, and
$11.4 million for more engineering places in tertiary
A new border clearance levy of around $16 for arriving
passengers, $6 for departing, to apply from 1 January.
$20.4 million to support implementation of the RMA reforms, $4
million for the Environmental Protection Agency to implement the
EEZ legislation in 2015-16 and $16.8 million to support the
freshwater management programme.
$107.8 million to the Christchurch rebuild for land clearances
to make way for Anchor Projects.
An extra $8.1 million for the Serious Fraud Office and $20
million for the SIS and GCSB.
An additional $24.9 million operating over four years and $2
million capital for biosecurity.
From the Future Investment Fund:
$210 million in new capital next year for KiwiRail, and a
further $190 million pre-commitment against Budget 2016
a $210 million contingency for additional investment to bring
Ultra-Fast Broadband to 80% of New Zealanders, and
a $150 million extension of the Telecommunications Development
Levy for improvements in rural broadband.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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