Bill English delivers Budget 2014 speech
Bill English, New Zealand’s Minister of Finance has delivered his 2014 Budget in which he anticipates a growth rate of 3% for next year and an average of 2.8% over the next few years. Revenue for 2014 is forecast to be NZD67.8 billion (£34.9 billion; $58.7 billion) and expenditure is likely to be NZD71.6 billion (£36.8; $62 billion). Unemployment will be around 5.9% and inflation 1.5%.
The budget paints a picture of an economy that is in good shape after a period of international economic turmoil through which the government has had to navigate. There is very little bad news within the budget and small amounts of generosity which has been carefully targeted. The opposition is likely to find little to attack in the ensuing budget debate and the government appears to have lined itself up neatly for the general election which is due to take place on 20th September.
You can find the full text of the budget speech here.
The official press release as published on Beehive giving the ‘Budget at a Glance’ is as follows:
“Budget 2014: At a Glance
Balanced and responsible management of the New Zealand economy continues, allowing more investment in families and public assets (All figures for four years to 2017/18 unless otherwise stated).
Looking ahead to the results of responsible economic management
•Economic growth forecast to average 2.8 per cent over the next four years, and peak at 4 per cent in 2015.
•Surplus of $372 million forecast for 2014/15, growing to $1.3 billion in 2015/16 and to $3.5 billion in 2017/18.
•Government committed to $1 billion new operating allowance in Budget 2014, rising to $1.5 billion a year in Budget 2015 and growing thereafter at 2 per cent per Budget.
•Combined with reprioritisation, the Government’s spending envelope will allow additional support for New Zealanders, without pushing interest rates higher than they would otherwise be.
•Net core Crown debt is forecast to peak at 26.4 per cent of GDP in 2014/15, and then fall to 20 per cent of GDP in 2019/20.
•Contributions to the New Zealand Superannuation Fund will resume once net debt reaches 20 per cent of GDP, projected to be in 2019/20.
•Core Crown expenses have fallen from around 35 per cent of GDP in 2010/11 to a forecast 31 per cent of GDP this year. They are then expected to continue falling to below 30 per cent of GDP by 2016/17.
•Average wages expected to rise by $7,600 to almost $62,300 by 2018.
•Possible ACC levy cuts of around $480 million in 2015/16, depending on the outcome of public consultation.
Supporting children and families
The Government is prioritising its spending to ensure that children and families are among the first to benefit from a growing economy. The $500 million package includes:
•$171.8 million to boost the paid parental leave scheme. Paid leave will be extended by four weeks – starting with a two-week extension from 1 April 2015, and another two weeks from 1 April 2016. The eligibility of paid parental leave will also be expanded to include caregivers other than parents (for example, permanent guardians), and to extend payments to people in less-regular work or who recently changed jobs.
•$42.3 million to increase the parental tax credit from $150 a week to $220 a week, and increase the entitlement from eight weeks to 10 weeks, from 1 April 2015.
•$90 million to provide free GP visits and free prescriptions for children aged under 13, starting on 1 July 2015.
•An additional $155.7 million to help early childhood centres to remain accessible and affordable, meet demand pressures and increase participation towards the Government’s 98 per cent target.
•$33.2 million in 2014/15 to help vulnerable children, including eight new children’s teams around the country to identify and work with at-risk children and their families, to screen people who work with children, and to support children in care.
Early Childhood Education and Schools
Total spending of $10.1 billion in 2014/15 on early childhood, primary and secondary education reflects the Government’s determination to raise student achievement. New spending of $858 million over four years and the remainder of this year includes:
•$359 million to strengthen leadership and quality teaching across schools, as announced by Prime Minister John Key earlier this year. The investment establishes new principal and teacher roles and a new allowance to get the best principals to the schools with the highest needs.
•An $85.3 million increase in schools’ operational grants.
•$172.5 million capital and $111.5 million in operating funding for new schools and classrooms and other school property improvements including:
◦$172.5 million capital and $38.1 million operating funding for new schools and expansion on existing school sites.
◦$29.8 million on a public-private partnership development at Hobsonville Point in Auckland.
◦An additional $16.9 million of operating funding for property in the Greater Christchurch Education Renewal Programme.
◦$10.4 million to meet compensation claims to remediate leaky buildings.
◦$8.5 million to cover increased insurance premiums
•$2.5 million to extend the Computers in Homes programme for a year.
•$4.7 million for teacher aide support for students with high health needs.
•$2.4 million for the Reading Together Programme.
•$199 million additional investment in tertiary education, including $83.3 million allocated to lifting tuition subsidies in disciplines including science (8.5 per cent increase), agriculture (8.5 per cent), and selected health sciences (pharmacy 16.4 per cent and physiotherapy 12.4 per cent).
•Up to $20 million in 2013/14 and 2014/15 for a further 6,000 apprentices in the Apprenticeship Reboot programme, taking the number of places to 20,000.
•An additional $53 million over four years to establish another three Centres of Research Excellence (CoREs), bringing the total number to 10.
On average, 1,500 people a week are moving from welfare to work and nearly 30,000 fewer children are living in benefit-dependent homes than two years ago. Budget initiatives to build on this progress include:
•New funding of $100 million – on top of $188.6 million in Budget 2013 – to support people off welfare and into work including:
◦8,000 more employment and work-readiness places targeted to beneficiaries at risk of long-term welfare dependency.
◦Trialling new approaches for beneficiaries with complex needs.
•Youth One-Stop Shops providing support to young people receive an additional $8.6 million.
•$5.6 million over the next four years to help newly-arrived refugees during their first 12 months in New Zealand.
•$22 million in non-government organisations providing budgeting services.
A $1.8 billion investment in health over the next four years takes health spending next year to a record $15.6 billion.
•$1.8 billion extra over four years will help meet cost pressures and fund new initiatives including:
◦An extra $112.1 million for disability support services.
◦A further $110 million for elective surgery to continue our record. increases in the number of operations and reduce waiting times.
◦$96 million for increased home-based support services.
◦$40 million for additional support for elderly, including those with dementia.
◦$32.7 million for faster cancer treatment, including $8 million to increase the number of colonoscopies performed.
◦A further $20 million for the rheumatic fever prevention programme.
◦$17.8 million for post-graduate education and training of doctors.
◦$6.3 million to provide bilateral cochlear implants for children under 18.
◦$4 million to increase the number of renal transplants performed.
•Duty-free tobacco allowance reduced from 200 cigarettes to 50 cigarettes, in line with the allowance in Australia.
•$50 million over the next two years for the Canterbury Earthquake Recovery Authority. This brings the Government’s spending and commitments to rebuilding greater Christchurch to $15.4 billion by 2018.
•$3.5 million in 2014/15 to offer up to 1,000 beneficiaries in other regions a one-off payment of $3,000 each if they have a full-time job offer in Canterbury.
•$13.5 million over four years to continue counselling, temporary accommodation, support services and the Canterbury 0800 support line.
•Cheque duty of five cents a cheque to be abolished from 1 July 2014.
•$132.3 million over the next five years for Inland Revenue to bolster tax compliance. It is estimated this will generate a gross increase in revenue of $297.5 million over the next five years.
•$69 million for New Zealand Trade and Enterprise to expand New Zealand’s presence in China, South America and the Middle East.
•$56.8 million over four years in contestable science and innovation, taking total annual government investment to $1.5 billion by 2015/16.
•Loss-making start-up companies will be able to cash out all or part of their tax losses from R&D expenditure. All businesses will be allowed tax deductibility for R&D “black hole” expenditure that is currently neither deductible nor able to be depreciated. These two measures will return an estimated $58 million in tax to innovative companies.
Future Investment Fund
The Government’s share offer programme has provided almost $4.7 billion for investing in new public assets such as schools and hospitals. Of this total, $1 billion is allocated in Budget 2014, including:
•$200 million for health, with $67 million for a new Grey Base Hospital on the West Coast.
•$172 million to upgrade and build schools.
•$198 million for Kiwirail’s Turnaround Plan.
•$75 million for a Christchurch housing contingency.
•$40 million for Crown Irrigation to invest in irrigation schemes.
•$31 million towards Hobsonville Land Company housing development.
•Interest-free loan of $375 million to the New Zealand Transport Agency as part of $815 million of accelerated Auckland transport projects.
•$77.5 million of new operating funding and $18.2 million of new capital funding to enable MSD to work with people to find the best housing option for them, and to support those who are ready to return to the wider housing market.
•$30 million to help the community housing sector provide more homes for high-needs families.
•Duties on plasterboard, reinforcing steel and nails will be suspended immediately. Tariffs on building products will be suspended from July 1. Together, these measures aim to increase competition and improve housing affordability. Estimated to reduce the cost of building an average new home by $3,500.
•$535.5 million to strengthen the Defence Force.”