Finance Minister Bill English has delivered an election
year Budget which delivers a bigger than forecast surplus, free
doctors' visits for 400,000 more children, big cuts to ACC
levies and dangles the prospect of tax cuts in front of voters.
Mr English said the Government's much vaunted return to
surplus would be $372 million, still slender but well ahead
of the wafer thin $86 million forecast six months ago thanks
to a rosier economic outlook.
With the books back in the black and the economy gathering
steam, Mr English said this was the first Budget in six years
"to focus on managing a growing economy rather than
recovering from a domestic recession and then the global
The $1 billion in new spending is dominated by "a $500
million package of extra support for children and families''.
While that new spending includes a well flagged extension to
paid parental leave, it also features $90 million over three
years from next year to extend free doctors' visits and
prescriptions to all children under 13. Previously it was
limited to children under 6.
Health Minister Tony Ryall said the move, which takes effect
from July next year, would benefit more than 400,000 primary
school-aged children and their families.
A $172 million a year extension to paid parental leave will
initially take it from the current 14 to 16 weeks on April 1
next year, rising to 18 weeks 12 months later.
Mr English also said eligibility would be extended to "home
for life'' foster caregivers and those in part time, casual
work or with multiple employers.
The Government will also "significantly boost'' the parental
tax credit available to working families not on a benefit and
not receiving paid parental leave. It will go from $150 a
week to $200 on April 1 next year.
Mr English also flagged a $480 million cut to ACC levies from
next year including cuts to motor vehicle levies which could
cut the average private car levy by about $130 a year.
The Budget shows surpluses rising to $1.3 billion next year
and $3.5 billion after that.
New spending in subsequent Budgets would rise to $1.5 billion
next year and by 2 per cent a year after that. Mr English
said that was the upper limit for increases that would,
combined with reprioritised spending, allow for "additional
support for New Zealanders, without pushing interest rates
higher than they would otherwise be''.
Any government that raised spending by more than that, "needs
to explain the effect on interest rates'' Mr English said at
the Budget lock-up early this afternoon.
"This moderate increase will provide the Government with
future options around investment in public services and
modest tax reductions", Mr English said.
He said the Government was "not prejudging the size of any
tax reduction'' or the proportion of future operating
allowances that would go to them.
"We haven't established a view about it. No doubt there will
be a debate about that over the next months and years.''
Among the big ticket items of Government spending, health
will receive $1.8 billion in extra funding over the next four
Education receives $857 million in new spending over four
years, the including $156 million in new spending over four
years for early childhood education to keep fees
"affordable'' and encourage participation rates.
The Budget sets out how $1 billion of the $4.7 billion raised
through asset sales will be spent this year. Health will
receive $200 million of that including $67 million for the
new Grey Base Hospital on the West Coast.
Struggling state rail company KiwiRail receives yet another
$198 million for its troubled "Turnaround Plan'' including
$25 million for to pay for repairs to Cook Strait ferry
Aratere. That takes the total bill for fixing up KiwiRail to
over $1 billion since 2010-11 or $2.4 billion since 2008.
$172.5 million goes to the upgrade and repair of schools, and
irrigation projects will receive $40 million.
In addition to projects funded by asset sales cash, $375
million of new capital funding in the form of an interest
free loan will go to the New Zealand Transport Agency to
speed up $815 million worth of Auckland transport projects
aimed at reducing congestion.
However the Budget contains scant direct relief for first
home buyers, with the only new initiative being the temporary
suspension of tariffs and duties on building products which
the Government said would reduce the cost of a standard new
home by about $3500.