New Zealanders will welcome the family focus of today's
Budget, Prime Minister John Key says.
Finance Minister Bill English delivered an election year
Budget which includes a bigger than forecast surplus, free
doctors visits for 400,000 more children, and big cuts to ACC
levies. It also dangles the prospect of tax cuts in front of
Finance Minister Mr English said the Government's much
vaunted return to surplus would be $372 million, still
slender but well ahead of the wafer thin $86m 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".
Speaking to reporters after his Budget speech, Prime Minister
John Key said the Budget was "a reflection of the fact that
the Government has worked hard with the people of New Zealand
to get back into surplus, and it does give us some room".
"So it's natural that the first place and the focus of
attention would be on families, and particularly vulnerable
"I think there's a lot of New Zealanders tonight who'll say
free doctors visits, free prescriptions for under 13s is
welcome, paid parental leave - an extension of the scheme
which is affordable - and just generally spending in the
areas that are going to support families and ensure they can
carry out the lifestyle that they want."
But Labour Leader David Cunliffe said the Budget "lacks
vision, it lacks substance, it lacks direction, it reinforces
privilege, it short changes New Zealanders, it does nothing
to solve the housing crisis; this is a fudge-it Budget that
takes New Zealand nowhere".
National had borrowed from Labour's playbook with policies
including an the paid parental leave extension,
"unfortunately for New Zealanders they haven't done it very
well", Mr Cunliffe said.
"These are smaller narrower benefits and if New Zealanders
want the full package, it's very simple - vote Labour."
While Mr Cunliffe said National had plundered Labour's ideas,
"fortunately we have many more".
Apart from the well-flagged extension to paid parental leave,
the Government's $500m package for children and families also
features $90m 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 six.
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 $172m 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 a year 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 $480m 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 $1.3b next year and
$3.5b after that.
New spending in subsequent Budgets would rise to $1.5b 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."
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 $1.8b in extra funding over the next four years.
Education receives $857m in new spending over four years,
including $156m in new spending over four years for early
childhood education to keep fees "affordable" and encourage
The Budget sets out how $1b of the $4.7b raised through asset
sales will be spent this year. Health will receive $200m of
that including $67m for the new Grey Base Hospital on the
Struggling state rail company KiwiRail receives yet another
$198m for its troubled "Turnaround Plan", including $25m to
pay for repairs to Cook Strait ferry Aratere. That takes the
total bill for fixing up KiwiRail to over $1b since 2010-11
or $2.4b since 2008.
Irrigation projects will receive $40m, and $172.5m goes to
the upgrade and repair of schools.
In addition to projects funded by asset sales cash, $375m of
new capital funding in the form of an interest-free loan will
go to the New Zealand Transport Agency to speed up $815m
worth of Auckland transport projects aimed at reducing
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.
- By Adam Bennett of the NZ Herald