Health, education big Budget winners

Health, education and social services are the winners in a Budget which contains few surprises but also few contentious moves.

Bill English
Bill English

Auckland housing also features prominently in the National-led Government's eighth Budget, released this afternoon. There is no rescue package for first-home buyers but funding will help free up land for housing developments in Auckland and open up more social housing places for the most desperate families.

The biggest surprise occurred outside Parliament, where a security threat closed streets outside the Beehive and delayed the Finance Minister Bill English's Budget speech. In a protest which appeared unrelated to the Budget, a man was arrested after threatening to light a vehicle on fire on Parliament's forecourt.

As promised, the Government's spending is firmly focused on keeping up with rising population numbers.

"This is a Budget that invests in a growing economy," Mr English said.

New Zealand's population growth has been driven by high net migration, which was now expected to peak at 70,700 in June.

As a result, public infrastructure is one of the key themes in the Budget, and there is extra money for schools, hospitals, housing and roading to meet the demands of population growth.

There are no controversial moves by the Government, though smokers will feel the sting of four annual tobacco tax hikes beginning next year. The price of a pack of cigarettes will rise from $20 now to $30 in 2020.

At the heart of Budget 2016 is big spending on healthcare, in particular a hike in funding for DHBs from $320 million to $1.6 billion over four years.

Included in the record $16.1 billion spending on health is funding for a long-awaited national bowel screening programme and a boost in funding for hip, knee and joint operations.

The funding boost is just enough to keep up with the pressure on the sector.

In the next year, an extra $568 million will be spent on health - just short of the $600 million which is required to keep pace with population growth and other pressures on the health system.

Nine new schools and 480 classrooms will be built around the country to respond to "the growing number of children turning up at our schools", Mr English said. Seven of the schools will be public-private partnerships.

Finance Minister reads the Budget and Prime Minister John Key looks on at Parliament this afternoon. Photo by Getty
Finance Minister reads the Budget and Prime Minister John Key looks on at Parliament this afternoon. Photo by Getty

Funding to free up land in Auckland for housing developments has been doubled to $100 million. Based on past funding, that could produce up to 2000 new homes in Auckland, some of which must be sold for $550,000 or less.

A boost in social housing investment will create 750 more places for families on the state house waiting list. A large portion of the investment was directed at Auckland, where the overheated property market has had an impact on poorer families.

The money earmarked for transport went mostly into roads and rail, including $115 million for regional roading projects and $190 million in new capital funding for Kiwirail.

As signalled by Finance Minister Bill English, the Budget builds on the Government's new "social investment" approach to helping New Zealand's most vulnerable families.

Mr English described the social initiatives as "data-driven investments that determine when and how to intervene to change lives for the better."

Andrew Little in the House this afternoon. Supplied photo
Andrew Little in the House this afternoon. Supplied photo

The largest part of the social funding would go towards previously-announced reforms of Child, Youth and Family.

The other key theme in the Budget was innovation. Nearly $800 million has been invested in science and innovation measures, the largest portion of which has been put into contestable funds and research.

Spending in the justice sector is focused on keeping up with wage and prison population pressures. More spaces will be found within the existing prison network to keep up with a larger prison muster, along with more prison staff and support for offenders leaving jail.

The environmental measures in the Budget include a new $100 million fund to help clean up New Zealand's rivers and streams. As previously indicated by Climate Change Minister Paula Bennett, a "2-for-1" subsidy for carbon credits will be scrapped, meaning businesses will have to cover the full costs of their greenhouse gas pollution.

Opposition parties have reacted predictably to the Budget.

Labour leader Andrew Little told the House the Government has "lost touch" over the past eight years and today's Budget was "scratched out patchwork half-measures designed to look like economic strategy."

Mr Little said the Budget has failed to deliver for most New Zealanders. 




Key points

• $2.2 billion more in health, including $1.6 billion for district health boards over 4 years.

• $1.44 billion more in education, including $882.5m for classrooms and nine new schools. But a freeze on many schools' operational funding as $43m is instead targeted at 150,000 at-risk children.

• $39 million to roll out a national bowel screening programme.

• $258 million to provide more at least 750 more social housing places in Auckland.

• $100 million to free up more Crown land in Auckland for housing.

• Net debt forecast to peak at 25.6% of GDP next year and drop to 19.3% by 2020/21 - hitting Finance Minister Bill English's target of 20% by 2020.

• Forecast surplus of $668 million in 2015/16, rising to $5 billion by 2019.

• Total new spending of $1.6 billion a year, plus an extra $480 million freed up from cuts or underspends elsewhere.

• Tobacco tax to increase by 10 per cent a year every year - a packet of cigarettes will rise from $20 to $30 by 2020. Forecast to raise $425m over 4 years.

• Treasury forecasts economic growth of 2.8% over next five years and unemployment to drop below 5% in 2018. Inflation forecast to stay lower than expected for longer, rising to 2% in 2017.

- by Isaac Davison

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