Budget 2016: Overview 27 May 2016
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Budget 2016: Overview
Budget 2016 is a forward-looking Budget that
invests in a growing economy
(All figures for
four years to 2019/2020 unless otherwise stated)
Looking ahead to the results of responsible
economic management
• Economic growth is
forecast to average 2.8 per cent over the five years to June
2020.
• By mid-2020, the unemployment rate is
expected to drop to 4.6 per cent.
• Over 200,000
more people are in work now than three years ago. Treasury
forecasts another 170,000 will be created by 2020.
•
By mid-2020 the average wage is expected to rise to $63,000
a year – that is $16,000 a year more than when National
first came into office.
• Modest operating
balance before gains and losses (OBEGAL) surpluses are
expected in 2015/16 and 2016/17, increasing to a forecast
$2.5 billion the following year, and $6.7 billion in
2019/20.
• Core Crown expenses have fallen from
almost 34 per cent of GDP in 2008/09 to 29.7 per cent of GDP
this year. They are expected to remain under 30 per cent
thereafter.
• Net debt is expected to peak at
25.6 per cent of GDP next year and to fall to 19.3 per cent
in 2020/21.
• Net new operating spending in
Budget 2016 is $1.6 billion per year on average.
•
Net new capital spending for investment in infrastructure
and other public assets is $1.4 billion. In addition,
significant capital spending will be funded from
reprioritising capital, taking the total new capital spend
in Budget 2016 to $2.6 billion.
Innovative
New Zealand package
The $761 million Innovative
New Zealand package will encourage entrepreneurship, skills
and economic growth. It includes:
• A $411
million investment in science and innovation, taking the
Government’s total science and innovation investment to
$1.6 billion a year by 2019/20.
• $257 million in
more tertiary education and apprenticeship programmes,
particularly in science, engineering and agriculture.
•
Regional economic development support of $94 million to
unlock business opportunities and benefit regional
communities.
SME-friendly tax
package
Further support for businesses –
particularly small businesses – is provided through a $187
million SME-friendly tax package.
• Provisional
tax will be reformed, with a new pay-as-you-go option
allowing small businesses to pay tax as they earn income
from 1 April 2018.
• Use-of-money interest will
be eliminated or reduced for most taxpayers.
•
Contractors will be able to more easily choose a withholding
tax rate that suits their needs.
• The ongoing 1
per cent monthly penalty will be scrapped from1 April 2017
for new debt – although immediate penalties and interest
charges for late payments will continue.
Infrastructure
A $2.1 billion
infrastructure package continues the Government’s
commitment to build a stronger, more productive economy. It
includes:
• Education - $883 million to deliver
480 new classrooms, nine new schools, two school expansions
and the relocation and rebuilding of three schools and a
Kura. This includes $168 million for the Christchurch
schools rebuild programme.
• Transport - $115
million for the Accelerated Regional Roading Programme for
projects in Gisborne, Marlborough and Taranaki, as well as
$190 million to support KiwiRail.
• Tourism -
additional funding for tourism infrastructure. This includes
$25 million to upgrade the New Zealand Cycle Trail, and $12
million to help communities build smaller-scale
infrastructure projects, like restrooms and carparks.
•
Inland Revenue - $857 million for Inland Revenue’s new tax
administration system, replacing one that is a quarter of a
century old.
Housing
The Budget
provides extra funding for housing, including:
•
$200 million for at least 750 more places for individuals
and families with the most pressing housing needs, as well
as meeting the costs of rising rents.
• $42
million will support 3,000 emergency housing places a year
and establish a new emergency housing Special Needs
Grant.
• $36 million to ensure more families live
in warmer, drier and healthier homes.
• A further
$100 million is provided to free up surplus Crown land for
housing developments in Auckland. In addition, the
Government will soon issue a National Policy Statement on
Urban Development, to direct councils to allow more housing
development.
Environment
•
The Emissions Trading Scheme one-for-two subsidy introduced
during the global financial crisis will be phased out. This
will positively impact the operating balance by $356 million
over the next four years.
• A $100 million
Freshwater Improvement Fund will help clean up New
Zealand’s rivers, lakes and aquifers over the next
decade.
• An additional $16 million is provided
to tackle wilding pines in the highest priority
areas.
• The Battle for Our Birds programme –
New Zealand’s largest pest control operation – receives
$21 million this year to fight an expected pest population
boom caused by a heavy beech seeding.
Primary sector
The primary sector
receives $70 million to help eliminate bovine
tuberculosis.
The Government’s goal is to eradicate TB
from cattle and deer by 2026, and from infected wildlife in
New Zealand by 2055.
Social Investment
Package
A $652 million Social Investment package
will help the most vulnerable New Zealanders by intervening
early and investing in public services tailored to their
needs. It includes:
• $200 million for a
system-wide reform of services and support for vulnerable
children and young people.
• $61 million to
extend the Youth Service to 19-year old parents, and 18 and
19-year old job-seekers at risk of long-term welfare
dependency.
• $50 million to reduce barriers to
employment, including for people with complex health
conditions who would otherwise spend significant time on a
benefit.
• $43 million for schools to increase
support for around 150,000 students most at risk of
educational failure.
• $40 million for Whanau
Ora to support around 2,500 more whanau and families in
areas such as managing health and disability issues,
improving financial literacy and reducing household
debt.
• $36 million for healthy housing
initiatives (as set out in the Housing section
above).
• $20 million to support offenders when
they leave prison.
Health
The
Government will invest $16.1 billion in health in
2016/17.
Over the next four years, $2.2 billion will be
provided for new health initiatives and to meet demand
pressures. This includes:
• $1.6 billion for DHBs
to invest in services, meet population growth and deliver
better results.
• $124 million for Pharmac to
provide more New Zealanders with access to new
medicines.
• $169 million for disability support
services.
• $96 million to provide more elective
surgery.
• $73 million for primary health care.
This includes extra support for the free doctors’ visits
and prescriptions for under 13s that we announced in Budget
2014.
• $39 million to start the roll out of a
national bowel screening programme.
• $15 million
to support air and road ambulance services.
• $12
million to increase support for primary care and social
services to enable people to access mental health help
earlier.
• $12 million to expand a successful programme
which provides intensive alcohol and drug support for
pregnant women.
• Tobacco excise duty will rise
by 10 per cent on 1 January each year for the next four
years.
Education
The Government
will invest $11 billion in early childhood, primary and
secondary education in 2016/17. Together, they will receive
an extra $1.4 billion over this year and the next four
years, including:
• $397 million to meet growing
demand for early childhood education and provide places for
a further 14,000 children.
• $883 million for new
school property (as covered in the Infrastructure
package).
• $43 million for schools to target
students most at risk of under-achieving, instead of an
across-the-board increase in operations grants.
•
$42 million for students with high and special educational
needs.
• Support for around seven new Partnership
Schools in 2018 and 2019.
Maori and
Pasifika
• $40 million for Whanau Ora
(as covered in the Social Investment package).
•
Almost $10 million for extra Maori and Pasifika Trades
Training. This funding, from a Budget 2015 contingency, will
increase the number of training places to 3,400 next year
– up from 1,200 in 2014.
• $35 million for Te
Reo Maori language initiatives.
• $6 million for
Pacific peoples initiatives, such as helping young Pacific
people in Auckland into work, education or training.
Justice
The Justice sector receives
$837 million over the next four years, plus $56 million in
2015/16 to prevent crime, rehabilitate offenders and reduce
reoffending. This includes:
• $299 million for
Police over the next four years, which includes $49 million
from a Budget 2015 contingency, primarily to meet wage
increases.
• $208 million for a number of justice
sector initiatives, including addressing family violence and
ensuring the justice system better caters for victims of
crime.
• $356 million for Corrections over the
next four years to reduce reoffending and meet recent growth
in the prison population.
o This funding includes $12
million to manage offenders returning from overseas and $9
million to continue 24-hour GPS electronic monitoring for
the highest risk offenders.
Fire Service and
Civil Defence
• $303 million to combine
urban and rural fire services into one organisation from the
middle of next year. This will come from a proposed increase
in the fire levy from 2017/18, as well government
funding.
• $6 million for the Ministry of Civil
Defence and Emergency Management to ensure New Zealand is
well prepared for future natural disasters.
Defence and security
• $301
million for the New Zealand Defence Force so it can
concurrently undertake domestic, regional and international
security tasks.
• $179 million for the New
Zealand intelligence community to ensure it can provide
essential intelligence and security services and remain
effective in a rapidly-evolving environment.
•
$20 million for a new national Computer Emergency Response
Team to combat cyber-attacks and cyber-crime.
Christchurch
regeneration
Taxpayers’ financial commitment
to Christchurch regeneration now stands at more than $17
billion - around $700 million more than signalled in the
last Budget. Nearly six years after the first earthquake,
progress includes:
• Almost 100,000 cash
settlements have been made by EQC and it has resolved more
than 60,000 land claims.
• Around 68,000 homes
have been repaired in the Canterbury Home Repair
Programme.
• 97 per cent of the horizontal
infrastructure repairs have been completed in the
Christchurch CBD.
• $3.9 billion of public sector
projects completed or under construction, with almost $800
million more forecast to begin in the next six
months.
• Three anchor projects have been
completed in Christchurch – Hagley Park cricket oval, the
bus interchange and the Margaret Mahy family
playground.
• Work is progressing on the Metro
Sports Facility and the Convention Centre.
Other initiatives
• $12
million for the New Zealand Symphony Orchestra, Royal New
Zealand Ballet and Te Matatini Kapa Haka Aotearoa.
•
$16 million for High Performance Sport New Zealand to
support athletes and further our medal prospects at the
Tokyo Olympics in 2020.
• $4 million for Drug
Free Sport New Zealand.
• $41 million for the
SuperGold card scheme to provide certainty for more than
670,000 cardholders across New
Zealand.
ENDS
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