Budget 2015: At a Glance
Sensible, targeted investment addressing drivers of hardship, possible because of solid economic growth and responsible fiscal management.
(All figures for four years to 2018/19 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.
- Deficit of $684 m forecast for 2014/15, moving to a surplus of $176 m in 2015/16 and growing to $3.6 b in 2018/19.
- Net core Crown debt is forecast to peak at 26.3 per cent of GDP in 2015/16, and then fall to 19.7 per cent of GDP in 2020/21.
- Government committed to $1 b new operating allowance in Budget 2015 and 2016, increasing to $2.5 b in Budget 2017 to allow for modest tax cuts before returning to $1.5 b a year in Budget 2018 and growing thereafter at 2 per cent per Budget.
- Core Crown expenses have fallen from 34.1 % of GDP in 2008/09 to an expected 30 % in 2015/16 and are expected to continue to fall
- Average wages expected to rise to $63,000 a year, by mid-2019 – an increase of 12.5 per cent.
- Unemployment forecast to fall below 5 per cent in 2016.
- Provision for annual ACC levy cuts of $375 million in 2016 and a further $120 million in 2017, depending on the outcome of public consultation.
Child hardship package
A $790 million package to reduce hardship among children in New Zealand’s poorest families includes:
- Most sole parents, and partners of beneficiaries, will have to be available for part-time work once their youngest child turns three, rather than five as now.
- All beneficiaries with part-time work obligations will be expected to find work for 20 hours a week, rather than 15 hours as now.
- Benefit rates for families with children will rise by $25 a week after tax, which is first time since 1972 that core benefit rates have been increased by more than inflation.
- Student Allowance rates for families with children will also increase by $25 a week
- Beneficiaries receiving Sole Parent Support will have to reapply for their benefit every year – as people receiving Jobseeker Support already do
- Low-income working families earning $36,350 or less a year, before tax, will get $12.50 extra a week from WFF, and some very low-income families will get $24.50 extra.
- Working families earning more than $36,350 will get extra from WFF, but it will be less than $12.50 a week, with the exact amount dependent on their family income.
- Families earning more than $88,000 a year will get slightly lower WFF payments, with the average reduction being around $3 a week.
- The Childcare Assistance rate for low-income families will increase from $4 an hour to $5 an hour for up to 50 hours of childcare a week per child.
- The exact impact of the child hardship package on any given family will depend on their individual circumstances, including the types of supplementary assistance they receive
In addition to the child hardship package, the Budget also includes:
- $36 million to support the Children’s Action Plan, including funding for new and existing Children’s Teams.
- $23 million to bolster the work of Child, Youth and Family.
- $8 million to help vulnerable students participate more in education or training, and lift achievement
Early Childhood Education and Schools
Total spending of $10.8 billion in 2015/16 on early childhood, primary and secondary education. New operating spending of $442.9 million includes:
- $74.9 million for early childhood education to enable more children to attend ECE from an earlier age, and for more hours.
- $62.9 million over four years for special education.
- Schools’ operation grants will be boosted by 1 per cent, at a cost of $42.3 million.
- 300 extra Trades Academies places will be added to support students to achieve NCEA Level 2
In addition, the Budget provides $243.8 million capital to build seven new schools and kura kaupapa, expand four existing schools and build an additional 241 classrooms at existing schools.
Budget 2015 provides a $112.3 million operating and $1 million of capital to invest in tertiary education. This includes:
- $85.8 million for targeted increases in tuition rates at degree level and above.
- $11.4 million for more engineering places and for activities to raise the profile of engineering.
- An $8.4 million contingency to grow Māori and Pasifika Trades Training (up to 500 new learners per annum from 2016)
- $5.9 million to support an increase in Trainee Medical Intern Grants.
- $900,000 in operating and $1 million reprioritised capital to expand the Youth Literacy and Numeracy Assessment Tool.
In addition to the $790 million for children at risk of hardship in low-income families, new measures include:
- $8.5 million to help reduce long-term welfare dependency - providing up to 10,000 extra places for intensive case management, prioritised for people with health conditions and disabilities, and an extension of the 3K to Christchurch scheme.
- $15.4 million will be invested in the Limited Services Volunteer programme, run by the New Zealand Defence Force.
- $8.6 million over the next four years, and $1.5 million in 2014/15, for the Out of School Care and Recreational Subsidy.
An additional $1.7 billion for New Zealand’s public health services over the next four years, increasing the Government’s total health investment to $15.9 billion in 2015/16.
- $320million per year for DHBs ($1.3 billion over four years) for extra services and to help meet cost pressures and population changes.
- $98 million to provide more New Zealanders with timely elective surgery, and to improve the prevention and treatment of orthopaedic conditions.
- $12.4 million to extend the bowel cancer screening pilot
- $76.1 million to help hospices expand palliative care services.
- $49.8 million to continue funding Whanau Ora navigators to help families tackle problems together, develop whanau plans and access a range of services.
- $35.3 million to improve housing outcomes for whanau Maori, including $22.8 million for the Maori Housing Network Fund [cross reference with housing].
- $12.8 million for the new Te Ture Whenua Maori Network which wil help Maori land owners improve the productivity of their land.
The Budget this week will confirm the following requirements will take effect from 1 October this year:
- Buyers and sellers of all property must provide a New Zealand IRD number as part of the property transfer
- Non-residents must also provide their home country tax identification number, along with identification requirements such as a passport.
- A new “bright line” test will be introduced, meaning gains from all residential property purchased after 1 October and then sold within two years are taxed - unless the property was the seller’s principal place of residence, inherited from a deceased estate or sold as part of a relationship property settlement.
The Government will also investigate introducing a withholding tax when non-residents sell residential property, to be introduced mid-2016.
From 1 July, IRD will receive an extra $74 million for additional enforcement of property investors’ tax obligations.
In addition, Budget 2015 also provides:
- $35 million for social housing, plus $29.3 million previously earmarked for capital grants through the Social Housing Fund
- $35.3 million to improve housing outcomes for whanau Maori
An additional $107.8 million in operational funding for Canterbury’s earthquake recovery takes the Government’s total contribution to the Canterbury rebuild to $16.5 billion.
This will support land clearances to make way for Anchor Projects and preparation of land before those constructions begin. It also covers the operational cost of owning and developing assets that have been purchased by the Crown, and the cost of preparing these assets for future sale or vesting.
Links to relevant summaries of Budget 15 decisions.
http://www.beehive.govt.nz/release/790m-package-children-poorest-families ( five fact sheets are at bottom)
(An $8.4 million contingency to grow Māori and Pasifika Trades Training (up to 500 new learners per annum from 2016).
Hon Flavell PR Releases: