Budget 2016: Overview
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 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.
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.
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.
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.
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.
• 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.
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.
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 Whānau Ora to support around 2,500 more whānau 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.
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.
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.
• $40 million for Whānau Ora (as covered in the Social Investment package).
• Almost $10 million for extra Māori 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 Māori language initiatives.
• $6 million for Pacific peoples initiatives, such as helping young Pacific people in Auckland into work, education or training.
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
• $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.
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.
• $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.