The budget announcements last week had a focus on reducing our borrowing and getting the bank balance back in the black. Pun intended the ‘Key’ points were:
No more new spending: This budget takes $5.2b from existing government spending offering up $1.2b a year over the next four years for new operating spending. The belt was tightened on KiwiSaver, Working for Families and students loans and distributed back through health, education and focused on reducing deficit. A delicate dance within departments will create a reshuffle of the allocation of $1.5b. The third budget announcement from Bill English sees Health and Education raising a glass!
The Canterbury Earthquake saw the Earthquake Commission and ACC shelling out a tasty measure of $3.3b of the $8.8b price tag- plans to tackle this expense are included in this announcement. A government Canterbury Earthquake Recovery Fund of $5.5b over six years covers the Government’s infrastructure, assets and emergency response costs, $740m comes from existing funding in the budget, from a new Canterbury Earthquake Kiwi Bond with the difference from other government bonds.
In order to raise around the $5b – $7b mark partial assets sales in the form of state owned energy companies will be offered up. A reduction in the shareholding on Air New Zealand will also play a part in raising these funds.
Purse strings will get the pull on KiwiSaver, Working for Families and Student Loans.
– For KiwiSavers that means a halving of the member tax credit while their employers will now pay employer superannuation contribution tax. From 2013 employees will have to contribute at least 3 percent (up from 2 percent) while bosses will have to pay the same amount more.
– Working for Families changes will revise abatement thresholds so wealthier people are less likely to be eligible.
– Student loans will be restricted for those with overdue payments and people aged over 55 will only be able to get loans for tuition fees. Part-timers will be able to borrow less and the repayment holiday for students who go overseas will be reduced to one year from three.
The big winner is the Health sector gaining $1.7b new operating funds and $40m capital funding over 4 years. Education is popping the Champagne with $1.3b new operating and $109b capital funding.
So a fairly well shaped revamp to sharpen the coffers in the wake of a mighty disaster and couple of hard years. Lets hope this budget reshuffle is the start of getting back on track!