Budget delivered, especially for working families

Steven Joyce has delivered his first budget. It will get dissected and analysed by media, and criticised by opposition parties, but it is likely to be a budget designed to tempt voters in election year.

Surplus: Treasury forecasts a $1.6bn surplus in 2017, climbing to $7.2bn in 2021.

Family Incomes Package

The Government’s $2 billion per year Family Incomes Package will make changes to tax thresholds, Working for Families and the Accommodation Supplement to help Kiwi families get ahead.

Income tax: The $14,000 tax threshold is raised to $22,000 and the $48,000 threshold to $52,000. The government estimates this will mean $11 a week more for people in the lower threshold and up to $20 a week more for those in the higher band.

Family incomes: Working for Families tax credit rates for children under 16 go up. The eldest child credit is a maximum $101.98 a week and $91.25 for every subsequent child. But the point where tax credits start reducing kick in at a lower income level ($35,000 compared to $36,500 previously).

Independent earner tax credit: The credit for people earning from $24,000 to $48,000 and not receiving a benefit, superannuation or Working for Families is scrapped. It was worth up to $10 a week.

From 1 April 2018, the Package:

  • Increases the $14,000 income tax threshold to $22,000, and the $48,000 tax threshold to $52,000.
  • Discontinues the Independent Earner Tax Credit.
  • Increases the Family Tax Credit rates for young children to the level of those for children aged 16 to 18.
  • Increases the Accommodation Supplement maximum amounts to reflect 2016 rents and makes some changes to Accommodation Supplement areas.
  • Increases weekly Accommodation Benefit payments by up to $20 for eligible Student Allowance recipients.

Housing costs: The accommodation supplement goes up by an average $36 per week. More areas are eligible for the higher payments; for example, people living in tourist hotspots such as Queenstown, Wanaka and Tauranga, and in all Auckland suburbs, will join central Aucklanders in getting the top payments.

Family Incomes Package Fact Sheets – More information about the $2 billion Family Incomes Package.

Family Incomes Calculator –  How does the Family Incomes Package affect me?

Investing in a Growing Economy

A $935 million package through the Business Growth Agenda to keep building a sustainable growing economy.

  • $372.8 million for the second round of the Government’s Innovative New Zealand programme. It includes:
  • $203 million for Science and Innovation
  • $31.1 million for Economic Development
  • $132.1 million for Tertiary Education, Skills and Employment
  • $30.5 million to upgrade and modernise the fisheries management system.
  • $18.4 million to further strengthen the biosecurity system and protect our borders.
  • $4 million to progress New Zealand’s climate change work programme to meet Paris Agreement 2030 emissions targets.
  • $8.7 million for initiatives to support pay equity dispute resolution and Holidays Act compliance.

 

Public Services for a Growing Country

A $5.4 billion Operating and $1.4 billion Capital package to deliver better public services for a growing country.

The Government is allocating $7 billion in Budget 2017 to sustain and expand public services, including:

  • $3.9 billion in New Zealand’s Health Sector, including $1.76 billion in direct new money for District Health Boards, $1.54 billion for care and support workers plus increased investments in disability support services, ambulance services, pharmaceuticals, mental health services, elective surgery and primary health care.
  • $1.1 billion in New Zealand’s Education Sector, including $767 million for funding roll growth and demand, a $61 million increase in operational grant funding for schools, and $35 million in targeted additional funding for early childhood centres.
  • $1.2 billion for law and order, including for a 10 per cent increase in police staff numbers and funding to meet increased demand for justice, courts and corrections services, plus new initiatives in burglary prevention, reducing youth reoffending, and supporting at-risk prisoners.
  • $803 million for other social services, including $184.7 million for social housing services, $64.4 million for supporting people into employment, and $424.4 million for the new Ministry for Vulnerable Children Oranga Tamariki.

Budget 2017 includes $321 million in funding for fourteen cross-agency Social Investment initiatives that are designed to tackle long term social issues for vulnerable New Zealanders.

Mental health: $224m over four years for mental health services including for a fund to trial new addiction and mental health treatment approaches, $11.6m to help Corrections manage prisoners at risk of self harm.

Health: $3.9bn for health services bringing the total budget to $16.77bn in 2017/2018.

Social Investment

Budget 2017 continues this approach with a $321 million Social Investment Package.

Infrastructure for a Growing Economy

A $4 billion package of new capital investment to help build the public infrastructure needed to support growth.

The Government is allocating $4 billion in new capital infrastructure spend in Budget 2017 to build the necessary infrastructure for a growing economy, including:

  • $812 million for the reinstatement of State Highway One north and south of Kaikōura.
  • $450 million for rail infrastructure and rolling stock for KiwiRail’s rail freight business, $436 million for the first stage of Auckland’s City Rail Link, and $98.4 million for upgrades to Wellington’s commuter rail network.
  • $392.4 million for six new schools, two school expansions, 11 special education satellite units, and 305 additional classrooms nationwide.
  • $150 million in additional capital towards the new building programme for hospitals around New Zealand.
  • $576 million for the Defence Force for new equipment and the commencement of the upgrading of the Defence Estate.
  • $763.3 million for new prison capacity around New Zealand.
  • $100 million to expand the Government’s programme to release Crown land for housing development around the country.
  • $63 million for investing in new water storage infrastructure in regional New Zealand.

http://www.radionz.co.nz/news/national/331570/budget-2017-at-a-glance

 

Budget day

The national Government’s ninth and Steven Joyce’s first budget will be delivered this afternoon.


Hon Steven Joyce, Minister of Finance

The Minister of Finance will deliver the Budget Speech – the Statement introducing the Appropriation (2017/18 Estimates) Bill in the House of Representatives – at approximately 2pm on Budget Day, Thursday, 25 May 2017.

Release of Budget Material

Budget material will be released here at 2pm on Budget Day.


My prediction – the Government will claim it is a ‘just right’ Goldilocks budget, while opposition parties will claim it is a three bears budget – too hot, too cold, too lumpy and too smooth.

See The budget drip feed

Labour targeting social and infrastructure deficits, not financial

Finance spokesperson Grant Robertson says that a Labour government would target infrastructure deficits and social deficits’ and revise the Government targets on lowering financial deficits.

NZ Herald: Debt targets to be revised under Labour-led Government says Robertson

National increased the debt as a result of the global financial crisis and the Christchurch earthquakes from 5.4 per cent of gdp in 2008 to 24.3 per cent now. The deficit peaked at a record $18.3 billion in 2011.

The current target of reducing net debt to 20 per cent of gdp by 2020 will be replaced by getting it down to 10 to 15 per cent by 2025, Joyce recently announced.

But Robertson says that Labour will have a different priority and will revise that.

If Labour’s Grant Robertson is the next Finance Minister he will ditch the new ambitious net debt target set by Steven Joyce as part of the 2017 Budget or the current target.

“We believe there are infrastructure deficits and social deficits that are going to need some investment before we can get to the 20 per cent target,” Robertson said.

“We will review and revise those targets once we are in Government and we’ll see where we get,” said Robertson.

“The last time Labour was in office we got debt down close to zero so of course we are in favour of reducing debt.”

He said the numbers Joyce had “plucked out” for the 2025 target was where Treasury’s longer term forecasts were going anyway.

Greens are on the same page as Labour. This was been written into the Labour-Green fiscal responsibility code.

The wild card is Winston Peters.

Meanwhile New Zealand First leader Winston Peters says the Government will present a surplus on Thursday only because it has underfunded many public services including in health, education, police, conversation and housing.

“The Government will have to explain how there is a surplus after addressing all the reasonable demands that need money spent on them,” he said.

“If this Thursday’s Budget does not do that, then claims of a surplus will be without credibility, plausibility or integrity.”

What that means in practice, and whether Peters will come out of coalition negotiations with credibility, plausibility or integrity, won’t be known until late September at the earliest.

 

The budget drip feed

The actual 2017 budget will be presented to Parliament on Thursday next week, but the Government has been drip feeding spending announcements over the last couple of weeks.

The days of massive giveth and taketh pronouncements on budge night are so last century. The state of the ‘books’ are fairly well known these days, and announcements of most of the smaller spending decisions are done in advance, presumably to try to maximise publicity leading up to an election.

There will be a few ‘surprises’ or speculations confirmed.The Government will want some good news to come out of their ninth budget, albeit now with a new Minister of Finance, Steven Joyce.

There will be interest in whether tax rates are tweaked slightly or not. Opposition parties will say there should be no cuts but they aren’t big enough.

Budget 2017

 On Thursday 25 May, Finance Minister Steven Joyce will deliver the National-led Government’s ninth Budget.Budget 2017 will invest in the infrastructure and public services needed for a growing country while…

Recent spending and budget announcements:

NZ to provide $1.3m for Fiji climate conference

Climate Change Minister Paula Bennett and Foreign Minister Gerry Brownlee have today announced that New Zealand will provide $1.3 million to support Fiji’s presidency of the United Nations Climate…

$6.7 million Redevelopment for Kaikorai Primary School

Kaikorai Primary School in Dunedin is set to benefit from a $6.7 million redevelopment as part of the Government’s commitment to modernise school infrastructure…

Step closer for new school for Syrian children

Foreign Minister Gerry Brownlee has welcomed the signing of a letter of commitment between New Zealand and Turkey which will see $1.3 million provided for a new school…

Multi-million dollar safety upgrade for Lyttelton Tunnel

Transport Minister Simon Bridges today announced work is set to begin on a multi-million dollar fire deluge system that will improve safety and reduce the risk of lengthy closures…

Govt $333m Urban Cycleways Programme achieves halfway point

Transport Minister Simon Bridges today marked the halfway point for the Government’s $333 million Urban Cycleways Programme (UCP) with the completion of a section on the Little River Link cycleway.

Budget 2017: Irrigation investment to better manage fresh water

Additional grant funding of $26.7 million over the next three years plus a capital boost of $63 million towards irrigation investments in Budget 2017 will deliver economic and environmental benefits…

Taranaki walk to support economic development

A $3.4 million investment into the Taranaki Crossing is part of the Government’s plan to boost growth in Taranaki, Economic Development Minister Simon Bridges and Conservation Minister Maggie Barry say.

Key transport project for Taranaki launched

Transport Minister Simon Bridges today officially launched the Awakino Gorge to Mount Messenger Programme in Mokau.The $135 million programme, part of the Government’s Accelerated Regional Roading Programme, is aimed at…

Budget 2017: $5.2m to fund more teachers in priority subjects

Education Minister Nikki Kaye has announced that Budget 2017 will commit $5.2 million of operating funding over the next four years to expand the innovative teacher training programme, Teach First…

Govt to build 34,000 new houses for Auckland

The Government today has announced a Crown land and building programme that will see tens of thousands of new houses built in Auckland over the next decade. Social Housing Minister…

Budget 2017: $21m to Battle for our Birds

Conservation Minister Maggie Barry says DOC will fight this year’s beech forest mast year increase in rat and stoat numbers with a $21.3 million war chest from Budget 2017 for…

NZ provides further $5m in humanitarian aid

New Zealand will provide a further $5 million in relief assistance to pressing humanitarian crises across Africa and the Middle East, Foreign Minister Gerry Brownlee has announced.

Budget 2017: Double crewing for road ambulance

Budget 2017 invests an additional $59.2 million over four years to ensure all road ambulance call outs are double crewed, Health Minister Jonathan Coleman, Associate Health Minister Peter Dunne and..

Budget 2017: $303.9m for New Zealand Screen grants

Budget 2017 will see $303.9 million allocated to support the continuation of the New Zealand screen industry production grants, both globally and domestically, say Economic Development Minister Simon Bridges…

Budget 2017: $76m for DOC tourism infrastructure

The Government will invest $76 million through Budget 2017 on new and upgraded tourism infrastructure for the Department of Conservation as part of a $178 million tourism infrastructure package, Conservation…

Budget 2017: $178m package for tourism infrastructure

Tourism Minister Paula Bennett has today announced a new $102 million Tourism Infrastructure Fund which has been launched alongside $76 million in new funding for our most important tourism asset,…

Budget 2017: $74.6m to further grow business R&D

Science and Innovation Minister Paul Goldsmith has today announced an additional $74.6 million in funding through the Innovative New Zealand programme in Budget 2017 to meet the growing demand for…

For and against Labour’s housing policies

Andrew Little announced a range of policies trying to address housing issues at Labour’s Congress yesterday.

NZ Herald: Labour to end tax breaks for landlords and property investors

He said Labour will:

  • Ring-fence losses on rental properties so they can no longer be used for tax breaks on other income. It will mean losses can only be applied to income from housing.
  • Use the estimated $150 million in increased taxes for $2000 grants toward insulation and heating.
  • Negative gearing will be phased out over five years.

The tax breaks benefited property speculators and those on high incomes and were heavily used by foreign buyers.

“This will create a level playing field for home buyers and help families get a fair shot at buying a place of their own.”

He said both the International Monetary Fund and the Reserve Bank had recommended removing the tax breaks.

Last year, the IMF said ringfencing tax losses on housing investments would weaken a significant price driver in real estate.

Little said the so-called “mum-and-dad” investors who had a rental property as a retirement investment were not the target of his policy, but admitted some could be affected.

“The vast majority of them don’t use this loophole. Those that do will have time to adjust.

This policy is about the big speculators who purchase property after property. It’s about those big-time speculators who are taking tens of thousands of dollars a year in taxpayer subsidies as they hoover up house after house.”

He said it was indefensible to hand out tax breaks that were effectively subsidies to property speculators when many couples were struggling to buy their first home.

But not surprisingly there are some critics.

NZ Herald: Labour Party’s focus on tax breaks ‘cynical’

Steven Joyce…

…said removing the tax breaks for property investors would not have the effect Labour claimed – and would hit mum and dad investors more than Little believed.

He said Little’s claim few small-time investors used it was “pulled out of the proverbial”, saying negative gearing was used for all loss-making investments – not just residential property.

He said tax working groups under Labour and National had concluded getting rid of negative gearing was unlikely to result in more housing supply and the most likely impact was higher rents. “You’ll end up with fewer houses being built and higher rents.”

He said countries which had ring-fenced housing losses still suffered fluctuations in house prices.

Property Institute chief executive Ashley Church…

…said it was a cynical move designed to set one section of New Zealand society against another and a “direct attack” on those who bought an investment property as a nest egg for retirement.

He said it could also result in fewer rental properties – and higher rents as landlords tried to claw back the losses.

“Your typical property investors are average mums and dads – not wealthy cigar-smoking fat cats.

“This move would certainly stop them investing, but in the process it would quickly lead to a shortage in rental housing which would fall back on the Government – so it would end up costing the taxpayer a lot more in the long run.”

Church also disputed Little’s claim it would even things up for first-home buyers, saying families were being closed out of the housing market by high loan-to-value ratios, not investors.

Andrew King, executive officer of the NZ Property Investors’ Federation…

…said the advantage the tax breaks gave to investors was over-exaggerated. He estimated that removing the ability to claim losses for rental property providers would increase the cost of providing the average home from $6184 a year to $10,293 – an increase of $79 per week.

That sounds significant to me, especially if part or all of that $79 cost per week as added to rentals.

The biggest potential problems seem to be:

  • If property investment costs are increased then rents will increase
  • If property investment is less attractive less houses will be built to rent so less will be available, which will put pressure on the cost of renting
  • If property prices remain at their current very high levels then poorer people will still be unable to but their own home.

Ngaro apologises, sort of

Cabinet Minister Alfred Ngaro has apologised, sort of,  for a speech that threatened repercussions against an application for a partnership school involving Willie Jackson if Jackson cricised National during the election campaign – see Charter school threat from National MP.

Actually that sounds like a poor apology.

This has seriously embarrassed National and senior ministers have (sort of) said that Ngaro’s remarks were out of order.

Stuff:  Apology over threat to withdraw funding from Government opponents

A junior government minister has apologised to his senior colleagues for “crossing the line” after implying people who bagged the Government would lose their taxpayer funding.

National’s campaign manager and Finance Minister Steven Joyce said Ngaro realised he had crossed the line with his comments and apologised.

“He apologised to the Prime Minister, the Deputy Prime Minister and myself as campaign chair. He got carried away…he crossed the line.”

Joyce said Ngaro’s comments were “not the way we operate”.

“We work with providers of all types all the time; people have their political views separate to work they do with the Government. The Government doesn’t take a view on people’s political views.”

Joyce and National and Ngaro will have to do much better than this on arrogance of power, or they could crash and burn this election.

There’s potentially been a lot of damage done to National – something like this could easily precipitate the current Government’s demise.

“An extremely unparliamentary term”

MPs often get grumpy in pPrliament during question time, but Steven Joyce took that a bit further than usual today when he used what was described as “an extremely unparliamentary term”.

Government Financial Position—Debt and Measures to Address

2. TODD MULLER (National—Bay of Plenty) to the Minister of Finance: What is the Government’s plan for reducing net debt as a percentage of GDP?

Hon STEVEN JOYCE (Minister of Finance): So far we have made very good progress in reducing the Government’s debt, as measured against the size of our economy. Net debt peaked at just under 26 percent of GDP, following both the global financial crisis (GFC) and the Canterbury earthquakes. It is expected to be around 24 percent of GDP by the end of this year. We are forecasting to achieve our short-term target of reducing net debt to around 20 percent of GDP by 2020. All this has been achieved after New Zealand was forced to weather the shocks of the global financial crisis and the Christchurch earthquakes, and, of course, more recently, the Kaikōura earthquakes. Supporting Kiwi families through these events resulted in the country borrowing significant sums of money—approximately an extra 20 percent of GDP.

Todd Muller: Once the Government has achieved its net debt target, what will the new medium-term goal be?

Hon STEVEN JOYCE: I announced last week that the Government will set a new medium-term fiscal target of reducing net debt to between 10 and 15 percent of GDP by 2025. We are a geologically young country and we are also a small country in an often turbulent world, so there are plenty of risks and shocks ahead of us. The GFC and the Christchurch earthquakes taught us that they come along at any time, and sometimes together.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. You will notice that the Minister of Finance is taking an extraordinarily long time to answer questions—for example, he was asked in the primary question: what is the plan for reducing net debt? It is not a history lesson; it is a question about the future plan.

Mr SPEAKER: Order! The member will resume his seat.

Rt Hon Winston Peters: Why?

Mr SPEAKER: Because I asked him to resume his seat. I am the judge of the length of answers and I am judging the relevance of a subsequent supplementary question. The supplementary question was definitely in order. The Minister has every right to answer it, and I will judge whether the answer goes on for too long.

Rt Hon Winston Peters: You may well judge that, but I am entitled to raise under the Standing Orders a point of order and outline why some members of this House find that his answers are not satisfactory. We have an entitlement to do that. Yes, you can judge whether or not we are making out the case, but you will not stop us from making it out.

Hon STEVEN JOYCE: I appreciate the member’s point of order, but I am a bit confused because I would have thought that New Zealand’s resilience to natural disasters is a very important issue, not just for this House but for this country. The member may want to make a point about saying that it is not of interest to him, and that is fine. But I do think that most New Zealanders would consider our ability to respond to earthquakes and other natural disasters to be very important. [Interruption]

Mr SPEAKER: Order! I have heard quite enough from both members. As I have—[Interruption] Order! As I have said, I will judge the length of answers. I want them to be relevant, but I thought the subsequent supplementary question was an important one. I would have thought most of the House was interested in future net debt targets. Does the Minister wish to complete his answer?

Hon STEVEN JOYCE: Thank you. With net debt at around 10 to 15 percent of GDP, New Zealand would have the capacity to absorb more than one shock without extra taxes and without slashing people’s entitlements, and that is what will be important to New Zealanders.

Todd Muller: How achievable is a net debt target of between 10 and 15 percent of GDP?

Hon STEVEN JOYCE: This is achievable because the Government’s books are now in good shape, and rising surpluses are predicted over the forecast period. It is backed up by a New Zealand economy that has now experienced nearly 6 years of continuous growth, together with unemployment falling yesterday to 4.9 percent. This is one of the dividends New Zealand gets from an innovative economy that allows us to reduce debt so we can respond to whatever the future has in store not just for the current population but, of course, for our children and grandchildren.

Todd Muller: How will this new debt target help New Zealand respond to major shocks?

Hon STEVEN JOYCE: You only have to look as far as the front page of the Wellington newspaper this morning to see the importance of ensuring that New Zealand has buffers against major shocks. It was suggested in that report that there is a new report produced saying that a major earthquake in Wellington would force the capital city to move to Auckland. I do not agree with that, and I think most Wellingtonians would not agree with that. The reality is that if you can afford to protect urban centres like Wellington after a big earthquake, then we do not have to consider moving the capital city. So, with sensible investments in infrastructure and prudent levels of debt, Mr Peters, then we can make sure that the capital city stays in Wellington.

Rt Hon Winston Peters: What are you going on about now?

Hon STEVEN JOYCE: Grumpy old prick.

Grant Robertson: I raise a point of order, Mr Speaker. I know there is a robust exchange in the House, but the Minister of Finance did use an extremely unparliamentary term to describe the leader of New Zealand First.

Mr SPEAKER: I heard the interjection; I did not hear where it came from, but now that it has been identified, I require the Minister to stand, withdraw—[Interruption] Order! The member is not yet in this position; he might be at some stage in the future. I require the member to stand, withdraw, and apologise.

Hon STEVEN JOYCE: I withdraw and apologise.

Mr SPEAKER: Thank you.


 

Peters: “he’s got his own problems, he’s going through his hair… and a lot of people don’t like that when they look like him!”

Joyce: “aww nooo it’s just robust debate and he was being a fairly grumpy chap wasn’t he?”

Steven Joyce’s pre-budget speech

In a pre-budget speech yesterday Minister of Finance Steven Joyce indicated a major increase in infrastructure spending.

Today I can announce that the Government has decided to invest $11 billion in new capital infrastructure over the next four years including $4 Billion in this year’s budget alone.

To put that into context, the net new capital allocated in the last four Budgets was $4.8 billion, of which $4.1 billion was funded through the proceeds of the mixed ownership model programme.

In Budget 2016 we were forecasting just $3.6 billion in new capital spend between Budget 17 and Budget 20 compared to $11 billion now.

The $11 billion is additional spend on top of investments already planned by the Government.

If you add the Government’s budgeted new capital investment together with the investment made through baselines and through the National Land Transport Fund – the total is around $23 billion over the next four years, or an average of nearly $6 billion per year.

Details of how the first tranche of that money will be invested will be laid out in the Budget on May 25th.

A big spend announced in election year.

He outlined his budget priorities.

I have four key areas I am thinking about in getting ready for this year’s Budget.

First, delivering better public services for a growing country – providing all New Zealanders with the opportunity to lead successful independent lives.

Second, building the infrastructure we need in growing a modern economy.

Third, we need to keep reducing debt as a percentage of GDP.

And finally, we remain committed to reducing the tax burden and in particular the impact of marginal tax rates on lower and middle income earners, when we have the room to do so. We need to always remember that every dollar the Government spends comes from hard working Kiwi families.

That’s a lot of things to work on. And at the same time we need to make sure that we continue to build a strong economy.  It’s only by having a strong economy that we get to consider these four priorities.

“This Government’s recipe for economic growth is pretty clear”.

First, is trade. Much has been made of the massive growth of middle-income consumers across Asia. But it has been New Zealand companies, supported by a trade-friendly government that have been converting those opportunities to actual trade, making New Zealand steadily wealthier. And our exports have continued to grow despite the dairy downturn.

Second, our working-age population is growing, and becoming more highly skilled. That means our companies can hire the people they need to keep growing. Our education system is delivering more graduates with the right skills, our immigration system is providing the necessary skilled migrants, and our flexible labour market is encouraging businesses to add more jobs.

Third, New Zealand firms are becoming more innovative. We are building a strong innovation ecosystem of high-tech companies across the health sector, agri-tech, fintech, software as a service, edtech, govtech, and so on. Our programmes encouraging business research and development are achieving real success – Business R&D was $356 million higher last year than it was in 2014.

Fourth, we are actively encouraging more private sector investment in new businesses and in growing existing businesses especially in regional New Zealand. That includes attracting new international investors whose capital can provide more jobs for Kiwis. At the same time we are working hard to balance the economic needs of our regional communities with our all-important goal of improving environmental outcomes.

Finally, we are building the public infrastructure needed to support growth, including roads, rail, broadband, schools, houses and hospitals.  In some parts of New Zealand, including Auckland – you can’t move for road cones at times – which is frustrating – but a strong sign of how we are building for further growth.

The Government’s plan is called the Business Growth Agenda. Blended with sensible, conservative fiscal policy, and successful orthodox monetary policy and you have a recipe for a steadily growing economy that provides more job opportunities and growing incomes.

One of the biggest risks in the New Zealand economy at the moment is the more insular economic policies being pushed overseas, and by our opponents domestically.

A budget speech with an eye to the election.

Summary

The Government’s budget is about balancing competing concerns, and that is always the challenge.

Whether in deficit or in surplus there are many alternative uses for the available resources.

The Government has set four priorities for Budget 2017 – boosting public services, building new infrastructure for a growing country, reducing debt, and seeking to lift family incomes.

However the biggest priority is the one that pays for the other four. It is only through having a strong economy that we can tackle the others, and provide for the income and security of New Zealanders.

Building and sustaining a strong economy therefore remains the Government’s most important goal.

It is only through having a strong and prosperous economy, that we can deliver a prosperous and successful New Zealand.

Full text: Pre-Budget Speech 2017 to the Wellington Chamber of Commerce

With Bill English chugging along without being noticeably impressive, and National at risk of settling down in the polls that show a coalition with NZ First would be needed to stay in power – see Roy Morgan – April poll – a lot will be riding on what Joyce delivers in the budget, and how Labour in particular responds.

The Nation: Is the rock star economy still rocking?

This weekend The Nation interviews Steven Joyce on the economy and the budget:

Is the rock star economy still rocking? Tomorrow we’ll talk to the newly-minted Finance Minister Steven Joyce ahead of next month’s Budget.

See also: Inflation up to 2.2%

Joyce says Auckland Council needs to look at how much it can spend on transport.

Expect to see the Govt’s expenditure on the CRL in the Budget, Joyce say.

Still a rock star economy? Joyce wouldn’t call it that but the new Zealand is still performing well, and better than most.

Joyce says he’s keen to see the tax system work more clearly for people. No decision yet on tax thresholds (for PAYE), everything is still “on the table” for the budget.

National’s Super age proposal

This afternoon Bill English announce National’s superannuation policy, which included a raising of the entitlement age in 20 years time.

There has been a lot of immediate reaction. I think people should think this through and discuss it sensibly.

There are political implications for coalition negotiations but that shouldn’t stop a decent debate without resorting to knee jerk reactions.

This policy won’t affect me as I’ll be on Super long before this takes effect.


Lifting NZ Super age the right thing to do

Progressively lifting the age of entitlement to New Zealand Superannuation from 65 to 67 is the responsible and fair thing to do for New Zealand, Finance Minister Steven Joyce says.

“Average life expectancy is increasing by around 1.3 years each decade and more older people are staying in the workforce,” Mr Joyce says.

“Greater life expectancy is of course positive but it does drive up the cost of NZ Super. While New Zealand has a more affordable scheme than most countries, the increasing costs would require future trade-offs – either restricting spending increases in areas like health and education, or increasing taxes.”

The Government intends to increase the age of entitlement for NZ Super by six months each year from July 2037 until it reaches 67 in July 2040. This means everyone born on or after 1 January 1974 will be eligible for NZ Super from age 67.

Other settings such as indexing NZ Super to the average wage and universal entitlement without means testing will remain unchanged; and the age that KiwiSaver funds can be accessed will remain at 65.

“Making a change over a reasonable timeframe will give future generations of New Zealanders more choice as to how they allocate their government spending,” Mr Joyce says.

“While others have called for an earlier transition, the Government’s view is that giving 20 years’ notice balances timeliness with being fair to current generations of working New Zealanders.”

Average life expectancy in New Zealand has increased by 12 years over the past 60 years, including by four years since 2001, when the age for NZ Super was increased to 65.

“When the age was set at 65 in 2001, a retiree could expect to spend about a fifth of their life receiving NZ Super. That has since increased to around a quarter,” Mr Joyce says. “Following this change, those eligible for NZ Super at 67 in 2040 can still expect to receive it for a quarter of their life on average.”

Mr Joyce says the Government’s previous position of not changing the age of eligibility was appropriate in the aftermath of the Global Financial Crisis, when New Zealanders were looking for certainty at a time when the Government’s finances were under pressure.

The Government is also proposing to double the residency requirements for NZ Super so that applicants must have lived in New Zealand for 20 years, with five of those after the age of 50. People who are already citizens or residents will remain eligible under the existing rules.

The Government intends to introduce legislation to make these changes early in 2018. The residency changes will cover people who arrive in New Zealand after the legislation is passed.

“These changes are important and need to be politically durable,” Mr Joyce says. “Scheduling the legislation in this way gives all political parties the opportunity to discuss their position with the public before it comes before Parliament.”

The proposed changes to the age of eligibility and the residency requirements are estimated to save the Government in excess of 0.6 per cent of GDP or $4.0 billion annually once the changes are fully in place.

Included in the legislation will be provision for parliamentary consideration of any need for any temporary transition requirements in 2030.

“It is not possible yet to determine what, if any, temporary support will be needed for people who are unable to continue working beyond the age of 65,” Mr Joyce says.

“Considering any requirements in 2030 will give a future parliament the opportunity to consider current information on health and labour market trends of different groups as the age change approaches.”