The Budget: "Stroking politically erogenous zones"

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With economic growth forecast to stay above three percent till at least 20189, the Government has increased its operating spending by $300 million above that forecast in the Half Yearly Economic and Fiscal update last December. New spending will now be $1.8 billion --- $1.7 billion next year; thereafter rising at two percent per year.
Surpluses are expected to rise to $7.2 billion by 2020/21 but capital spending will also rise to peak at over $8 billion in 2019.
The extra spending has allowed the creation of an election year budget, dominated by what the late David Lange once described as the “stroking of politically  erogenous zones”.


Key points:

Tax Thresholds rise from April 1, 2018
$14000 threshold rises to $22000
$48000 threshold rises to $52000
Working for Families Family Tax Credits will also rise --- as will the accommodation supplement.
Figures supplied with the Budget indicate that the changes could raise the income of a family earning $51,000 a year by $23.69 a week. All up, the package is expected to benefit 1.34 million families by on average $26 a week.
However homeowners will pay higher EQC levies which will rise from 15 cents a $100 of cover to $20 cents per $100. But unlike the tax cuts, the new charges will apply from November 1.

Capital spending to rise
Many of the details of the $4 billion capital spend have already been announced --- Kaikoura road and rail; the Auckland City Rail link; Defence procurement; new schools but there is also new money for the Wellington commuter rail network ($98 million); $763 million for additional prison capacity and $63 million for irrigation and $100 million to release land for housing development.
 
Bringing the private sector in: 
“The Government intends to leverage our already significant infrastructure investments through the further use of public-private partnerships and joint ventures between central and local Government and private investors to deliver an even larger infrastructure programme.” – Steven Joyce, press release. He told the press conference he would have more to say on this in the coming weeks.
 
“The Government and Auckland Council are now finalising the necessary funding and governance arrangements that will accompany both parties' significant investment (in the Central Rail Loop), including setting up an independent company to deliver the project. Further announcements on the details of these arrangements will be made in the coming months.” – Simon Bridges, press release.
 
Winning votes
 
Movers designed to counter areas where the Government has come under criticism.

  • $46.9 million over the next four years for new services designed to reduce burglary and youth offending. (Addresses complaints from ethnic small business owners in Auckland.)
  • $224 million over the next four years to mental health services. (Labour has made the need for mental health services a key part of Andrew Little’s recent provincial speeches.)
  • An extra $3.9 billion over the next four years into Vote Health which includes the extra $1.54 billion for care workers stemming from the already-announced Terra nova settlement. DHB’s will get $1.76 billion over the next four years “to invest in services, improve access, and to meet cost pressures and population growth.”  (Another big issue for Labour.)
  • $81.8 million over four years for community corrections and prisoner rehabilitation. This is to “enable Community Corrections to increase its resources to manage the growing number and complexity of community based offenders and to support the Parole Board and the judiciary to make informed risk based sentences and decisions.” (Addresses Sensible Sentencing complaints about soft sentencing.)
  • $38 million over four years in Maori Party wins including Whanau ora and Maori language funding. Also $10 million for Maori tourism and $31 million to establish the new Maori Land Service. (Keeping the Maori Party on side.)
  • RNZ gets and additional  $11.4 million over the next four years. (Their funding has been frozen since 2009 but a new CEO and Chair has made the organisation less disliked in the Beehive.)
  • Long term commitment to Kiwirail with $450 million over the next two years and a promise to “put the rail network on a longer term sustainable footing,” (NZ First might like this.)
  • The Government expects to open 540 new lane kilometres of state highways over the next four years. (The Greens won’t like this.)

The mission statement:
“This is a budget that delivers for New Zealanders from a Government that cares about people and knows how to get things done.” PM Bill English’s Budget press statement, “Sharing the Benefits of Growth.”

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