-
John Key and Bill English walk into parliament before the Budget reading - Source: Getty Images -
Watch Video
-
Related
The economy will create up to 170,000 new jobs over the next four years, the government said today as part of its Budget announcement.
The forecast was followed by details of cuts to KiwiSaver and Working for Families in a Budget that Labour leader Phil Goff said was "the worst Budget he had seen in 27 years".
The government said the boost in job numbers will come on the back of an economy which is predicted to grow to 4% by 2013, while wages are tipped to grow 4% a year for the next three years.
ONE News political editor Guyon Espiner said a lot of the growth was expected to come from the Christchurch rebuild and the Rugby World Cup.
However, he said the forecasts for wage and job growth are "just forecasts" and that they are "not locked in".
Prime Minister John Key told TV ONE's Close Up tonight that New Zealanders needed a plan for jobs, and that today's Budget delivered that.
"New Zealand can't keep borrowing money at $380 million a week. We can't have New Zealanders exposed to high interested rates, New Zealanders need a plan for jobs.
"This is a budget that actually delivers that."
He said the plan for jobs was "quite evident."
"Treasury say in the Budget, as a result of this platform on what we've delivered, 170,000 jobs created and 4% wage growth over the next three to four years."
And he added that every New Zealander was paying the price in the Budget cuts.
"In a way, all of us are paying some price and all of us are getting benefits," he said.
Families will 'feel it in the pocket'
Cuts to Working for Families will "bite deep into the pockets" of middle-income New Zealanders, Goff said.
The changes announced today in the 2011 Budget will see the eligibility for tax credits in the scheme tightsened for most earners.
The government says its changes to Working for Families will simplify the scheme and save it money, with the threshold for incomes to be lowered slightly from $36,827 to $35,000.
Families with incomes above this threshold will receive fewer tax credits. More than 70% of families above the threshold have an income of $60,000 or more.
Goff said it was "not a zero budget" but a "sub-zero" budget.
"The cuts to Working for Families will bite into the pockets of middle-income Kiwis - another broken promise because National said its changes would only affect top earners," he said.
See how the Working for Families changes affect you here
Westpac senior economist Dominick Stephens said the Budget was "tighter than we were expecting", while political commentator Dr Bryce Edwards of Otago University said there was "nothing really in the Budget for the unemployed".
"Some families will be worse off after this Budget and they will feel it in the pocket," Edwards told ONE News.
Green Party co-leader Russel Norman told Parliament the budget
was "fiscally irresponsible".
KiwiSaver changes
KiwiSaver changes will see the government halve its support and the minimum contribution of members rise.
Members will have to pay 3% of their earnings as a starting
point, a rise of 1%, though the sweetener for workers is that
employers will have to match it.
Watch Bill English's full speech here
The government will keep its $1000 kick start but its maximum contribution of $20 a week, in the form of a tax credit, will be slashed to $10 a week as it cuts its support by $2.6 billion over four years.
The Budget also includes $5.5 billion over six years for the Canterbury Recovery Fund and $942 million to complete the government's ultra fast broadband plan.
In what is his third Budget, Finance Minister Bill English said the government hopes to generate up to $7 billion by extending the mixed ownership model to four state owned electricity companies and by reducing its majority shareholding in Air New Zealand.
TV ONE's AMP Business presenter Nadine Chalmers-Ross said some aspects of the Budget, such as the KiwiSaver changes, were much as expected.
"But the reduction in overall spending over the next four years was perhaps more aggressive," she said.
Redirection of funds
Finance Minister Bill English delivered the toughest of his three Budgets coming on the back of a debt blowout because of the global financial crisis, the Christchurch earthquake and finance company bailouts.
Savings of $5.2 billion will be made over five years, with nearly $4 billion redirected over four years, primarily towards front line health and education services.
The remaining savings will be used to reduce the government's massive deficit that has been predicted to hit $16.7 billion this year, which is 8.4% of GDP.
The Treasury predicts the deficit will shrink to $9.7 billion in 2012 and to $4.1 billion by 2013.
Ahead of the Budget announcement, financial commentators warned that English must set out a credible plan to avoid a downgrade to New Zealand's current AA credit rating.
Leading agency Standard & Poor's put New Zealand on a negative outlook last November.
Its response to the Budget was to confirm that New Zealand's sovereign ratings are intact.
English said the government would return to surplus by 2014/15, one year earlier than previously expected. Contributions to the NZ Superannuation Fund will resume in 2016/17, two years earlier than expected.
He said the Budget built a strong platform for "jobs and growth, sets a credible path back to surplus by 2014/15 and helps increase national savings".
"The net result is a reduction of $1.2 billion in operating spending out to 2014/15," he said.
Working for Families
Tax credits this year will cost the government $2.8 billion - about double the amount in 2005/06. By 2014/15 the figure will have reduced to $2.6 billion.
The government says changes, which will be staggered from April 1, next year, will be "better targeted to the most vulnerable families".
Around 387,000 families will be affected. Families below the new income threshold of $35,000 will receive an extra $7 a week.
However, a sole parent on $90,000 a year with two young children, for example, will have a weekly reduction of just over $11. A couple with a combined family income of $40,000 a year and three children will receive an extra $4.12 a week.
Budget timing
The Budget changes will not come into effect until after the November 26 election, possibly even until later this year.
However, it is expected that the changes will be included in Budget legislation to be introduced to Parliament later today.
Prime Minister John Key said the Budget was "responsible and balanced for the times".
"We have continued to protect the most vulnerable New Zealanders through extensive programmes such as Working for Families, New Zealand superannuation and welfare benefits, as well as investing significantly more in health and education," he said.
What do you think of the Budget? Have your say on the
messageboard below.
Latest NZ News Video
-
ONE News Minute 9am update: May 26 (1:00)
-
Kids cough up $14m for Government (1:50)
-
Education ministry 'barbaric' (1:55)
Add a Comment:
Post new commentchrisinus said on 2011-06-06 @ 10:28 NZDT: Report abusive post
Most of the students who are overseas are there because they're having problems living in NZ with low salaries and very high taxes but rip-off costs of living. If you want to keep them here, NZ needs to increase salaries and taxes to match those in Australia and UK. Then they would continue to pay their loans and new laws wouldn't be necessary. KEEP UP WITH THE WORLD, NZ!!!
JayKay22 said on 2011-05-21 @ 21:12 NZDT: Report abusive post
Why take away all course related costs for part-time students - why not simply halve it instead - make the entitlement $500 instead of $1000. That makes far more sense.
pioneer said on 2011-05-20 @ 12:04 NZDT: Report abusive post
TO MANY FAMILIES WANT HAND OUTS. THE FAMILY ON TELEVISION LAST NIGHT HAD 5 CHILDREN AND A DOG THE CHILDREN WERE OLD ENOUGH FOR THE MOTHER TO GET A JOB PLUS SHE HAD SPENT MONEY ON A STUPID TATTOO IF YOU CAN'T AFFORD CHILDREN DON'T BREED AND EXPECT THE COUNTRY TO BORROW FROM CHINA AND jAPAN FOR THEM. WE HAD 3 CHILDREN I WORKED AT NIGHT AND IN THE WEEKEND WHILE THEY WERE BABIES UNTIL THEY WENT TO SCHOOL THEN WORKED PARTIME 1 IS A SOLICITOR,2 A CEO IN AUS,3 BUSINESS MANAGER
big2al said on 2011-05-20 @ 09:06 NZDT: Report abusive post
As usual with a Nat govt, the only ideas they can come up with are selling the family jewels (SOE's) which we already know is only a short term gain & a long term loss (NZ Rail) and cutting public services. A billion dollars lol, where do they think the money is coming from? Essential services & jobs will be cut, which will lead to more spending pressure on WINZ as more unemployment benefits are paid. No matter how this Govt cleans it up, it is the poor & middle income earners who suffer.
smithy said on 2011-05-20 @ 07:48 NZDT: Report abusive post
It may lack flair and inspiration but I think it is a very sensible budget given the economic climate. I dread to think where we would be with Labour in charge who have not yet made a valid argument on any subject