Treasury forecasts NZ$176 million Budget surplus for 2015/16; Govt dumps NZ$1,000 kick start for new KiwiSaver members; Benefits and Working For Family payments nudged up

Treasury forecasts NZ$176 million Budget surplus for 2015/16; Govt dumps NZ$1,000 kick start for new KiwiSaver members; Benefits and Working For Family payments nudged up

By Bernard Hickey

The Government has forecast a Budget surplus of NZ$176 million for 2015/16 in Budget 2015, which is one year later than it promised before the last two elections and thin enough to turn into a deficit with any economic downturn.

But the Government only managed to get to that wafer-thin figure by ditching the NZ$1,000 kick-start for new KiwiSaver members from today to save NZ$175 million in 2015/16 and by imposing a new NZ$22 per trip levy on tourists to raise NZ$100 million a year to pay for customs and bio-security costs.

However, the Government followed through on its post-election promise to spend some money on addressing child poverty by increasing benefits and tax credits by up to NZ$25 a week at a combined cost of NZ$200 million a year from 2016/17.

But it also added the attached string of making parents on benefits work part time once their children reach the age of three, down from five previously. The money being spent is also not as large or as soon as some would like with the first benefit increases not starting until April 1.

Finance Minister Bill English and Social Development Minister Anne Tolley announced a plan to spend up to an extra NZ$240 million a year on benefit payments and Working For Family payments for low income families.

The plan is forecast to cost NZ$790 million over four years and includes a NZ$25 a week increase in after-tax benefit rates for families with children, which English and Tolley said was the first time core benefits had risen faster than inflation since 1972. But the benefit increase from April 1, 2016 comes with a big attached string. Most sole parents and partners of beneficiaries will have to be available for 20 hours work a week once their youngest child turns three, which is up the youngest child turning five.

All beneficiaries with part-time work obligations will also now be expected to find 20 hours work a week, up from 15 hours now. It will cost NZ$125 million a year from 2016/17, but just NZ$32 million in 2015/16 when the Government's budget surplus is at its most wafer thin.

Low income working families earning less than NZ$36,350 a year before tax will get an extra NZ$12.50 a week in Working For Families tax credits. The base rate will rise 21% to NZ$72.50 a week. Some very low income families on the Minimum Family Tax Credit will get up to NZ$24.50 extra per week.

The extra Working For Families payments progressively decline as after tax incomes rise above the NZ$36,350 threshold. However, there is a sting in the tail for higher income families. Those earning over NZ$88,000 will receive around NZ$3 a week less. The Working For Families changes will cost NZ$74.6 million in 2016/17, but just NZ$19.4 million in the budget-constrained 2015/16. Childcare assistance for low income families will increase from NZ$4 an hour to NZ$5 an hour from April next year, which would affect 40,000 families.

'Still room for tax cuts in Budget 2017'

The Government left its Operating Allowances unchanged from December at NZ$1 billion in Budget 2015, NZ$1 billion for Budget 2016 and NZ$2.5 billion for Budget 2017 to help pay for modest tax cuts "should fiscal and economic conditions allow."

The extra income for low income families amounts to just NZ$51.4 million in 2015/16, before rising to a combined NZ$210 million a year from 2016/17. For comparison sake, spending on NZ Superannuation payments is expected to rise in line with the ageing population and average wages to the tune of NZ$667 million in 2015/16 alone to a total of NZ$12.256 billion.

Government to borrow more

Elsewhere, The NZ Debt Management Office announced a domestic bond programme for 2015/16 of NZ$8.0 billion, which was NZ$1.0 billion higher than forecast at the Half Yearly Economic and Fiscal Update in December.

The Government said it remained on track to start reducing net debt from a peak of 26.3% of GDP in 2015/16 to 19.7% of GDP in 2020/21.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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... wasn't it a thin wafer that caused Mr Creosote to explode in Monty Python's " Meaning of Life " ?

Best be careful what we wish for .... one overhyped property market north of the Bombay Hills ....

... ka-PLOOOOOOO-ie !

wafer thin mint?

So we'll still have a huge debt, but we'll get tax cuts which will make it even longer to pay off, yes makes so much sense, not.

The Government has forecast a Budget surplus of NZ$176 million for 2015/16 in Budget 2015, which is one year later than it promised before the last two elections and thin enough to turn into a deficit with any economic downturn.

Can't this lot stop digging holes for themselves to fall into? There must be many more sustainable policy endeavours that demand citizen approval. And forget the excuse of worrying about foreign financing support- they are just glad to lend to all except those already in default.

Damn clever. Lets increase corporate welfare, put the responsibility on the "beneficiaries" and solidify our voting base by increasing the bribe.

Kiss Kiwisaver Goodbye ? What next, Housing subsidies for Kiwisaver members cut in the future ?
That will cool the market for sure...

Is indexing tax rates with CPI ever going to be on the cards? Grrrrr. 13 years in NZ, still same tax brackets as when we arrived (yet everything else has pretty much doubled, is no one else feeling like they're being fleeced?!).

Didn't Cullen deal (a bit) to bracket creep in his final budget whilst in office and then Key moved percentages in the top bracket down in his first term?

But, yeah, I feel fleeced but not necessarily with respect to tax paid.

... neither Cullen nor English get it , that our tax structure punishes the low and middle earners , and favours the higher income earners ...

All the tinkering with WFF and K/S is just useless ... we need a rock solid land tax to suck out some of the fat from the rich end of town ...

Hey , nice to see you still around here , Elley ... cracker day in Oxford , 20'c & N/West !!!

I think they get it, alright.
They just don't care.
They don't rub shoulders with low and middle income earners....they don't have any power, so why would they bother?

Actually I think they do get it. They know full well no low income workers will vote for them so no point in trying to bribe them.

Yep, nice day in Oxford :) I'm still around, just busy running a business and raising 5 kids (WFF-less!) so haven't been on this site for a long time.

Great to see you back here Elley! Missed you.

The tax cuts in 2017 are supposed to simply raise the brackets to offset the last few years worth of bracket creep. Not really cuts, but much better than the opposition were offering.

Its how the Govn gets more tax without actually increasing the rate. I think Cullen used to gloat that no one seemed to notice this.

Sure, but you'd think people would actually realise it and say something about it!! Everything else is indexed on CPI, including benefits. It baffles me that tax brackets aren't and that no one seems to even notice.

I guess its accepted. What other options are there anyway? The govn needs X amount no one wants to pay more as a %, ergo no adjustments. On other other hand CPI increases is minuscule and likely to be that way for some years.

Well if you dont like it the airport is still where it was when you arrived. I mean the Govn still needs an income from somewhere so if we had an adjustment in brackets the rate itself would have to rise, there is no free lunch.

14
up

What a lovely comment. I like it here actually, it doesn't mean I wear rose-tinted glasses and approve of everything. It's called having a brain and using it thank you.

When you think about it, it is nothing short of an admission of the total lack of wage raises. It seems hard to grasp but no, the rate wouldn't have to rise if brackets changed, so long as wages increased in line with the CPI: the government wouldn't be any worse off indexing tax brackets if salaries actually raised like everything else!

Anyway, gotta go but thanks for suggesting the airport. Given the amount of tax I pay and the nil amount we receive, I don't know if that'd make the country better off (not to mention the high-tech business I'm in and money we bring into NZ thanks to it).

Agree with you on the brackets...first 15k at least should be untaxed, and the tax bands need to be wider

and how then is the huge hole in the income made up? land tax?

Yes. Even Gummy is calling for one in Auckland.

Maybe I was a little harsh there, sorry. but NZ is NZ, it isnt the UK, or France or the USA. Never ceases to amaze me that some ppl who come here wish for the things they think were good points of the country they left behind were here, then it wouldn't be NZ.

I have long thought about such things and yes BE and/or JK have said they expected inflation to take them into the black comfortably. That isnt a genuine balance its smoke and mirrors. So think beyond this, JK has also said he doesnt understand why with so much stimulus we are not having 6%? growth. Maybe that should be screaming at ppl these are the wrong ppl in Govn.

Tax and nil for it, yep just consider how lucky you are to have the IQ and ability to earn a decent income and pay tax on it, plus of course you still have most of it to keep. of course you have roads, communications, a good rule of law, decent protection laws and standards and should feel safe, thus its not nil. This is how I think of it anyway.

Elley you don't need wage rise here, all you need to do is borrow a zillion and chuck it into a dump in Auckland.....sit back and retire. So simple, not sure why the rest of the world hasn't woken up to such a simple strategy to make us all gazilionaires...

ahhh... must have brought your capital in from out of country then.

You think the tax / brackets are a "fleecing" you should try bootstrapping capital in this hole 13 years ago...

Welcome back Elley, take no notice of the rude comments.

Standards have dropped somewhat since you were last here.

Thank you Alter Ego :) To be perfectly honest, that's probably the biggest turn off coming here.

... if you don't come here to post your viewpoint , then the uncivil bloggers will have won !

Join us in the hurly burly of it all , and to hell with the graceless slobs ...

... you're in integral member of our little family here at interest.co.nz : Cheers !

Thanks GBH. You are right and I did enjoy the good debates and conversations however after a while it seemed like people, including myself, were 'bickering' over the same issues over and over again. All with no hope at all to actually make things change one way or the other. Which sort of made the exercise a little pointless! Still, I'll pop in now and then :)

Feels like there might be an AGM of the North Canterbury branch coming up.

Don't mention it...Elley....I know just what you mean, but never say never..

We need a balanced view, not just a chip on each shoulder.

Your version of the truth is just as valid as some invalids.

how come when it comes to tackling speculators, tax evaders and gambling bankers, it takes minimum 2 years for a law to become active, but for a kiwisaver cut it takes 1 second?

maybe because it takes a while for nat donors to restructure or take there profits, whereas they can do what they like to those that don't vote for them. to be fair last govt did the same with free student loans.
what we need is for governments to do what is best for the country and its people and not what will get it the most votes next election, that's how we have got to where we are now

speaking of doing what's right for the country, how come the additonal spending allowances are $1b, $1b, $2.5b. Is it really best for the country for a sudden boost in spending in year 3? Or is it best for the National party to do that in an election year?

I have been told off for ranting today already, so I will take a sporting chance that this is better than asking leading questions.

Suffice to say, the vested interests have decided that actually saving is even more
detri-mental than themselves borrowing as fast as they can and having the savers bail them in....not out.

In cricket the umpire would say that was out, not in...when you hit the bails.

But in real life, the match has been fixed, almost like most cricket seems to be now as match fixing is rife. They make more money fixing matches, than playing them.

So that is not cricket, now has a new meaning, So does saving for your old age.

All arse about face. You have to bet it on the house. Like all the above..IAN64 listed.

But what if we all did, who would actually do the work. Would it work, of course not.?

Must be tiring all this building up hopes and dreams of an adequate life, an adequate house, an adequate pension,, then kicking the guts out of the poor Kiwi savers.

I heard the Powers that be, who make the rules to suit,that they were gonna start on the kids next.

How low can some people stoop. Taking a slice of the action and hitting them for six.

No second chance, this budget. It is now fixed, All bets are off. The house wins. Yet again.

Certainly not cricket. Not in my estimation. But as I see it, better than a simple rant about the question raised above, but not by me.

But he does have a valid point, does he not. IAN 64, The two year rule will apply, JK has already ruled it....no second ...chances. Except when it suits. ..the suits. Then they can spin and spin, on a dime.

... in the absence of our dear friend Sore_loser , you're now our " Ranter Laureate " ...

Or is that " Lorikeet " .... involves a lot of squawking and ruffling of Mr Chaston's feathers ... he really needs to chill , keep his hair on ....

.. . enjoy your rants !

I shall bow to your better judgement...but unfortunately I shall next week bow out for 3 months to allow Mr Chaston to chill out..somewhat...I know he does not like my prose, so the better part of valour will have me parrot..elsewhere.

Caged, I will never be. Freedom is my watch word.

I fear not Mr Chaston he has chastised many just recently, including me, but it is getting chilly here in NZ and warmer climes have called me home until the suns rays warm the cockles of my heart, if not David's,once again on my return.

Many have vanished from this site. I too miss Christov and Wolly and the afore mentioned Sore_Loser. I fear we shall never see their like again.

So I will wish them all at Peace wherever they are..

And to your good self Gummy and all our readers, a prosperous winter of my dis-content.

Farewell, it must be hard for editors, banging away at a brick wall. So do not be too hard on him in my absence...

Enjoy the winter , in your discount-tent ... in the warmer climes , the tropical paradise where the mango juice runs free ....

..... ahhhhhh ..... just as you must do , I love Taihape too ..... sighhhhhhhh ....

Gummy nude..That's a bare faced lie...

A little further north of the equator is my desti-nation. My home away from home..

But the home has a motor and the world is my oyster. The travails of NZ dollar will be replaced by the Euro mess to see where my travels end up. But it will not be Greecing the palms of certain EU citizens, who need a handout, more than a hand-up. I pay my way, not someone Else's.

I too love Taihape as a pit stop...not a stop gap. At least it works, better than Greece.

My juices will be fomented and tinged with Scottish and other liqueurs, not free, but a pretty penny, so after a hard days wanderings, I may sleep like a baby, crying and bawling my eyes out for a little milk of human kindness.

I shall miss some people. Some people I aim at I shall not miss at all, when I get back.

At least you have Elley to keep you amused....Take aim if needed...we need to look after the workers, not the twits who bitch far too regularly.

If we did not have a sense of humour, sense of decency, then Fridays would not be worth much at all.

Which brings me to another gripe..

Just watched Campbell Live..those poor Christchurch people will miss him.

Pity the Insurance Co's and Cera and the Councils have not resolved all cases by now. But that is to be expected. You pays yer money and they take it but hate to give all a Fair Go.

Yet not much is heard, except from John.....and I do not mean the Key figure head.

Probably why Mr Campbell has been ousted. Some people do not like to be reminded that the waste of money that they are, would have fixed all problems Nationally, if truth be told...

Who needs Awkland invaded, when the battlefields are elsewhere.?

John Campbell deserves a Fair Go...I hope he gets one..as well as Christchurch.

We need people who care about the under dogs, not the ones who care not a jot.

End of missive..not a rant...Just making a point...or two. Fair Do.

The micromanagement of comments to enforce a strict standard of bland tedium is kind of tiresome.

And now I feel like I've painted a target on my adorable green feathery back.

As they say...... say...Water off a Ducks Back. and dive back in. Mate.

But you have to keep in mind the average age of the Eds is only ten and half years.

Counting the seconds to deletion ........

So Labour had the dot com bust in the early 2000's, the 9/11 impacts, 2 years of the GFC 2007 and 2008, and still made a surplus every single year, and paid off billions in debt while they were there.
These muppets run a deficit 7 out of 7 times, rack up well over 50 billion in debt.
Then have the cheek to claim to be good economic managers, anyone that believes that is beyond stupid, they're a joke, pathetic economic managers.

that's because they have a flawed philosophy, they believe private enterprise and competition is the only way to do things, in our small economy you sometimes can not get the benefits of scale so you end up with a bigger number than optimal of competitors all trying to make a profit. classic example taxis in Auckland, they deregulated the industry to bring in competition and instead what did we end up with more expensive taxis and why? now there are hundreds of them, but they have to make a living so the prices have gone up to compensate as they have less work for each driver due to the competition.
you could use as example electricity or petrol or telephones.
sometimes for a market as small as ours you need to balance competition and number of players so you can get the benefits of both

Or physical deliveries to our doors. NZ Post in a slow death spiral, yet how many courier companies do you see these days driving the same streets? All with their own sorting/distribution hubs behind them.

Cost to ship an item via NZ post/NZ couriers $35, via fistways $<25, post haste, ditto. Plus NZ post wont ship items it considers "dangerous" while all the private couriers I have used will as long as you tell them and ship it in 2 parts. What crazy is however they are legally obliged to take all international parcels and deliver them to your door but the same parts will be refused to ship by them in NZ. All I can say is good riddance to them.

While I agree, not petrol or phones. Petrol is simply internationally priced. My phones and communications have got cheaper and faster and more. As an example before we had broadband and Saturn Telescum kept us on dial ups and ISDN making a small fortune on them. Eg when I got the first adsl/cable modems (in 1998 or so) my costs for 1~5m/sec was $100 a month for 600meg volume v a mate who was paying telescum $2400 a month plus data for a 64K isdn line. So Saturn coming in heralded fast and cheap broadband NZers greatly benefit from. Last year I switched to 2Degress from vodafone, I now pay $29 a month instead of $39 for 50% more minutes and 100% more data, it also rolls over.

a) Check your dates. GFC was what Labour left National in late 2008.

b) check your facts.

i) Start with how much austerity did National undertake? little if none as a result NZ has sailed through the worst global financial crisis since the 1930s Great Depression relatively un-scathed.

ii) Now I'll agree National's tax cuts were wrong without hesitation IMHO. It porked an already over-heated housing market and now they reap that.

iii) You need to compare what Labour was promising v National. Labour debt would almost certianly been significantly higher, I doubt you'll find anyone who will disagree on that or at least support it.

iv) The National Govn has had a far better time with overseas investors than Labour would have, as a result I think our credit rating and borrowing costs stayed pretty sane.

v) Check the in-equality stats, hardly a change there.

vi) Un-employment? doesnt look bad at all by world standards

About all you can lay fairly at National's feet and well and truly is they have brought this housing problem squarely onto themselves.

it would have been interesting to have had the parties round the other way, i.e national in a term or two before the GFC, the major policy I can remember was tax cuts and that was probably the right time and the right thing to do. then labour in after the GFC to tax and spend.
its a bit hard to judge what or who was or is best, all we can deal with is now and what to do for the future. The one thing that gets me is when either is in power and they do something that doesn't work rather than say hey we got it wrong lets try this they carry on and sometimes make it worse so as to not lose face. Happens in business too but when it hits the bottom line that boss gets moved on a lot quicker and a new one appointed. The scottsman at telecom comes to mind here

Agree, it would have been interesting, even doing so today. So I often take um-bridge with ppl saying how bad national have been and labour would have been better, but they have no proof. Now if we measure National against other Nationa's Govn's and GDP/economy we see that actually National compares quite favourably or at least not badly.

Dr Brash promised tax cuts if I recall correctly in 2005, he lost as Cullen's last minute WFF bribe was as big or bigger. If he'd won i think Brash's tax cuts for the 'rich" would I think have porked the property market even further.

"in power" i think to get to where they are they have to have an extremely thick skined and have an un-swerving belief in themselves not to buckle under the stress and trauma from the opposition both inside their party and other parties. This means they simply dont listen and hence we vote them out.

Labour primarily had the massive boom years of 2002 - 2007, where they did nothing to stop house prices across the country doubling. Interesting you leave out the fact that National had to deal with the GFC fallout, not Labour, and have you forgot about CHC earthquakes...

Is this Angry Andrew...

Is that you creepy jon, sorry no pony tails for you to pull today, you'll have to take your weird fetish somewhere else today.

an example of a bad government policy that will not be changed until they get voted out as they don't want to show they have backed down to the opposition
http://www.stuff.co.nz/business/industries/68754328/govt-property-plans-...