Bernard Hickey picks out the 10 key details from Bill English's Budget 2014, including the potential for tax cuts and a loosening of fiscal policy

Bernard Hickey picks out the 10 key details from Bill English's Budget 2014, including the potential for tax cuts and a loosening of fiscal policy

By Bernard Hickey

Finance Minister Bill English has unveiled his sixth budget and his last before the September 20 election. Here are the 10 things worth taking away from the Budget

1. Here come the surpluses – The Government expects to post a NZ$372 million OBEGAL (Operating Balance Excluding Gains and Losses) surplus in the year to June 30. That's up from a deficit of NZ$2.447 billion in the year almost finished and better than the NZ$100 million forecast in December.

Treasury forecasts the surpluses will rise to NZ$3.485 billion by 2017/18 or 1.3% of GDP.

2. A small lolly scramble – The Government stuck with its new net spending allowance of NZ$1 billion for the 2014/15 year, but has increased it by NZ$500 million over the next three years to help pay for a few (small) goodies for families, home builders and for Defence.

3. It's a (slight) loosening – Treasury's fiscal impulse figures show a contraction forecast in December for the 2014/15 year has turned around to a slight stimulus of 0.1%. That may put a smidgen of extra pressure on interest rates this year or next year, but Bill English thinks the Government has the balance right.

Over the full four years of the Budget outlook Treasury is forecasting the Government will withdraw 0.6% of stimulus each year on average over the latter part of the forecast period. That's down from an average contraction of 0.7% in the Treasury's December forecast.

4. Talking tax cuts – Tax cuts are not forecast in the budget, but Bill English started talking about the potential for tax cuts, echoing teasing comments yesterday by Prime Minister John Key about the potential to use some of those discretionary spending pots of NZ$1.5 billion a year in 2015/16, 2016/17 and 2017/18 to fund some sort of tax cut, albeit it relatively small given the size of those fiscal envelopes.

5. A few builders offcuts – The Government is working to improve housing supply, particularly in Auckland. It unveiled a plan to temporarily remove tariffs on building materials, which it said would reduce the cost of building a standard home by NZ$3,500.

It also announced NZ$64.3 million of new operating funding and NZ$16.4 million of new capital funding for social housing needs assessment for the Ministry of Social Development.  There would also be a NZ$30 million boost to the Social Housing Fund.

6. Some lollies for young kids – The Government announced a NZ$500 million package that includes a four week extension to Paid Parental Leave, an increase in the parental tax credit by NZ$70 a week and by two weeks to 10 weeks,  and extra funding for Early Childcare Education.

7.  Migration is an issue – One scenario painted by Treasury in its fiscal risks section was for a rise in net migration to 41,500, which it said would put extra pressure on prices, house prices and interest rates.

8.  4% growth – Treasury forecast GDP growth of 4% in the year to March 2015, up from 3% in the year to March just completed. It expects real private spending growth of 7% in the year ahead as high net migration, record high terms of trade, insurance payouts and strong asset prices fuel growth.

9. There's a limit – Bill English said Treasury had advised him the most new spending any government could manage in a year without pushing up interest rates was NZ$1.5 billion. That sets the parameter for the political debate about lolly scrambles vs higher interest rates.

10. Money for Auckland - The Budget included a NZ$375 million loan to the NZTA to kick start NZ$815 million of Auckland Transport projects to reduce congestion. This was a factor NZIER pointed to in an analysis about expensive housing.

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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Excellent !

  • No shocks
  • Everything going broadly according to plan
  • No increases in taxation
  • No unpleasant surpries
  • Steady as she goes

John and Bill have done a fantastic job steering us through the worst recession in living memory , lets ensure these  good guys get back for another term .

I wonder where and when Johnboy can organise the next earthquake in order to keep GDP/employment/surplus to keep going up.  Such brilliant management!

Wouldn't suprise me if some hardcore Labour/Green supporters already accused the Nat for that.

Wouoldnt surprise me if hard core Natioanl voters would accuse any left wing support of anything as silly as that.

Hypocrite’s.  In the house Norman and Cunliffe are questioning why National clocked up more debt, then loony lefties on here are saying National are not doing enough to help Chch.  What do you think the debt was for, Chch isn’t going to rebuild itself… 

go on ask that in Russell's Facebook page?

Ask Jonboy on facebook at the same time why he didn't reverse the 2008 tax cuts if getting back into surplus was so important.

Because National needed to get the country through an unprecedented global financial crises.  Because increased taxes is a withdrawal from the economy.
If you want higher taxes just vote Labour. 

If your economics is at level 101 I guess you can make that suggestion.  In NZ terms If however you look at how that tax cut was spent, it seems to have gone into property,  meanhile we had a GST rise which is regressive and shrinks spending, neither are very good to get us out of a recession.   On top of that taxing more progressively and spending on infrastructure works would look to have a NET positive effect due to a large multipler when in a recession. We'd also get public infrastructure at a discount and see more employment and in the building sector which usually leads an economy out of a recession.  Also of cource that means more employed in the building sector make fewer WINZ claims and pay the cost of employing them for a Govn is fractional.
Meanwhile the ppl who think that Govn finances work the same way as a domestic house's finances seem rather, um common.
Now would Labour have spent more and wisely?  Yes and I suspect not, both parties are yesterday's men, both refuse to see it.

When your economics is at level 101 and you have political blinkers we get comments like yours.  Interesting you mention property which went up approx 96% under the last Labour government and only approx 25% under this National government.  And infrastructure, I see National doing more infrastructure projects in the last five years than Labour did in 10.  All your points above regarding infrastructure spend and employment is positive re-enforcement of Nationals policies.  Your points and arguments are confused and disjointed, I’m not sure if it’s from a lack of intelligence or trying to justify the dead cause that is the Labour party, or both.  Would Labour have spent more wisely?  No, they had their chance and achieved nothing. 


No, you are the one that is busy trying to justify the sanity of investing in housing using a level of economics that is only valid in a school room.  and no I dont wear politcal blinkers, I have contempt for all the parties.  Im sorry for you that you cannot fathom better.
Labour, as I believe I have said yesterday's men, never voted for them, cant see I ever will.

Odd that you choose housing to try and make a point, it is as you say basic economic theory, so why then have you managed to get it so wrong for so many years now?  Do you want me to explain supply and demand theory to you, again. 

No thanks, I passed such basics a while back, pity you are still stuck there.

Fair enough, can't teach an old dog new tricks. 

Using Key’s percentage values Labour vs National for the sake of comparing apples with apples, as he gave in sitting time parliament a month or two ago, to demonstrate that it is possible to draw completely valid and different conclusions from his own arguement.

  • Labour rise 50%

Start $350,000.00 End $525,000.00 Total rise $175,000.00

= $19,444.44 per yr for 9 years

  • National rise 25%

Start $525,000.00 End $656,250.00 Total rise $131,250.00

= $21,875.00 per yr for 6 years (it’s not even 6, actually so this figure will be higher)

Use any price rise in any region with highest prices and you’ll find the outcome is similar. House prices have risen considerably more quickly under National than they did under Labour.
Using John Key’s own statistics – no matter what number you wish to use as a base starting point – prices have risen more quickly on an annual basis under the National government than under Labour.


Yes a good budget for everyone , great speech by Key itemising the things that labour did not support , well done and keep it going , i cannot see anyone coming close to National and another term is a certain.

Voting along ideological lines is dangerous, we need proper response to housing crisis and all I see is weak admission that there even is one... Here's one vote National will never get, so long as their fiscal policy features real, deleterious externalities.

Lance the boil.

Depends, if those ppl are already Nat supporters then really he isnt swinging the vote he needs the young FHB...

You only have to look at the pre-last election polls %s and the drop since then to now to do a wtf on your comment.
Looks a very close call, with as dh said 89% chance Whinnie is the king maker. I wonder who he detests more National or the Greens? looks like the former. The interesting thing will be the pork barrel politics from him and which major party is more likely to agree to pay.

National were more popular in the Ipsos poll of a few days ago than the Roy Morgan the 89% figure comes from? Mind you, Ipsos don't ring cellphones and Roy Morgan do, so there are differences between the poll methodologies.

There seems to be considerable noise and yes variations in method.  Hence I dont look too much at one off figures but trends over time.  Looking at a 3 year trend National is now considerably lower in the polls running up to this election than the last.  Has that trend been down enough? hard to tell. 
Meanwhile future tax cuts are being dangled which always seems to win some votes and labour dont seem to be able to field a leader worth diddly in the public eyes.

"...labour dont seem to be able to field a leader worth diddly..."
Agreed, Labour is an embarrassing shambles.

" the public eyes".  So no that doesnt mean they are a shambles it means our shallow voters are getting what the deserve.  It also doesnt mean that either of the last 2 Labour leaders would have been in-competant as PMs, any worse than JK is proving anyway.  Not sure about the one they have now, we may well get to find out.

On the contrary, in the eyes of traditional Labour voters they're performing well - taking the government to task on corruption and releasing solid and original policy that people can relate to.  Ironically, even John Campbell's "at home with the leaders" series showed David Cunliffe to be quite a pleasant chap with a lovely wife - it's been very well received.  Labour Party membership is also at it's strongest in 30 years.  People that I know who voted National at the last couple of elections are either returning to Labour or not voting. 
Polls without cellphone calls included are completely irrelevant - 20% of New Zealanders don't have landlines.  You're not a Labour supporter, you never will be and so your opinions on the party don't matter one iota - what matters is the return of traditional Labour voters and people such as my father who didn't vote at the last two elections out of protest.  These votes are returning this year, it's dangerous for National and this is why people such as yourself are making so much noise - you're worried.

But the traditional Labour voters would frankly vote for a gold fish if it was red (ditto National voters of course).  In either case what the core supporters think is moot, what matters is how the swing voter sees Cunliffe.  Certainly after following him on Facebook for a bit I would never vote for him, not unless it was him or JK and I was forced to vote, "protest" indeed.
In terms of return of the traditional voter, I am not so sure. I have to ask just where has the Greens support come from? I'd suggest the 5% or so gain is mostly left off labour and that hasnt returned.  Does that matter? I'd suggest not, whether that vote is Green or Labour its a left vote, where Labour should be gaining is the centre off Natioanl, not a huge sign of that.
I wouldnt dismiss any poll because of the trend they show, the more the better. 
"worried" yes indeed...any housng speculator and there seem to be a few in here faces a hard time, fear and greed...both ugly IMHO.

Some things that I have read about Labour's tactics indicate they believe that the lowered voter turnout has disproportionately affected them. That there 'core' hasn't got out to vote. They believe an effective strategy will be focusing on a ground campaign of 'getting out the vote'. This might be true but would be a missed opportunity if that is all they do.
Steven I am a bit like you and have a pretty low opinion of all political parties. But it seems to me that the weak point of National and the opportunity for Labour/Greens is National has a lack of vision. National are trying nothing new and as the saying goes 'if you keep doing the same things then the same things will keep happening.'
It would be possible to present a new vision for NZ based around affordable housing, a big improvement in transport infrastructure and local saving/investment policies that favours productive investment rather than rentier exploitation. Labour has some of that already in the KiwiBuild and KiwiSaver schemes but they need to tie it all together as a vision that voters can emotionally connect to.

Well in terms of policy and vision I guess I will vote Green again. Mainly because they are the only party looking at AGW and peak oil, and addressing it, the others all ignore it.   The rest of their policies I will just have to live with, not that its all bad, but Im uneasy on the detail.  The devil is always in the detail.
Labour isnt that wrong on turnout I think. Pity, their supporters are fools if they didnt vote and especially will be this time when its looking so close.
Interesting that BE has gone list I think, very easy to drop off that and "retire" if National looses.

I have a lot of respect for Bill English. I think he has matured into a pretty balance politician much like Ryall in Health. I think Bill has seen the damage unaffordable housing is doing to our economy/society but every time he makes a move towards addressing this problem his boss Jonboy pops up and waters down the proposal by saying the government does not want house prices to fall.
I think Bill can see the opportunities missed of a generation paying too much for housing wheras Jonboy just hobnobs in the posh areas of Auckland reassuring the rich end of town that they will not lose anything on their property portfolios...
I suspect that Bill's biggest regret in his political career will be not pushing back against his PM on housing affordability.

PEAK OIL IS BOLLOCKS , there is so much oil and so many alternative fossil fuels on the planet , we will not run out before altenatives to petrol and diesle is found .
REMEMBER , we are in the oil age , and the stoneage did not end because we ran out of stones

... ah yes , but the ice age did end when they ran out of ice ...
And that is a great shame for those who prefer their whisky on the rocks ... which , ironically enough , aren't actually stones ...
Chin chin !!!

You know your ignorance of math, science, geology and their interaction with economics is mind blowing.
If we had so much oil and could pump it out why is it at $100 a barrel? when the norm 10 years ago was more like $20~30?

If you think its cyclic please please enlighten us as to why its so high today and why it will come down except for the reason production of crude has peaked and we ration via price.  
NB 1978~9, Iran went Fundie for instance.
Also I did say the "norm" so outside of geo-political events causing artificially high prices for short periods the long run prices was more like $30.  Today we can see that crude oil output peaked in 2006 and the present price is how we ration oil.  If you look at 2008 and the collapse from $148 to $35? caused by a recession, yes that is sort of cyclic.

Plus some Green party ideas such as the Green investment bank that would help the tranistion to a more renewable energy economy would work well with this 'vision'.

Forget the Green Investment Bank .... it will never happen .
Its lacks even the remotest basic tenets of  fundamental economic common sense  , and thats why the media and John Key have ignored it . its a laod of codswallop
The idea comes from cloud cuckoo land  in the context of NZ , and it will never fly

Boatman it is copied off what the Tories are doing in the UK. Do they lack economic common sense? Are they dumb?
Fundamentally there is nothing wrong with setting up a bank with expertise in environmental matters such as renewable energy -solar power. To bring these ideas to the market. Given the way our banks have overly focused on property then something like the Green Investment Bank could be the sort of nudge that the market needs.....
By the way SHOUTING doesn't make your arguments right!

Sorry Steven - I was referring to Happy not you.  Agreed re Labour wanting to get their vote out, but I do think they are re-connecting with people again this year after years in the doldrums.  David Cunliffe lacks charm but he's a smart lad and I'd personally trust him to run the economy (with David Parker as the face).
I know several people who voted National last year and there's no way they'll vote for them this year, whether Labour or NZ First gets their vote or they don't vote at all is yet to be seen - these chaps wouldn't vote Green.  Housing affordability and a perception of corruption (even if it's just that) is leaving a sour taste in the mouths of these 'typical kiwis' who still believe in a 'fair go'.  This election is one for National to lose rather than Labour win.

I know you were.

PDK chatted to David parker Re: peak oil, he is a denier...frankly anyone in charge of an economy who denials a fundimental part that undrpins it isnt someone to trust.
However at least the Green's would be in cabinet to push such issues unlike if National wins again.
National to lose, yes I agree.

Parker thinks that budget surplus is a good thing also. Doesn't know basic (MMT) macro-economics. Only that neo-classical crap.

My opinion is as irrelavent as yours, what matters is the cold hard stats and they say that only 30% of the population can bring themselves to vote Labour.  In my opinion these people tend to be selfish vested interests who only want to see a bloated public sector for their own personal benefit, higher benefits for the useless or stronger trade unions to blackmail and stifle business. 
Remind me what Cunliffes preferred PM % is....  Is he even in double figures...

" only 30% of the population can bring themselves to vote Labour"  That's totally out of context, unless you think the Greens will enter negotiation with the largest party first?

It appears no one wants to partner with the Greens, Labour is avoiding the question and Winnie has all but ruled it out.  Labour has been asked repeatedly what their relationship with the Greens will be and I've not seen them give a definitive answer. 

I think you'll find that labour will happily partner, but with 12~15% of the vote its moot how Labour feels anyway. In any event the policies of both merge very well, so really thinking it wont happen is as per your usual thinking process, flawed.
On top of that National did for WP, I cant see any love lost there. 

We do actually life in a country where the government is elected through MMP, which is why you can have National as the party with the most individual support by a long way, but a majority of people polled wanting a Labour led government. These results are not contradictory. 

Indeed it's quite common in proportional electoral systems for the party that got the most votes to be in opposistion, and in fact is one of the key benefits.  If labour got 35% of the vote, greens 5%, national 25%, conservatives 20% and act 15%, would it really right for Labour to be in power?

On those %s they would not be would they though? However bear in mind that that is the MMP system, so if there were 6 left parties all with 8.5% and the right one party of 49% then yes ts right that the left parties have Govn.

I agree they shouldn't in that senario.  But it is commonly voiced in this country that somehow the party with the single largest vote has a 'right' to govern, and that somehow a coallition that doesn't include the largest single party is somehow illegitamte or imoral.

If your going to measure parties + coalition partners you need to measure both sides similarly. 

Incorrect we have MMP. so we have the luxury of a more granular vote but still with the mass effect of a left vote which sits at 45.5% then there is mana.
That means that Whinee with his 5~7% is the "King maker".  I dont know which way he will go but I dont think there is much love lost between him and National.   Im watching him and NZF over the next few months.

Winnie the king maker with only 5% of the vote and extracting what-ever pound of flesh he wants; right there is the problem with MMP.  Disproportionate power to the minority. 

As someone who doesn't want strong governments ruling over me pushing through minority policies, I really like that a government needs the support of more than half the electorate to be formed. I may not think much of Winston, but I like him as a sign that governments can't use a minority of support to push radical change.

It's left bloc versus right bloc chap and the latest Roy Morgan had Labour/Greens in front of National/ACT/United Future/Maori Party so basically it's game on.
People vote in their own self interest Happy - that's what politics is about. National voters are selfish also, perhaps more so - they're voting for artificially high house prices, no capital gains tax and personal tax cuts. 
Personally I've never been on a benefit, I'm not in a union and I run my own business so that destroys your stereotype.  On paper I should be a National voter but their disdain for the environment, head in the sand approach to Auckland housing, GCSB shambles and generally arrogant and corrupt attitude to politics means they don't have my vote.

Rebuilding Christchurch was one of three objectives for this National government. Equal to getting the government revenue/expendicture into surplus. Yet this doesn't get a mention in Bernard's top ten. Is that because Bill English didn't mention it in the Budget or because the North Island media don't give a .... about Christchurch?
Of course Money for Auckland comes in at 10. Surely this cannot be true? What needs to happen for money for Christchurch to make the list of important Budget points?
A CERA reports indicates Christchurch rents will reach Auckland levels by January next year. Traffic growth in the northern and southern corridors has been ten years worth in three. The RoNS in Canterbury will be congested before they are even finished and given they were not very significant compared to what Auckland or Wellington transport got the situation is just going to get worse.
Does the government see Canterbury as little more than a cash cow? Good for dairy conversions and to soak up a few unemployed but not much more.
Where is the vision?
Bernard please tell me this is all a mistake....

According to Winston - we can thank you folks for the surplus - its the interest earned on your insurance payouts which have been held back.  

Kate we don't know how much the quakes have cost the country because there has been no independent analysis. Certainly the Auckland centric media aren't interested. It is less than the government claims because they never admit that the insurance payout generates extra tax revenue, increased employment and lower government benefit payments.
I think the government has overall paid out as a result of the earthquakes, some of it because they underfunded EQC prior to the quakes. But that payout is to be expected. Christchurch is a modern city in a first world democracy. It has a right to expect its public services will be repaired to the same standard as the rest of country.
Yet those public services, the roads and underground services in particular are not even being repaired to 2010 prequake conditions and definitely not to the 2014 standards that exist in NZ other big cities -Auckland and Wellington. Currently it is looking like the job will be $500 to $1000 million short.
I don't know how the government can be giving election year bribes to Auckland of new infrastructure when the repair job is only half done in Christchurch.
I see this government as hypocrites only interested in the big end of town.

Auckland is the turbine of the NZ economy, upgrading Auckland infrastructure is critical.

I thought it was the dairy industry

Auckland is where everything is happening. Our Great Leader lives in an Auckland central mansion, has a multimillion dollar beach front bach just up the road and told everyone that Wellington is as good as dead.

I suppose it depends on how close the election is and your audience

So you're saying Dairy and the nz provinces that process that dairy earn the money and auckland spends it on clipping tickets, shuffling papers, out bidding each other on houses and burning petrol on your stress fulled 45 min traffic jammed commutes to and from work each day?

You never been to East  Tamiki, Penrose/Te Papa, Albany, Wairua Valley, Wiri, Airport, Henderson, Rosebank Rd?
The growth and expansion in Auckland is incredible.
Dwarfs any other industrial/commercial areas in NZ.

Fueled and riding on the coat tails of dairy and the provinces. Your welcome.

I like Auckland but wish it would go its own way and leave NZ. The rest of us feel so guilty about holding it back from being a standalone superstar it surely would be.

 $26.6 billion of 2013 agricultural exports out of a total of NZ goods exported of $45.7b, agriculture represents about 58 per cent

I live in Auckland and invest in Auckland and can tell you from experience that you are 100% correct.  The only way Auckland will ever pay its way is if it creates its own export industries, best options would be a financial services hub (the Canary Wharf of the South Pacific) or a IT/software/systems hub (Silicon Valley of the South Pacific). 

You'll need to drastically improve the the transport systems in Auckland before you get a financial or software hub in Auckland.  Those industries need to recruit from a large pool of highly skilled labour and get them all in the same room collaborating.  

I think you mean tuban. Go the full burqua.

If Auckland is this economic wonder - how come it can't afford to build it's infrastructure ?

Because the tax take goes to the central government.
Even half the rates spend isn't under local government control.  Auckland Transport for instance which spends close the 35% of rates money, by law has to follow the central governments instructions, not the local governments instructions which it only has to 'consider'.

You are right dtcarter. In NZ we have the pretense that our urban forms are the result of local democratic decisions when in fact central government has been pulling the strings to get what they want for generations.
In every city in NZ the types of housing, public transport and roading has been 90% influenced by decisions made in Wellington not in the local town halls.
In my most cynical moments I believe that Wellington only allows a small ineffectual local government to exist at all because that way they have someone to blame when things go wrong (leaky buildings, the rebuild etc). This worked in Christchurch for three years and only now is Gerry's blame the council tactics wearing thin and Jonboy is being forced to front up to the media more. Ultimately the tactic will be successful if National win a third term and move the 'conversation' onto other matters.

dtcarter is right for the wrong reasons. Of course Auckland Transport as a council-controlled organisation is loosely beholden to Auckland Council not the government. But as you will often hear me say,"who cares?". Central Government pulls the only lever that matters when it comes to the shape of Auckland and the affordability of housing there. Gerry Brownlee as Minister of Transport could whack a massive freeway south of central Auckland and pretty much all of the housing issues would go away overnight.
All the budget does is advance an existing "do very little" plan by a couple of years. (A) yawn, and (B) so much for all the hot air about making it possible for anyone to buy a house in Auckland.
Brendon, do not get me started on the malignant co-dependency between central and local government here. It ends up being jobs for all the boys and no-one to blame for all the foul-ups.

Agree completely.  Regarding a massive big freeway would make a huge difference, so would a satelite town/city serviced by fast rail or dedicated busways, whichever is cheaper. Also I think the mistake the media/politicians fall into is thinking the biggest problem is in Auckland so lets just fix that first. But if all growing parts of NZ got new infrastructure or at least the land bought for new transport infrastructure with the promise to build it, if people/business come then there would be so much competition that housing would be affordable for generations.

Kumbel you are wrong i am afraid, since the Land Transport Management Amendment Bill was passed last year, all Auckland Council can do is sack leadership of Auckland Transport, but any new leader they appoint is legally obliged to ignore the councils wishes and implement the central governments transport policy statement.  Our elected councilers can talk all they want about a livable city and walking and cycling and public transport targets, but they are weak in the face of the government policy statement with it's focus away from public transport and toward motoroways
"The new law strips Auckland councillors of their power to decide how the $459.5 million of ratepayers' money - 33 per cent of total rates income - spent on transport each year is targeted. Instead, the final arbiter will be the unelected board of Auckland Transport, which will have to follow the Government policy statement (GPS) on land transport. The only sanction the Auckland Council will have to control the board of Auckland Transport - a council-controlled organisation - if it goes feral is to sack it. But the new law insists the board's first loyalty in setting transport priorities must be to the government GPS, so what would a replacement board do differently?"
We are already spending billions on a massive great freeway south of central auckland, it's called the south-western.  Do you suggest another?

I am always happy to accept that I am wrong when I am. But this is not one of those times.
1. The independence of Auckland Transport was built in at the time of the creation of Auckland Council. Many councils over the last twenty-odd years have created wholly owned subsidiary companies to perform some function or other. They are known as council-controlled trading organisations. The rub is that these organisations, constituted as limited-liability companies with their own board of directors, operate under the Companies Act not the Local Government Act. Even councillors appointed as directors must carry out their duties as directors or be personally liable for any failures. There are ways that councils and CCTO's work together but no councillor can walk into a CCTO and insist on something being done nor can a council pass resolutions that bind the CCTO to a certain policy or action. All of this was known when the structure of the new council was announced.
2. All councils have to adhere to the Government Policy Statement if they want to be eligible to receive government funding for transport through the National Land Transport Programme administered by NZ Transport Authority. Auckland gets a special mention in the legislation you quote only because they have a unique structure. Otherwise it's the same for everyone.
I haven't read a GPS but it is likely to be high-level and to express preferences such as a preference for private motor transport over public transport. It is not the government directing how AT spends the ratepayers' money.
3. I expressly said a freeway not a motorway. I am taking as a model the northern part of the Perth freeway system. By combining three laned roads, a train line,. plenty of space for other trunk infrastructure and the occasional new city centre Perth has grown north at a rate that would make AKL dizzy. Anyone who is serious about putting affordable housing in Auckland would build a large trunk south and forget about the North Shore. This would mean upgrading and extending the existing Southern Motorway quite possibly at the expense of rail loops and harbour tunnels. Under the current setup it is central government that funds, builds and operates highways and rail lines- not local councils - so it is Gerry Brownlee, as Minister of Transport,  who has all the power to make Auckland affordable again.

So, your word against Rudmans and Mike Lees.  You dissagree with "Mike Lee complained of the impending loss of democratic accountability to Auckland ratepayers, pointing out that Auckland would be the only part of New Zealand where elected representatives would not set the local land transport plan."?  I haven't read the Act myself, just relying on others analysis of it.

It's you I am disagreeing with not them. When you said "Auckland Transport for instance which spends close the 35% of rates money, by law has to follow the central governments instructions, not the local governments instructions which it only has to 'consider'" you misunderstood what the Rudman article was saying.
Auckland Council not having the final say on the regional land transport plan is not the same as saying that the government pulls all the strings in AKL.
In the coming year the taxpayer via the government will spend some $2.85b on roading in NZ. Most of that goes into the state highway system. And just to be clear: all  the motorways in Auckland are built and paid for by the taxpayers of New Zealand not the ratepayers of Auckland. About $700m of that budget will also go to councils as a roading subsidy. The bulk of it will go to rural councils but it is available to all councils.
The purpose of the Government Policy Statement is to make really clear to councils the sort of projects that might attract a subsidy and also to ensure that councils don't undermine the taxpayer spend on highways by doing their own thing.
As a wholly owned subsidiary of Auckland Council, AT will have to work with its parent to decide how the rates are spent in any particular year. The government will have no direct role in that process.
I don't think the situation is ideal from a democratic point of view but something like this was always going to happen from the moment transport was hived off into a separate company with its own board. 

The problem is that "ensuring the councils don't underming the taxpayers spend on highways by doing their own thing", means local decisions are no longer influenced by Auckland Council but are decided by Auckland Transport, who have to implement the Government Policy Statement, and since this amendment was passed, have very little accountability to Auckland Council.  What was wrong with the way things were before?  NZTA are still only going to fund the things they want to fund.  How was Auckland Transport having to give effect to the councils transport plan undermining the governments national transport spend?
Why does hiving transport off into a seperate company mean that the central govt should set the regional transport plan?  Why cant the regional land transport plan not still be set by the council, and handed over to AT to implement?
See this also.

DT and Kumbel whether or not Auckland Council has control over its rates transport spend or not is a moot point re transport. The majority of transport infrastructure in Auckland has been decided by central government not local government. The urban architecture of Auckland is created by decisions made in Wellington not Auckland.  To change that would require a transfer of tax from Wellington to Auckland (and therefor to other regions too).

dtcarter, your questions are very good ones and there is not enough room here to answer them fully.
I have a couple of points that may help:
1. Auckland is not unique. The "hierarchy of transport plans" exists across the whole country. But I believe that the government was very cynical setting up AT as a CCTO because it knew it could influence AT more easily than it could influence the Council itself. Turned out to be a good insurance policy since "their man", John Banks, did not find favour with the electorate.
2. Since 1876 there has been a very steady growth of the power of central government at the expense of local government. This sped up in 1991 with the passing of the Building Act. In my book the legislative change you refer to was a very small sidebar to a much bigger story.
We have reached a point now where I believe that all decision-making at the local level is a sham. The policy wonks call the decisions made in councils "decisionless decisions". The councils go through the motions but they have little choice in reality about what they do.
3. KH, dtcarter and Brendon you may all want to contemplate that some $500m+ gets sucked out of Auckland every year to fund highways and local roads in rural areas. And, of course, the government really wants to make sure that that never changes.

It's worse: dairy farmers are going to pay for Auckland roads.
I actually don't know what to make of Vote Transport. To be fair there's $100m for road reconstruction in Christchurch but this was probably already in the forward budget from last year so its not "news". The rest of it is odd to say the least.
The biggest budget item is the National Land Transport Plan which gets an overall increase of 1.8% but let's look at the winners and losers inside that budget item.
Starting with building new state highways (not actually in the NLTP): it gets a whopping 20.6% increase. And the big ticket items in the NLTP:
State highway operations and maintenance:  3.4%
Public transport                                                      1.6%
New and improved local roads                           8.8%
Renewal of local roads                                          0.4%
Maintenance of local roads                                   0.0%
Given that the civil construction price index has averaged an annual increase of 4.5% over the last ten years any increase below about 3.5 to 4% is definitely a cut. With the exception of subsidies for new local roads this budget is a massive cut in funding to rural councils.
So, the dairy farmers? I think councils will take the easy way out to fix the funding shortfall by following Southland Districts lead and charging a differential roading rate depending on land use. In Southland dairy farms pay the highest roading rates I guess on the basis that dairy tankers cause a lot of wear and tear on tiny roads that were only designed to handle the annual carting away of lambs to the works.
And Christchurch? Look for the miraculous bringing forward of the Belfast Western Bypass and the Northern Corridor projects a little closer to election time.
according to stuff the earthquake was wort $200m extra in the budget. Thank you ChCh for giving back what you so obviously don't need.

This budget is way way way more healthy than the one they have just delivered across the ditch.  Obviuosly the pain has gone in NZ and it just started in Aus..  

LOL, when did the 1% ever feel any pain?

Never voted for Winnie but have voted for both majors within the last decade.
If and only if I could depend on Winnie to make defending NZ against foreign ownership his absolute bottom line, he would get my vote. The problem is whether we could depend on him to carry through.
Could he force the Nats to face reality and not be swayed by the baubles of power?

Thats the problem. I dont want the nats to have unbridled power but you can't trust Winnie to do anything. Conservatives anyone?

I don't see why National would be too oposed to winnies 'smart immigration' policies that aim to place immigrants in cities/towns outside of auckland.

Make them milk a few cows before they get on the property flicking game in auckland.

Basil/Simon, your xenophobic blinkers are on, all my neighbours are of Asian descent, speak very little pigeon english, but they have the same faces that you whine about at the auction house, get with the program! The small percentage that DO want to buy our property will find a way, through relatives/friends or whatever... Winnie's policy of placing migrants in Gore to work, yawn... time to retire Mr Wrinkle, the flu isn't going to save you much longer...

Here we go again.
These days we just have to be xeno..... or racist. Personally I just think that Auckland has too many demands being put upon it by excessive immigration. I do not care where they come from but I do care to have to provide the capital cost added they impose on those here already. If I am accused of anything relating to race it is the fact that costs have to be greater if they are non English speakers. We absorbed Pacific immigrants with not too much disruption but only because they were at that time valuable as factory workers and we had governments that accepted the responsibility of housing and other pressures. That is entirely ignored as a problem by our current bozos in Wellington.

Not me whining. Just a more sensible use of existing infrastracture.

It would be great if reporters doing vox pop reaction stories, when they tell a random uninformed person about the headline announcement, also told them about things like when the policy was being introduced. Peope can complain about NZ folk being being financially uninformed, but honestly when the media sets up questions that are the equivalent of "Kittens!!! Do you like kittens?" what kind of outcome do you expect.

@Steven, one of the reasons why GST goes up and cut in income tax is a good thing

Uh, no. 

A question. If the government had declared it was spending $375 million on building roads, rather than declaring it is making an interest free loan to NZTA of $375 million to build roads, would it still be in "surplus".

Next it will be making interest free loans to Health and Education!
Charter hospitals?

What's worse, is the the "interest free" part of that is acutally the interest being paid from the main budget.  So much for roading being hypothecated

 I think there is a place in politics for hypocrisy and sanctimony, its Just that National are so much better at it than Labour at the moment. George Parr Mp