Elizabeth Kerr digs through the detail of Budget 2015 to find beneficiaries, working families and pets are the winners, while tourists and KiwiSavers are the losers

Elizabeth Kerr digs through the detail of Budget 2015 to find beneficiaries, working families and pets are the winners, while tourists and KiwiSavers are the losers

By Elizabeth Kerr

If you think managing the cash in your own wallet is challenging, then imagine what it’s like balancing the books for the entire country.  Imagine for a moment that it is your job is to work out what they can and can’t have.

“More elective surgery, more bridges, more for vulnerable kids, better roads, more train tracks, change the flag…..no don’t change the flag…feed the kids… no don’t you have to support the parents…look after the elderly but reduce house prices first….” oh blimey what a headache!   Just like your own home budget –tough choices need to be made and you can expect at least one of your kids will be crying by the end of the day.

This year's Government budget will wind up exactly like that.  There will be at least one person crying because they missed out on what they were hoping for.   At first glance through the documents most will have a little extra money, continue going to the doctors without charge, be supported into child care or new classrooms, have parents supported into work and hopefully benefit from a few extra dollars in the family kitty each week; so lets not pass the tissues out just yet.

If you’re working, or a working parent, then you might be interested in the following:

  • If you weren’t in Kiwisaver before today then it sucks to be you.  There is no $1000 kick-start anymore, but you will still get your extra $521 per year for making contributions so get yourself in Kiwisaver quick-smart.  Free money is not to be sneezed at so get in there!!!
  • Your ACC levies are likely to be reduced giving you some extra pocket money come time to pay your car rego.
  • Anyone going on holiday overseas can expect to pay an extra NZ$6 to get out and NZ$16 to get back in for the new border clearance levy for bio security and customs activities.  (Expect more x-rays and sniffer dogs too by the way.)
  • If you earn over $88,000 per year then your Working For Families tax credit will likely reduce by about $3 per week.
  • Families on less than $36,350 per year before tax will get an extra $12.50 per week from Working for Families and those much lower will get $24.50 extra.
  • Those earning between $36,350 and $88,000 then don’t worry you are not left out but it will likely be pro-rated and capped at $12.50 per week.
  • Average wage is expected to rise by $7,000 to $63,000 a year by mid-2019.

Education

  • If you have young kids you can kick up your heels a bit as there is $74.9million for early childhood education to enable more children to attend from a younger age for more hours.  “Hurrah” I hear some of you shout.
  • If your teenagers are hanging around home a bit too much then rest assured the 300 extra Trades Academy places could take care of their spare time.
  • $62.9mil extra for children with special needs.
  • 7 new schools and Kura Kaupapa, expansion of 4 schools and building of an extra 241 classrooms at existing schools.
  • $2.1mil for Maori suicide prevention.

Health

  • More money for health than ever being spent on health we’re told.   Palliative care, bowel cancer screening and more funding for elective surgeries are the major winners to the tune of $186.5mil.  
  • Free doctors’ visits and prescriptions for kids under 13 are still destined to take effect from 1 July 2015.

“Get back to work!” they said.

If you’re on a benefit then you need to be available for 20 hours part-time work from the time your youngest turns 3.   (Unemployment is expected to fall below 5% in 2016).   But if you’re struggling to get work then, they will give you some extra money to help you make ends meet in the meantime.

This year’s budget had the following for beneficiaries, which are without doubt in my opinion the biggest winners this year:

  • Benefit rates for those with children increase by $25 per week (after tax).  That is actually quite a decent increase considering it’s more than inflation BUT don’t breathe out yet – its implementation is 9 months away.
  • An extra $1 per hour for Childcare Assistance for up to 50 hours per week per child.
  • Have a dodgy-dead-beat mum or dad not paying their fair share?   Well they’re throwing some money at that situation as well to get better compliance from those shirking their responsibilities here.   If you’re one of those people who want to pay, but haven’t been because you owe more than you can stomach in debt, then its possible that debt will be forgiven in order to get you paying going forward.
  • A warning to those who are receiving Sole Parent Support though, you now have to reapply every year for your benefit.
  • If you’re studying and have children then your Student Allowance will increase by $25 per week.
  • Vulnerable children are especially targeted with over $67mil being set aside for supporting CYF, the Children’s’ Action Plan and keeping at risk students in education or training.

Lets discuss this surplus…

The government earned $67.3 billion dollars last year (2013/14), but spent $71.5 billion.   As you know the secret to wealth is to spend less than you earn so they get an F grade from me here.   However to give you some context it’s the equivalent of someone earning $50k per year but putting $3100 on their credit card.   It’s not great but it’s not really a complete disaster.   Basically this level of deficit says to me “Son, we could have got that surplus but we might have had stop your swimming lessons”.  I.e.: they could have gone harder and really driven for that surplus, but what’s the harm in keeping a few ‘nice to haves’ and getting better results in some areas, at the risk of waiting just one more year?

Also worth noting is that there are two ways to create a surplus.   You could spend less or just earn more.   And I think it’s fair to say that this governments Budget is intending to work on the later as well by continuing to invest in the Governments Business Growth Agenda including tertiary education, Regional Research Institutes, R&D growth grants, increasing tuition subsidies for some science subjects and increasing engineering places, building more houses and continuing the UFB rollout.   A few more initiatives in this growth space would have been nice, but that’s just me.

Non-negotiable expenses and everything else

You all know that in order to be financially successful you need only two things - a pot for your ‘non-negotiable’ expenses and a pot for everything else.   This is based on the fact that there are some things in life which you have to spend on in order to keep yourself safe and healthy, and the rest is used for thrills and giggles.

SO this budget has its own version of non-negotiable costs laid out but I can see there are a few thrills and giggle items that could possibly have been delayed to achieve that surplus if they really wanted to.

Okay maybe they could have done away with the $40 million for urban cycle-ways.   Whilst I love them, they are a ‘nice to have’ and come well below meeting the needs for families in hardship and hungry children in my opinion.   As with the new $52 million wharf on the Chatham Islands and the $40 million for Te Papa for capital works on its Wellington buildings.   The $49.8 million to continue funding Whanau Ora could have been set aside until squabbling was set aside on how to measure what it is that they set out to achieve, and more money towards Security Intelligence, Lincoln's new science lab, $13mil to relocate the Archive NZ Christchurch office and the $12.1m investment for the NZ Business Number initiative…*deep breath*.... and possibly the extra $53.3 for Novopay (over 4 years) and the $11.2m to secure the future of the kiwi could have waited.   But they are included and that should make those affected very happy.  

So that’s it folks – there appears to really be something in here for everyone - even the family pet is part of a $10 million package for animal welfare protection.   

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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We give tax credits to people earning over 88K?

hey, the national government gave everybody earning over 70K a 3% tax credit in their first budget....

That's the cap for Working For Families.

If 88K is the cap, then technically there should be no credits for people earning more? Confused about how you've phrased this, now.
.
Does somebody earning over 88k get credits, or not?

They way I read it and the WFF is they used to but now that is capped so they cannot. So WFF payments is dependant on how many children you have I think. as a sliding scale against salary.

"Lets discuss this surplus" what you imply is Govn austerity and that throughout the world has shown to be a really bad idea. aka say Sweden, or better Greece. Clear failures. On top of that how many NZers really care about the Govn achieving a small surplus or not? I really dont see it registering with many voters overly much.

what does austerity mean/?living within your means? Borrowing to create growth for the sake of growth will have to be paid for at some point further down the track.

No, that isnt the argument (we'll come to growth for ever in a moment). A Govn's spending is pretty fixed and actually increases in a downturn (more un-employed benefits) and it loses income (less PAYE, GST etc). If a Govn saved $s for a rainy day like a "sensible" householder then borrowing to continue spending wouldnt be an issue it could spend down its savings. No goven really does that however does it? (well some asian ones might, Sinagpore?).

Growth, well it seems this Govn (and indeed the last Labour one) and Govn's all over the world insist on the exponential growth thing while we are on a finite planet with limited resources. I for one can see the simple math showing that is impossible, how about you?

You don't have to have any mathematical comprehension to understand that growth is finite, and if you think you can just continue to grow till you physically can't anymore you're just as mad as the one who thinks that growth can be infinite.
Prospering without growth is going to look a whooooooole lot different, but its doable with a will

growth for growths sake can create a misallocation of resources (eg China's ghost cities... and too many dairy farms). i wonder if money printing will get us to the same place we are heading anyway ,by a different route?

They weren't clear failures...what was clear is that their government is so unbelievably corrupt that their probably nothing that can be done.

Government Austerity is _supposed_ to mean _reducing_ tax burden, and spending _less_ in political pet projects, and reducing the cost load of governance.

The greece way _increased_ the tax burden on the taxpayers, _especially_ the businesses, spent _more_ in pet projects and promotions and _less_ in economic development/returns, and _increased_ the governance loading (costs and time).

They were the anti-austerity, no wonder it failed. However it was important that they make it fail.
If they'd done real government austerity then the people would realise they really don't need a bloated government and the famous Greece Government Job sinecure would vanish.

In whose language exactly does Austerity mean that? I've only ever heard it used in the 'governments paying down outstanding debt at the expense of all other priorities at the whim of the bondholders' meaning!

Pretty much steady as it goes Given the huge fall in dairy prices the fact that the budget is almost in balance is a great achievement. One only has to look at the shambles in Australia as they flip flop from one budget to the next to appreciate what we have here...Boring is good!!

Employment generation is the Key, which is not happening to certain sections of New Zealanders and that is a big shame. Corporate Welfare and Funds Management Industry subsidy by way of Kiwisaver fees, etc is a big rip off on the common citizen. Money is being siphoned off. Interest set off is a big scam and sham. No guts in the government to face up to hard choices.

As Brian Fallow commented - the Budget is largely Deflationary with a decrease in government spending per capita. Tight govt spending will put downwards pressure on costs, and downwards pressure on the RBNZ to cut interest rates.
Once again, it's up to the
RBNZ to provide some stimulus to the economy during a global recession and a NZ downturn ahead.

whats interesting is we are slowing down while the rest of the world (apart from china) is showing growth even japan, surprise there. so the question is why and that comes back to policy settings

"Free money is not to be sneezed at so get in there"

Free money? Where did it come from? Kind of like if I went to my bank to talk about drawing down on our mortgage a bit so I could put it into a term deposit that's locked in until I'm 65....67............sometime in the future.......

The only wealth generation now is people buying and selling houses to each other at a higher and higher price. This does not increase the tax take as would any productive enterprise would.