Delivering for New Zealanders Hon Steven Joyce, Minister of Finance - - PowerPoint PPT Presentation

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Delivering for New Zealanders Hon Steven Joyce, Minister of Finance - - PowerPoint PPT Presentation

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Delivering for New Zealanders Hon Steven Joyce, Minister of Finance 25 MAY 2017 Delivering for New Zealanders Strong economic forecast Improving fiscal forecast Investment in public services and infrastructure for growth

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Delivering for New Zealanders

Hon Steven Joyce, Minister of Finance

25 MAY 2017

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  • Strong economic forecast
  • Improving fiscal forecast
  • Investment in public services and infrastructure for growth
  • Reducing net debt as a percentage of GDP
  • Family Incomes Package

Delivering for New Zealanders

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Positive economic forecast

1 2 3 4 5 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Strong GDP growth continues through forecast period

%

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Positive economic forecast

1 2 3 4 NZ US UK Australia Canada Euro Japan Trading Partner Growth 2015 2016 2017 2018 %

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Strong labour market

1 2 3 4 5 6 7 2013 2014 2015 2016 2017 2018 2019 2020 $44,000 $48,000 $52,000 $56,000 $60,000 $64,000 $68,000 Unemployment falling and wages rising Average annual wage Unemployment rate (RHS)

Forecast

%

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Strong labour market

60 64 68 72 76 80 NZ Japan UK Canada Australia US Euro

Employment rate higher than main trading partners

%

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Diversified growth

10 20 30 40 50 60 70 80 90 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Exports expanding

Dairy Meat Non-commodity Other goods Services $ billions

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Stronger external accounts

  • 85
  • 80
  • 75
  • 70
  • 65
  • 60
  • 55
  • 50
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1

2007 2009 2011 2013 2015 2017 2019 2021

Current account deficit and net international liabilities

Current account deficit Net international liabilities (RHS)

% of GDP % of GDP

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Construction sector

5 5.25 5.5 5.75 6 6.25 6.5 2010 2011 2012 2013 2014 2015 2016 2017 50 100 150 200 250 300 Construction sector growing Construction employees Construction share of real GDP (RHS) (000s) %

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Housing market response

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Houses Townhouses and other units Apartments Consents

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Budget 2017 delivers for New Zealanders

  • Delivering better public services for a growing country
  • Building the infrastructure we need in a growing modern economy
  • Further reducing debt as a percentage of GDP
  • Reducing the tax burden on low and middle income families

Budget 2017 fiscal priorities

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Operating allowance

  • 1

1 2 3 4 5 6 7 8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Family Incomes Package Care Workers' Settlement $ billions

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Core Crown revenue & expenses

24 26 28 30 32 34 36 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Core Crown expenses Core Crown revenue

Forecasts Projections

% of GDP

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OBEGAL

  • 20
  • 15
  • 10
  • 5

5 10 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Forecasts

$ billions

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New capital allowance

0.0 1.0 2.0 3.0 4.0 5.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Budget 2017 $ billion

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Residual cash

  • 14
  • 12
  • 10
  • 8
  • 6
  • 4
  • 2

2 4 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Forecasts

$ billions

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Net debt and resilience

10 20 30 40 50 60 70 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

Forecasts Projections

Pre-Budget 2009 Forecast v Actual & Budget 2017 Forecast % of GDP

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$1 billion over four years including:

  • Innovative NZ: $373 million to help diversify the economy
  • Trade Agenda 2030: $134 million to forge new trade opportunities
  • Tourism: $188 million for tourism infrastructure in the regions
  • Film industry: $222 million for the international Screen Grant

Business Growth Agenda

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$7 billion over four years:

  • Education: $1.1 billion to increase operational grants funding, roll

growth, and ECE centres

  • Justice: $1.2 billion for 10% more police, burglary prevention,

reduce youth offending and support at-risk prisoners

  • Oranga Tamariki: $424 million to support vulnerable children
  • Social housing: $185 million for social housing
  • Health……

Better Public Services

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$3.9 billion over four years:

  • District Health Boards: $1.76 billion
  • Disability Support Services: $205 million
  • Pharmac: $60 million
  • Ambulance services: $52 million
  • Bowel screening programme roll-out: $39 million
  • + 55,000 care and disability support workers’ wage increase: $1.5 b

Health Services

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$321 million over four years to improve lives of most vulnerable

  • $73 million to help kids have a better start in life
  • $79 million to reduce re-offending
  • $54 million to reduce barriers to employment and independence
  • $116 million for new approach to mental health needs
  • This means $224 million total new spend on mental health services

Social Investment

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$4 billion in new capital expenditure in Budget 2017

  • Roads: $812 million to reinstate SH1 north and south of Kaikoura
  • Education: $392 million for more new schools and classrooms
  • Health: $150 million for health facilities
  • Housing: $120 million to free up more Government land for housing
  • Rail: $984 million, including $436 million for Auckland’s CRL project
  • Defence: $576 million for new capabilities and modernisation
  • Justice: $786 million for additional capacity and resilience

Infrastructure for a growing economy

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Total capital spend

1 2 3 4 5 6 7 8 9 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 $ billions

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Personal income tax thresholds increases

  • $11 a week to anyone earning more than $22,000 per year
  • $20 a week to anyone earning more than $52,000 per year

$2b Family Incomes Package

Current From 1 April 2018 Rate Under $14,000 Under $22,000 10.5% $14,001 - $48,000 $22,001 - $52,000 17.5% $48,001 - $70,000 $52,001 - $70,000 30% Over $70,001 Over $70,001 33%

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Independent Earner Tax Credit removed

  • To simplify tax system and reduce compliance burden
  • It is only claimed by 32% of eligible recipients during the tax year.
  • People who lose this credit will be compensated in full by the lifting
  • f the lowest income tax threshold from $14,000 to $22,000.

Family Incomes Package

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Working for Families increases

  • Rates for first child under 16 increase $9 a week
  • Rates for subsequent children increase by $18 or $27 a week
  • Abatement threshold reduced to $35,000; rate up to 25%

Family Incomes Package

Weekly rate Current From 1 April 2018 Eldest child, 16-18 $102 $102 Eldest child, 0-15 $93 Subsequent child, 16-18 $91 $91 Subsequent child, 13-15 $74 Subsequent child, 0-12 $64

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Accommodation Supplement maximum payments will increase and make-up of areas will be updated

Family Incomes Package

Area Family size Maximum weekly increase Area 1 2 person 3+ person $75 $80 Area 2 2 person 3+ person $30 $55 Area 3 2 person 3+ person $30 $40 Area 4 2 person 3+ person $25 $45

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Impacts of Accommodation Supplement changes

Family Incomes Package

75,000

Households receiving a benefit will see an average increase of

$30

per week

46,000

Low income working people and families not receiving a main benefit will see an average increase of

$48

per week

15,000

Superannuitants will see an average increase of

$29

per week

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Impact on example families from Family Incomes Package

Family Incomes Package

Family size Primary income Secondary income Tax reduction (weekly) IETC loss (weekly) WFF change (weekly) Total tax & WFF change (weekly) Maximum AS change (weekly) Two adults Children: 3 & 5 $55,000

  • $20
  • $21

$41 Up to $80 Two adults $55,000 $55,000 $41

  • $41
  • Adult

Child: aged 14 $33,000

  • $11
  • $9

$20 Up to $75 Two adults $55,000 $33,000 $31 ($10)

  • $21
  • Adult

$80,000

  • $20
  • $20
  • Two adults

Children: 16, 14, & 12 $33,000 $33,000 $21

  • $24

$45 Up to $80

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Impact on superannuitants and students

  • 750,000 superannuitants benefit through link between NZ Super

and after-tax wages

  • Couple rate for NZ Super increases by $13 a week, in addition to

normal adjustments because of wage indexation

  • Accommodation Benefit, paid to eligible Student Allowance

recipients, will increase by up to $20 per week

Family Incomes Package

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Quintile analysis for working families

Family Incomes Package

Quintile Population Families who gain Percentage Average gain per week 1 299,000 154,000 52% $35 2 298,000 296,000 99% $15 3 298,000 296,000 99% $24 4 298,000 297,000 100% $27 5 298,000 298,000 100% $33 Total 1,492,000 1,342,000 90% $26

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Continuing progress over next four years

  • Strong economic plan underpins rising wages and continued

employment growth

  • Additional social investment to improve lives of New Zealanders
  • Responsible expenditure management produces rising surpluses
  • Debt starting to fall in nominal terms to provide resilience in case of

economic shock or natural disaster

  • Intention to continue adjusting tax and transfer settings as fiscal

conditions allow

Beyond Budget 2017

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Delivering for New Zealanders

Hon Steven Joyce, Minister of Finance

www.budget.govt.nz/budget/2017/family-incomes-calculator