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 • Reducing net debt as a percentage of GDP • Family Incomes Package
Positive economic forecast Strong GDP growth continues through forecast period 5 4 3 % 2 1 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Positive economic forecast Trading Partner Growth 4 3 2 % 1 0 NZ US UK Australia Canada Euro Japan 2015 2016 2017 2018
Strong labour market Unemployment falling and wages rising Forecast $68,000 7 6 $64,000 5 $60,000 4 % $56,000 3 $52,000 2 $48,000 1 $44,000 0 2013 2014 2015 2016 2017 2018 2019 2020 Average annual wage Unemployment rate (RHS)
Strong labour market Employment rate higher than main trading partners 80 76 72 % 68 64 60 NZ Japan UK Canada Australia US Euro
Diversified growth Exports expanding 90 80 70 60 $ billions 50 40 30 20 10 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Dairy Meat Non-commodity Other goods Services
Stronger external accounts Current account deficit and net international liabilities 0 -50 -1 -55 -2 -60 % of GDP -3 % of GDP -65 -4 -70 -5 -75 -6 -80 -7 -8 -85 2007 2009 2011 2013 2015 2017 2019 2021 Current account deficit Net international liabilities (RHS)
Construction sector Construction sector growing 300 6.5 250 6.25 200 6 (000s) 150 5.75 % 100 5.5 50 5.25 0 5 2010 2011 2012 2013 2014 2015 2016 2017 Construction employees Construction share of real GDP (RHS)
Housing market response 8,000 7,000 6,000 Consents 5,000 4,000 3,000 2,000 1,000 0 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Houses Townhouses and other units Apartments
Budget 2017 fiscal priorities 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
Operating allowance 8 7 6 5 $ billions 4 3 2 1 0 -1 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
Core Crown revenue & expenses Forecasts Projections 36 34 32 % of GDP 30 28 26 24 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Core Crown expenses Core Crown revenue
OBEGAL Forecasts 10 5 0 $ billions -5 -10 -15 -20 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
New capital allowance 5.0 4.0 3.0 $ billion 2.0 1.0 0.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Budget 2017
Residual cash Forecasts 4 2 0 -2 $ billions -4 -6 -8 -10 -12 -14 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Net debt and resilience Forecasts Projections 70 60 50 % of GDP 40 30 20 10 0 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Pre-Budget 2009 Forecast v Actual & Budget 2017 Forecast
Business Growth Agenda $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
Better Public Services $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……
Health Services $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
Social Investment $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
Infrastructure for a growing economy $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
Total capital spend 10 9 8 7 6 $ billions 5 4 3 2 1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
$2b Family Incomes Package Personal income tax thresholds increases 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% • $11 a week to anyone earning more than $22,000 per year • $20 a week to anyone earning more than $52,000 per year
Family Incomes Package 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 of the lowest income tax threshold from $14,000 to $22,000.
Family Incomes Package Working for Families increases Weekly rate Current From 1 April 2018 Eldest child, 16-18 $102 $102 Eldest child, 0-15 $93 Subsequent child, 16-18 $91 Subsequent child, 13-15 $74 $91 Subsequent child, 0-12 $64 • 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 Accommodation Supplement maximum payments will increase and make-up of areas will be updated Area Family size Maximum weekly increase Area 1 2 person $75 3+ person $80 Area 2 2 person $30 3+ person $55 Area 3 2 person $30 3+ person $40 Area 4 2 person $25 3+ person $45
Family Incomes Package Impacts of Accommodation Supplement changes 75,000 $30 receiving a benefit will see an average increase of Households per week working people and families not 46,000 $48 receiving a main benefit will see an Low income average increase of per week 15,000 $29 will see an average increase of Superannuitants per week
Family Incomes Package Impact on example families from Family Incomes Package Tax Total tax & Maximum Primary Secondary IETC loss WFF change Family size reduction WFF change AS change income income (weekly) (weekly) (weekly) (weekly) (weekly) Two adults $55,000 - $20 - $21 $41 Up to $80 Children: 3 & 5 Two adults $55,000 $55,000 $41 - - $41 - Adult $33,000 - $11 - $9 $20 Up to $75 Child: aged 14 Two adults $55,000 $33,000 $31 ($10) - $21 - Adult $80,000 - $20 - - $20 - Two adults $33,000 $33,000 $21 - $24 $45 Up to $80 Children: 16, 14, & 12
Family Incomes Package 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 Quintile analysis for working families Families Average gain Quintile Population Percentage who 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
Beyond Budget 2017 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
Delivering for New Zealanders Hon Steven Joyce, Minister of Finance www.budget.govt.nz/budget/2017/family-incomes-calculator
Recommend
More recommend
