Budget 2017: Tax changes to benefit every working Kiwi

The average Kiwi worker will be in line for an extra $1000 a year in a major election play by the Government.

Every worker earning more than $52,000 a year will get around $20 a week after tax threshold changes in this year's Budget.

Finance Minister Steven Joyce has rained money down on workers and families with a $2.2 billion Family Incomes Package which will include those tax thresholds changes and changes to tax credits.

The package, which the Government says will impact 1.3m families, is the tent pole in Mr Joyce's first Budget which also includes a major piece of the pie for road and rail and health, but little for climate change.

The changes, however, hinge on the outcome of September's election - the policy isn't set to come into force until April 1 next year.

The major changes are: 

Budget 2017: Tax changes to benefit every working Kiwi
  • Tax thresholds change from $14,000 to $22,000 and from $48,000 to $52,000
  • Those in the $22,000 bracket will get a $10.77 tax reduction a week, those on $52,000 will get $20.38
  • Independent Earner Tax Credit has been scrapped, those claiming it will be fully compensated
  • Family Tax Credit increases the maximum credit for the first child under 16 by $9 a week, each subsequent child under 16 by between $18 and $27 a week. Abatement rate increase to 25 percent, and reduces the abatement threshold to $35,000.
  • Accommodation Benefit increases weekly payments for students by $20 in Auckland, Wellington and Christchurch but less in other parts of the country.
  • Maximum Accommodation Supplement for a two-person household will increase between $25 to $75 per week, and between $40 and $80 a week for larger families.

Mr Joyce says it's important "Kiwi families directly share in the benefits of New Zealand's economic growth".

He expects the changes will bring 20,000 households above the threshold of "severe housing stress" and bring down the numbers of children in families receiving less than half the median income by 50,000.

Budget 2017: Tax changes to benefit every working Kiwi

The extra $20 a week for students likely to be short of the New Zealand Union of Students Associations' pre-Budget wishlist of a variable housing grant in cities where weekly rent is 100 percent of current levels of student support.

Surplus:

Finance Minister Steven Joyce (Getty)
Finance Minister Steven Joyce (Getty)

Prime Minister and former Finance Minister Bill English says with the latest Treasury forecast of a $1.6b surplus in 2016/17 which is expected to grow to $7.2b in 2020/21, it gives the Government a "once-in-a-generation opportunity to raise living standards for all New Zealanders.

But while Mr Joyce says that sounds like a lot of money, it is all virtually earmarked for its major infrastructure programme.

"Our new capital spend of $4b this year and a total of $11b over the next four Budgets, in addition to already planned capital expenditure, absorbs virtually all the cash generated from the operating surpluses."

Forecasts show the Government is also on track to meet its target of cutting net debt to 20 percent of GDP in 2020, hitting 19.3 percent by 2020/21.

Public services:

The public service is set to expand with a $7b injection over four years.

In all, $3.9b will be directed toward the health sector, including $1.54b in new money for District Health Boards, and some already-announced spending for care and support workers, ambulances, Pharmac and mental health services. 

Budget 2017: Tax changes to benefit every working Kiwi
  • $1.1b over four years for schools and early childhood centres
  • $1.2b for law and order, including already-announced extra police and funding for justice, courts and corrections. Corrections will get $763.3m for more prison capacity.
  • $803m for other social services, including social housing, getting people into employment and Ministry for Vulnerable Children
  • $321m for 14 cross-agency social investment programmes

EQC levy:

To rebuild the Earthquake Commission's Natural Disaster Fund, more will be taken from the amount homeowners pay for insurance.

It will go up from 15c per $100 of insurance cover to a maximum of $207 a year as part of their premiums to 20c per $100 of insurance with a cap of $276.

Minister Responsible for the Earthquake Commission Gerry Brownlee says the fund was drained following the Christchurch and Kaikoura earthquakes and needs to be replenished.

kaikoura earthquake budget
The slip made the critical road impassable (File)

EQC has a Government guarantee and $4.7b in re-insurance cover, so homeowners will have coverage if there's another major natural disaster, but Mr Brownlee says it's now time to refill the fund.

Climate change:

The Government is only investing $4m of new operational funding over four year to help reduce emissions.

Climate Change Minister Paula Bennett says that money be spread across government to come up with costed, tested and modelled policy options to meet its Paris Agreement emissions target of 30 percent below 2005 levels by 2030.

It is also reviewing the Emissions Trading Scheme.

Defence:

Almost $1b will go strengthening New Zealand's Defence Force, including upgrading defence camps and bases and upgrades of ships and aircraft.

The sector will get $406m in operating funding over four years and a $567m in capital which will be spent on initiatives identified in the 2016 Defence White Paper.

Housing:

There is nothing specific for first-home buyers, but the Government has put $100m more to build housing on Crown land.

Home under construction

The Government's already announced 34,000 new homes in Auckland over the next decade as part of the Crown Land Development Programme.

But the new money will be used to make land available for 1200 new homes.

Just 20 percent of those homes will be social housing, while 20 percent will need to be priced as "affordable" defined as no higher than the KiwiSaver HomeStart cap.

Conservation:

There'll be $107.8m for conservation programmes which includes already-announced funding for the Battle for Our Birds programme and for tourism infrastructure.

A little spotted kiwi (Supplied)
A little spotted kiwi (Supplied)

$750,000 in 2017/18 will go toward two new marine protected areas in Hauraki and Marlborough

$4.75m of 2016/17 operational funding will help cover costs of the devastating Port Hills fires earlier this year.

Mental health:

Budget 2017: Tax changes to benefit every working Kiwi

Over the next four years, $224m will be invested in mental health services and will include $124m in "new innovative approaches". 

  • $100m for a new cross-government social investment fund looking at new ways to deal with New Zealand's mental health issues
  • $4.1m for the Ministry of Social Development to trial integrated employment and mental health services
  • $11.6m for Corrections to better manage prisoners at risk of self-harm
  • $8m to extend Rangatahi Suicide Prevention Fund
  • $100m for DHBs to support local mental health and addiction services.

Road and rail:

The country's state highway network will be in for a $9.17b funding boost over four years in what is the Government's biggest-ever investment in roading. 

Budget 2017: Tax changes to benefit every working Kiwi

There will be a number of key projects which will be underway in those four years, including:

  • Auckland's Western Ring Route
  • The Northern and Southern Corridor of SH1 in Auckland
  • Huntly and Hamilton sections of the Waikato Expressway
  • Motu Bridge replacement in Gisborne
  • Mt Messenger-Awakino Gorge corridor in Taranaki

Over that time, that'll equate to 540 new lane kilometres of state highways.

Meanwhile, $548m of new funding will go to upgrading the rail network, $450m of which will be spent on KiwiRail over two years.

Wellington's metro rail network is set for a $98.4m investment.

While getting the South Island's main trunk line, destroyed by the Kaikoura earthquake remains a top priority.

The rail line through Kaikoura was destroyed in the November quake (Getty)
The rail line through Kaikoura was destroyed in the November quake (Getty)

The Budget also marks the first lot of funding for Auckland City Rail Link, with $436m of capital funding.

Other announcements:

  • Pitt Island wharf: $3.4m to build a breakwater and ongoing maintenance of the Pitt Island wharf damaged in 2015 storms. Pitt Island and Chatham Island are the only ones in the archipelago of 11 which are inhabited.
  • Census: $4.5m over three years for Statistics NZ to look at new ways of getting and supplying census information without "expense and inconvenience" of a five-year census.
  • Science: $81.9m over four years for "high-impact, misson-led" science programmes via Endeavour Fund.
  • Radio NZ: $11.4m over four years for better technology and capability.
  • Biosecurity: $18.4m over four years to strengthen biosecurity systems and protecting borders.
  • Fisheries: $30.5m over four years to upgrade fisheries management including cameras, monitoring and electronic reporting on all commercial vessels.
  • Family violence: $37.2m to reduce harm caused by family violence.
  • Disability support: $205.4m over four years to maintain and improves services supporting the disabled.
  • Antarctica: $9.6m to continue New Zealand's presence in Antarctica, including $2.1m over two years and $4m in capital to redevelop Scott Base.
  • Tertiary education: $132.1m for initiatives such as the Performance-Based Research Fund, increased tuition subsidy rates.
  • Care for young: $424.4m for vulnerable children and young people in care, including supporting around 4500 caregivers and a 24/7 crisis response and support service and more youth justice residential beds for young people between 14-16.

Newshub.

Share to Facebook Share to Twitter Share to Email
Share to Facebook Share to Twitter Share to Viber Share to WhatsApp Share to Email