Finance Minister Nicola Willis says 83 percent of New Zealanders can expect to see tax relief in Budget 2024.
Speaking in Wellington's Upper Hutt on Thursday morning, Willis said the tax cuts will be aimed at middle and lower-income workers across the country.
She stressed the importance of needing "a different sort of Budget from those we've had in recent times."
Willis said "it won't be a big-spending Budget", but rather "moderate" and "responsible."
The Budget will prioritise investments in the public services, targeted new spending for the essential frontline services you rely on, a significant funding boost for the health system and targeted new investment in other essential frontline services including education, disability services and police.
"The Budget will deliver personal income tax reduction for working Kiwis," she added. "We will be sticking with Kiwis through the economic rough patch and ensuring you get to the other side, stronger and better-off than you are today."
"I can confirm that our Budget will deliver further tax relief. Its focus will be income tax relief aimed at middle and lower-income workers. The relief will be meaningful, but modest.
"Our tax relief package will increase the take-home income of 83 percent of New Zealanders over the age of 15 and 94 percent of households.
Willis said the Government has allocated an operating allowance of $3.5 billion for the Budget.
"On taking office at the end of last year, we acted quickly with our mini-Budget to rein in Government spending - banking $7.5b of immediate savings and quickly setting up a programme to find $1.5b of ongoing annual savings across government agencies."
She confirmed that the Government has "met that savings target", but that it's taken "a lot of work to get there."
"New Zealand's economy is in a tricky spot: inflation is too high and has been for almost three years, interest rates have soared and are biting homeowners and businesses alike, unemployment has risen and growth has stalled in four of the past five quarters."
"This is all taking its toll on New Zealanders."
In her speech, she acknowledged that "workers are hurting", adding that the reality of their struggle is "impossible to ignore."
"As I've put together my first Budget the people foremost in my mind have been those I've called the 'squeezed middle'. The everyday Kiwis who've soldiered on through a prolonged cost of living crisis, who work hard and yet experience a seemingly endless struggle to get ahead, who worry about your mortgage and the unexpected bill, and yet don't ask much from the Government - you want decent health services, good schools, law and order and a fair go," she said.
"Workers have endured 14 years without any adjustment to tax brackets. For a median income worker that's meant the average tax you pay has increased from around 15 percent in 2011 to around 21 percent today."
"Everyday New Zealand workers have been left to wait in line while beneficiaries, government agencies and consultants got a boost."
"In my first six months as Finance Minister, each Treasury update seems to be worse than the last. Sadly, I've learned to dread what comes out of the forecasters' mouths when they come into my office. Given this, I certainly don't expect any windfalls before Budget day. Instead, our Government has taken the responsible approach of preparing for a world in which the books could get worse before they get better," Willis said.
"It is darkest before the dawn."
What will the Budget make progress on?
- Cost of living relief
- Fairer tax
- Better value from public spending
- Balanced books for lower debt
- A stronger more productive economy
"The Budget won't be an instant fix. Instead, it will lay the ground for steady progress, for today, tomorrow and the longer term," she explained.
Willis announced that a new Social Investment Agency to replace the Social Wellbeing Agency will be put in place, effective from 1 July this year.
"We will also establish a Social Investment Fund as a vehicle for future social investments, to be managed by the Social Investment Agency, with a brief to directly commission outcomes for vulnerable New Zealanders, and to work with community, non-government organisations and iwi providers," she said.
The fund will begin investing in 2025.
"Over time I expect the fund to grow in partnership with other funders to deliver at scale with a wide portfolio of investments."
She said a Social Investment Board will be established, made up of "real-world experts who will provide external challenge and guidance as we drive Social Investment forward."
"This work is of personal importance to me and it's important to many Ministers across our Government," Willis said.
Finishing off her speech, she added that Budget 2024 will be a "critical step" in strengthening the economy and delivering Kiwis "cost-of-living relief, higher incomes and better public services."
"We want our country to be a better place to do business, to invest, to innovate, to take risks, to build things, to make things, to hire people, to grow and to raise our children.
"Our plan will make New Zealand a much wealthier country, where our people can earn more, live better and we can expect greater opportunities for our children and grandchildren."
