Thursday 19th May 2011
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Key points from the budget:
* Zero new spending. Last year's budget provided $1.1 billion. This budget takes $5.2b from existing government spending over five years allowing $1.2b a year over the next four years for new operating spending.
Savings come from across government agencies and from changes to KiwiSaver, Working for Families and student loans.
Most of the money, almost $4b, goes to new initiatives in areas like health and education. The rest goes on reducing the deficit. Within departments, $1.5b is being reprioritised to fund different priorities.
* The operating deficit will hit $16.7b this year -- nearly double what was estimated in last year's budget -- but it will then reduce substantially, down to $9.7b next year, $4.1b in 2013, and 0.7b the following year before going achieving a surplus of $1.3b in 2015.
* Economic growth predictions from the last budget failed to eventuate. Now the pick is for the economy to improve from 1 percent of GDP this year to 1.8 percent in 2012, soaring to 4 percent in 2013 before dipping again to 3 percent and 2.7 percent in 2014 and 2015 respectively.
* Measures are outlined to tackle the $8.8b cost of the Canterbury earthquakes. Of the total, $3.3b will be paid by the Earthquake Commission and ACC. A government Canterbury Earthquake Recovery Fund of $5.5b over six years covers the Government's infrastructure, assets and emergency response costs, $740m comes from existing funding in the budget, from a new Canterbury Earthquake Kiwi Bond with the difference from other government bonds.
* Plans for partial asset sales for State-owned energy companies and a reduced shareholding in Air New Zealand are expected to raise $5b to $7b.
* KiwiSaver, Working for Families and Students loans will be pared back.
- For KiwiSavers that means a halving of the member tax credit while their bosses will now pay employer superannuation contribution tax. From 2013 employers will have to contribute at least 3 percent (up from 2 percent) while bosses will have to pay the same amount more.
- Working for Families changes will revise abatement thresholds so wealthier people are less likely to be eligible.
- Student loans will be restricted for those with overdue payments and people aged over 55 will only be able to get loans for tuition fees. Part-timers will be able to borrow less and the repayment holiday for students who go overseas will be reduced to one year from three.
* Health will be the biggest beneficiary, getting $1.7b new operating and $40m capital funding over four years. Education is the other winner getting $1.3b new operating and $109 capital funding.
* State sector employers will have to fund super saving costs from their own budgets rather than out of central funding.
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