The National government has just released its 2012 budget,
which will see a number of reasonably minor yet important changes across several
sectors.
Bill English’s fourth budget forecasts a surplus in the 2014
– 2015 year through a ‘zero’ budget for the upcoming years. This is briefly
summarised in the following paragraphs.
National has announced the tightening of tax rules in an
attempt to target those who ‘should’ be paying tax, while the rules around
Kiwisaver have also changed. The SOE sales have been defended with the creation
a Future Investment Fund, which will hold the sales profits for future
investment into infrastructure.
Over the next four years, the economy is projected to grow
about 3% and, thus, create more jobs.
Meanwhile, the government is increasing investment into
science and technological innovation, as a means to address New Zealand’s key
issues and save money in the future. Millions of dollars of National’s budget
has been allocated to create the Advanced Technology institute to aid in achieving
this purpose. The government is also acknowledging the importance of quality
telecommunications for a geographically isolated country like New Zealand, and
is maintaining its investments into this sector.
The Health sector was a big focus for the 2012 budget with
just under $90million of the budget allocated to it to contribute to: hospital
development, District Health Board budgets, targeted cancer treatment,
reheumatic fever reduction and enhanced maternity care, public health
screening, disability services and other health services. The allocated money
will be supplemented by increased tobacco tax and prescription charges, which
will rise from $3 to $5.
In transport, the final phase of KiwiRail’s turnaround plan
has been allocated $250million of the budget, with investment also being made
into improving state highways and local roading. Note that little is mentioned
around the many aspects of New Zealand’s public transport system.
In the justice system, a new Justice Sector fund is being
created to better allocate money within the sector. The government is also
continuing to commit to reducing crime, with the ongoing roll out of the Prevention
First and Policing Excellence programmes.
Finally, the government is also looking to invest in
upgrading the national electricity grid.
The Highlights
Economy
- The tax deductibility rules for mixed-use assets ($109 million over four years) and livestock valuation rules ($184 million over four years) will be tightened
- Three tax credits that are generally no longer used for their original purpose ($117.1 million over four years) will be removed
- New disclosure rules have been created around Kiwisaver, as well as the level of private contributions from 1 April 2013 being raised and the amount the Government is borrowing to subsidise the scheme being reduced
- The expected profits from minority share sales of SOEs, expected to be $5-$7billion, will be channelled into a newly created Future Investments Fund. This fund will invest in modern schools and hospitals, innovation, and transport.
- Economic growth is expected to average about 3 per cent a year over the next four years, with 154,000 net new jobs being created; an extra 40,000 jobs a year
Technology
- The annual spending on science and innovation will increase by $385 million over the next four years, taking total science and innovation spending across government to more than $1.3 billion by 2015/16, largely split as follows:
§
$76.1million
has been allocated to the creation of the Advanced Technology Institute
§
$60 million extra has been allocated for
National Science Challenges
§
$100 million extra has been allocated to
increase the Performance-Based Research Fund
§
$33.8 million will be used to fit out schools
for ultra-fast broadband and an extra $300 million channelled into the Rural
Broadband Initiative
§
$59 million to boost funding for science and
engineering courses. Funding rates for
engineering degrees will be increased by 8.8 per cent and for science
degrees by 2%
Health
- $88.1million has been allocated to the health sector, most of which will be invested into hospital development
- Prescription charges will increase from $3 to $5. Note, no family will pay more than $40 extra in a year as a result of these changes and there will still be no charge for under-sixes or those with a Pharmaceutical Subsidy Card
- Tobacco excise tax will increase by 10 per cent a year on 1 January in each of the next four years as part of a wider Government programme to prevent smoking
- These three sources will fund:
§
An
extra $1.11billion allocated to District Health Board budgets over the next
four years
§
A
‘continued’ commitment to Frontline health services
§
$32.4 million for better, faster cancer
treatment, including dedicated cancer nurses to support patients through the
course of their treatment
§
$16 million to speed up diagnostic tests for
patients
§
$48 million for more and faster elective surgery
§
$20.5 million to strengthen maternity services
and boost PlunketLine and WellChild services.
§
$132.7 million to improve services and access
for people with disabilities
§
$1.68 million for more public health screening
§
Residential care exemption will adjust from a
flat increase of $10,000 a year to an annual inflation adjustment in line with
other aged-care support adjustments
§
Provide $12 million to reduce rheumatic fever
§
Invest $133 million in disability support
services
Transport
- $250 million has been allocated to the third and final phase of KiwiRail’s Turnaround Plan, which over the past two years has refurbished the locomotive fleet, renewed and upgraded the rail network to improve transit times, remove capacity constraints, and improve reliability and created the Aratere Cook Strait ferry extension – creating 30% more capacity for rail and trucks, and improving passenger facilities
- Around $12 billion has been allocated to improving state highways over the next 10 years
- Investing more than $500 million a year in improving and maintaining local roads, and completing the $2.1 billion upgrade of the metro rail systems in Auckland and Wellington
- An additional $3.7 million will be spent for the 2012/13 financial year on operating the SuperGold Card off-peak public transport scheme bringing total government operating funding of the scheme to $21.7 million for the 2012/13 financial year
Justice
- A new Justice Sector Fund will give the justice sector flexibility to invest in areas that deliver better results for New Zealanders. The fund allows money saved in one justice sector agency to be used in another
- The Prevention First and Policing Excellence programmes continue to be rolled out and will help Police remain on course to reach their existing target of a 13% reduction in crime by 2014/15
Energy
- Through Transpower, the Government is investing $4.6 billion in upgrading the national electricity grid over the next 10 years
