The 2017 Budget: A Snapshot
What's happening?
The Family Incomes Package
The Family Incomes Package comprises the accommodation benefit and supplement, tax credits, and changes to two of the income tax thresholds. This 'package' is said to benefit 1,340,000 families in New Zealand by, on average, $26 per week from 1 April 2018. Around 750,000 superannuitants and around 41,000 students will also benefit from the Family Incomes Package.
Accommodation Benefit
The budget provides for increases to the accommodation benefit for students, raising weekly payments by up to $20 to better reflect the increasing cost of housing.
Accommodation Supplement
The maximum payment rates have been increased for a two person household by between $25 and $75 a week, and for larger households by between $40 and $80 a week. More areas have also become eligible for the higher accommodation supplement payments. Tourist hotspots such as Queenstown, Wanaka and Tauranga, and all Auckland suburbs, will join central Aucklanders in getting the top payments.
Family Tax Credit
Changes to the budget increase the maximum family tax credit for a first child under 16 by $9 a week, and for each subsequent child under 16 by between $18 and $27 a week. The abatement rate is also increased to 24 per cent, and the abatement threshold reduced to $35,000.
Income Tax Thresholds
The $14,000 income tax threshold is raised to $22,000, and the $48,000 threshold to $52,000. This entails a tax cut of $590 per year for people earning $22,000 or more, rising to $1059 per year for anyone earning $52,000 or more.
National expects these changes to bring 20,000 households above the threshold of "severe housing stress", and reduce the number of children in families receiving less than half the median income by 50,000.
For an individual earning $50,000 per year, income tax amounts to $8,020:
Other Changes to Government Spending
Schools
Education spending includes an additional $392 million to be invested into school properties with six new schools, 11 special education satellite units and 305 classrooms.
Mental Health
$116 million will be given to test different strategies of approaching mental health care. The funds will test how we engage with people who have mild-moderate, and severe mental health needs to help build a better picture of client needs and service gaps.
Infrastructure
A $812 million capital investment will be used to reinstate the sections of State Highway 1 from Picton to Christchurch which were damaged in the Kaikoura earthquakes.
The Government’s total investment in new infrastructure over the next four years is $32.5 billion. This includes $9.2 billion in new State Highways and $2.7 billion in housing, including the Auckland Housing Programme.
Film Industry
$18 million in 2016/2017 and $222 million over four years will be marked for the International Screen Production Grant. This incentivises more international movies to be made in New Zealand. A further $64 million will be brought forward for the domestic screen grant.
Māori Development
$93 million for developing Māori tourism, Māori housing and social initiatives, Whānau Ora extensions, and supporting and sustaining the use of te reo.
Justice Sector
$1.2 billion directed towards a 10 per cent increase in police staff numbers. The aim is to meet an increasing demand for justice, the courts and corrections services. Further goals include reducing family violence, reducing youth reoffending and supporting at-risk prisoners.
Prisons
A $763 million investment to increase prison capacity.
Defence Spending
$576 million in Defence spending for new capability and the modernisation of defence bases.
The 2017 budget reflects a strong outlook for the New Zealand economy going forward. Real GDP growth is expected to average 3.1 per cent over the next five years. The average wage is expected to rise to $64,300 a year by 2021, and 215,000 more jobs are expected in that time.
Further Reading:
http://www.newshub.co.nz/home/politics/2017/05/budget-2017-tax-changes-to-benefit-every-working-kiwi.html
http://www.radionz.co.nz/news/political/331570/budget-2017-at-a-glance
https://www.budget.govt.nz/
http://www.treasury.govt.nz/budget/2017
