Low-income families receive considerable further assistance in Budget 2013 to improve their quality of life, Finance Minister Bill English and Wh?nau Ora Minister Tariana Turia say.
Mr English, who chairs the Ministerial Committee on Poverty, says taxpayers already spend billions of dollars on social services, and the new spending in Budget 2013 is a combination of extending proven programmes, and new initiatives targeted at supporting vulnerable New Zealanders.
“Budget 2013 continues our commitment to supporting New Zealand families in need while maintaining the responsible fiscal disciplines that have been a hallmark of this Government and are serving the country well,” Mr English says.
Mrs Turia, who is deputy chair of the Ministerial Committee and co-leader of the M?ori Party, says the Expert Advisory Group on Solutions to Child Poverty provided recommendations that would make an immediate difference.
They include introducing a Warrant of Fitness test on housing and taking up a range of mutually reinforcing actions across agencies.
“Budget 2013 is addressing some of the poverty challenges, including by extending the Government’s commitment to home insulation. Urgency is also being given to further investment in helping reduce the incidence of rheumatic fever,” she says.
Budget 2013 initiatives offering direct and practical support to low-income families span a range of ministerial portfolios and comprise:
- $100 million over three years for the Warm Up New Zealand: Healthy Homes programme targeting low-income households, particularly those with children or elderly occupants or high health needs, for home insulation.
- More than $21 million over the next four years for rheumatic fever prevention.
- An extra $1.5 million for Budgeting Services in 2013/14, in addition to the $8.9 million provided already in 2012/13.
- A whiteware procurement programme to enable beneficiaries to purchase new appliances under warranty using Ministry of Social Development repayable grants.
- A commitment to investigate and pilot a partnership with NGOs and financial institutions to support the provision of low and no interest loans for low-income borrowers.
- A trial on Housing New Zealand properties of a Warrant of Fitness programme for rental housing.
Some of these initiatives were included in the Children’s Commissioner’s child poverty report, which the Government will respond to in the next few weeks.
“These initiatives are the result of the National and M?ori Parties working together to alleviate the effects of poverty in Aotearoa,” Mrs Turia says.
“The Warm Up NZ programme will be targeted towards low-income families with children and those with high health needs.
“Warm and dry homes are fundamental to reducing the risk of children contracting illnesses that not only create misery, but might also jeopardise their school attendance and have other lifelong serious consequences.”
As part of the Government’s social housing reform programme, $26.6 million over the next four years will be used to extend income-related rent subsidies to tenants in non-government community housing.
The Government wants to see more New Zealanders taking opportunities to reduce their reliance on state support, but it is also important that practical measures are available to help people in need, he says.
“Budget 2013 delivers on the Government’s commitment to ongoing support for families in need, while ensuring the effective use of taxpayers’ money during tight financial times,” Mr English says.
Finance Minister Bill English and Reserve Bank Governor Graeme Wheeler have signed a memorandum of understanding on measures aimed at further protecting the economy and financial system from boom and bust cycles.
This follows Reserve Bank consultation over recent weeks with the banking and financial sector.
“Excessive credit growth, followed by a bust, was at the core of the global financial crisis,” Mr English says.
“While New Zealand’s banking system avoided the upheaval that engulfed some other countries, the Government has agreed that the Reserve Bank should have extra measures available to reduce New Zealand’s vulnerability to such cycles.”
Banks already have to meet increased capital and liquidity requirements. In addition, the memorandum, signed this week, provides four new measures for the Reserve Bank to apply if necessary.
They would require banks to:
- Hold additional capital on their balance sheets as a buffer during an economy-wide credit boom.
- Hold additional capital against loans in specific sectors if risks emerge in those sectors.
- Adjust their funding ratios to use more stable sources of funding to avoid short-term funding shortages.
- Apply quantitative restrictions on the share of high loan-to-value ratio loans in the housing sector.
“These extra tools, if it becomes necessary for the Reserve Bank to apply them, will help to promote financial stability,” Mr English says.
“They will increase the resilience of the financial system during periods of rapid credit growth or easy liquidity conditions, and help to dampen excessive growth in credit and asset prices.
“While the tools may help to support monetary policy, the official cash rate will remain the primary monetary policy instrument.
“As many countries have seen in recent years, boom and bust cycles in credit and asset prices can pose real risks for homeowners and businesses, and destabilise banking systems.
“They can also pose a significant risk for the Government’s balance sheet. Improving macro-prudential policy is therefore an important step in reducing vulnerability to future risks.”
At this stage, the extra tools would apply to registered banks, which account for most lending to New Zealand households and businesses.
As set out in the memorandum of understanding, the Reserve Bank would consult the Minister of Finance ahead of making any macro-prudential policy decision.
However, final policy decisions would be made independently by the Reserve Bank Governor, Mr English says.
For further information: www.rbnz.govt.nz/finstab/macro-prudential/
The International Monetary Fund has confirmed that the Government’s economic plan strikes the right balance between supporting growth and limiting public debt, Finance Minister Bill English says.
In its final staff report issued this morning, the IMF endorses New Zealand’s balanced and pragmatic economic management.
“Coming out the day before the Budget, this is a strong vote of confidence in the Government’s programme over the past four years,” Mr English says.
“It follows a string of encouraging economic figures, which shows the economy growing at 3 per cent last year, an extra 50,000 jobs over the past two years, falling unemployment and healthy consumer and business confidence.”
In particular, the IMF notes the New Zealand economy appears to have strengthened in the last few months of 2012, with subdued inflation and fiscal policy that strikes the right balance between supporting growth and limiting public debt growth.
The IMF says: “The benefits of the plan are many. First, it withdraws fiscal stimulus at the right time by making room for the expected increases in private sector and earthquake-related reconstruction spending.
“Second, it has improved the macroeconomic policy mix by reducing pressure on monetary policy.
“Third, it creates fiscal space to help the country deal with aging and health care costs that are expected to increase over the long-term, and to cope with any negative shocks that may cause a sharp reduction in domestic economic activity or potential liabilities associated with the banking sector.
“Last, it could help raise national savings, reduce the current account deficit, and limit the increase in foreign liabilities.”
The IMF also notes the New Zealand banks remain sound.
However, it says New Zealand’s longstanding external liabilities remain a risk, reflecting historically low household savings rates.
“The Government has acknowledged this as New Zealand’s largest vulnerability and we have a sound, long-term plan to help turn that around,” Mr English says.
“Our economic programme includes a large number of measures aimed at improving the competitiveness of businesses. They include increasing exports and innovation, improving skills and infrastructure, deepening the capital markets and sustainably developing our natural resources.
“We are making progress in all of these areas.”
The IMF report is available at: http://www.imf.org/external/np/sec/pn/2013/pn1351.htm
The Government will launch an update of its Budget app for smartphones and tablets on Thursday with interactive features that allow users to see how much tax they pay and how their tax dollars are spent, Finance Minister Bill English says.
“This is a refresh of the Budget app which was successfully launched last year and is part of the Government’s continuing focus on delivering innovative and better-value public services,” he says.
“The Budget can reach more people when it is digital and accessible.”
The new app features interactive content that allows users to drill down into the Budget spending, and to enter their annual income details to see how much tax they pay and where it is spent on their behalf.
The updated app, called NZ Budget, will include access to the full set of Budget documents including estimates, and will deliver monthly economic updates from Treasury.
“We’ve further reduced the print run for this year’s Budget, which is part of the Government’s continuing strategy to interact with more New Zealanders online,” Mr English says.
The NZ Budget app is available to download free from Apple and Android app stores and further information and links will be available from the Treasury’s website www.treasury.govt.nz/budget/app.
The app will go live with new information when the Budget is delivered at 2pm on Thursday. It includes the Budget speech, press releases, videos, and access to the full set of Budget documents.
Printed copies of key Budget documents will continue to be available from selected bookshops. All documents will also be available at the Treasury’s website when the Budget is delivered in Parliament.Tweet
The Government’s finances continue to improve with higher than
forecast tax revenue contributing to the operating deficit now being
lower than forecast in the Half-Year Update in December, Finance
Minister Bill English says.
The operating deficit before gains and losses for the nine months to 31 March was $5 billion, or $273 million smaller than the $5.2 billion deficit forecast in December.
“The financial statements show that continued spending restraint is important as we remain on track to surplus in 2014/15, as the Budget next week will confirm,” Mr English says. “Ongoing spending control will allow the Government to build up sufficient surpluses to provide choices around repaying debt and investing more in priority public services.”
Overall, core Crown tax revenue was $535 million higher than forecast at $41.9 billion for the nine months. Tax on individuals’ income other than salary and wages was $406 million above forecast - a result of solid investment incomes driven by recent strength in sharemarkets. Source deductions were $187 million above forecast.
Compared with the nine months to March 2012, tax revenue increased by $2.1 billion, mainly reflecting wage growth, higher effective tax rates and a rise in GST revenue.
Core Crown expenses remain in line with forecasts set out in December’s Half-year Update, which showed a substantial $1.7 billion reduction in expenses compared with Budget 2012.
Higher than expected net gains from Government investment funds delivered a $2.5 billion operating surplus for the nine months, which was significantly better than the $2.0 billion forecast operating deficit.
The Budget on 16 May will confirm the Government remains on track to surplus in 2014/15, Finance Minister Bill English said today.
It will also confirm the need for responsible fiscal and economic management beyond then so the Government can start repaying debt and investing more in priority public services.
“The Government is in the midst of a comprehensive programme to make government and the economy more effective, and to create conditions to give businesses and families more confidence to invest in our shared future – despite global economic uncertainty,” Mr English said in a speech to the Wellington Employers’ Chamber of Commerce.
Getting the Government’s own finances in better shape remains an important part of that programme.
“The Government has set a target of returning to fiscal surplus in 2014/15 and the Budget will set out updated forecasts next month.
“But I can confirm that it will show the Government remains on track to surplus in 2014/15, as a result of our careful management of the accounts.
“That is a considerable achievement – and a significant turnaround in the space of just a few years. Just two years ago, we ran an $18.4 billion deficit, half of which was the cost of contributing to the rebuild of Canterbury.
“Returning to surplus in 2014/15 will complete only the first part of our task.
“We will still have some way to go in rebuilding the fiscal buffers that have been run down in recent years. That means fiscal responsibility will be permanent,” Mr English said.
Looking beyond the return to surplus, the Government’s focus would shift toward using forecast surpluses after 2014/15 to achieve its second fiscal objective: bringing down the Government’s net debt to 20 per cent of GDP by 2020.
“This reflects what the Government considers to be prudent levels of debt in the current economic environment.
“In the Half-Year Update in December, net government debt was forecast to be almost 30 per cent of GDP in 2017.
“So you can see there is quite a challenge in front of us to meet the 20 per cent debt target by 2020,” Mr English said.
“It means we will need to maintain firm expenditure control beyond our return to surplus, so we can run big enough surpluses to have choices about paying down debt and investing more in priority public services.
“It is also a critical element of building a more internationally competitive economy.
“By reducing the resources the Government absorbs, we are making room for private investment while minimising upwards pressure on interest rates and the exchange rate. Budget 2013 will reflect those realities.”
The Budget will also continue to focus on macro-economic stability.
“Conventional monetary policy, predictable fiscal policy and a sound financial system are precious advantages in an unstable world. We will hold on to them,” Mr English says.
- 11 April - speech to Wellington Employers' Chamber of Commerce (pdf 336.24 KB)
Higher than forecast tax revenue continues to underpin an improvement
in the Government’s finances, compared to the Half-Year Update in
December, Finance Minister Bill English says.
The operating deficit before gains and losses for the eight months to 28 February was $3 billion, or $556 million smaller than the $3.6 billion deficit forecast in December.
“The other pleasing aspect of the financial statements is that government spending remains under control,” Mr English says. “That is important as we remain on track to surplus in 2014/15.
“It will remain important beyond then, because we will need to build up sufficient surpluses to provide choices around repaying debt and investing more in priority public services.”
Overall, core Crown tax revenue was $719 million higher than forecast at $37.6 billion for the eight months. Source deductions were $266 million above forecast due to a higher effective tax rate paid by those in the workforce, and tax from other individuals came in $326 million above forecast.
Compared with the eight months to February 2012, tax revenue has increased by $2.2 billion, mainly reflecting wage growth, higher effective tax rates and a rise in GST receipts due to growth in nominal consumption and residential investment.
Core Crown expenses were $370 million below forecast, reflecting broad-based spending control and delays in Treaty of Waitangi settlements.
Higher than expected net gains from Government investment funds delivered a $4.3 billion operating surplus for the eight months, which was significantly better than the $481 million forecast operating deficit.
The economy recorded a lift in growth in the December quarter, consistent with a broad improvement in activity and confidence, Finance Minister Bill English says.
Gross domestic product grew 1.5 per cent in the three months to 31 December, 2012. This took annual growth – from the December quarter 2011 to the December quarter 2012 - to 3 per cent.
“We had had a slightly softer September quarter so it is pleasing to see that growth picked up again in the final quarter of 2012,” Mr English says.
“Indications are that growth will continue this year as consumer and business confidence rises. A lift in household spending signals that people are feeling more secure and optimistic.
“We are also seeing a pick-up in construction activity beyond the re-build in in Christchurch and which will flow-through to other parts of the economy.
“We are on track for 2-3 per cent-plus growth over the next few years though internationally the problems of high debt and low growth remain and, at home, the impact of the drought is very likely to temper overall growth in the economy.
“Those factors make it important for the Government to continue to focus on its Business Growth Agenda initiatives aimed at improving New Zealand’s productivity and competitiveness as a way of fostering job growth and lifting wages.
“As we have previously noted, New Zealand is still performing better than most other OECD countries. New Zealand’s GDP growth of 3 per cent in 2012 compares with 1.6 per cent in the US, 1.1 per cent in Canada, 0.4 per cent in Japan, 0.3 per cent in the UK and -0.9 per cent in the Euro area.
“We expect our growth to continue as the Government retains tight control of its spending, households and businesses pay down debt, and very low interest rates and low inflation continue their long run.”Tweet