Hon Bill English MP - Media Releases

Photographs from Budget 2013

nospam@example.com (Admin) — Thu, 16 May 2013 20:51:55 +1200

Budget 2013: Delivering progress and optimism

nospam@example.com (Admin) — Thu, 16 May 2013 15:19:15 +1200

Budget 2013 confirms New Zealand is on the right track, with forecasts of economic growth, more jobs, rising wages, and a return to surplus by 2014/15, Finance Minister Bill English says.

“New Zealanders can look to the future with well-earned confidence and optimism,” he says. “The New Zealand economy grew 3 per cent last year, which is almost the same as Australia, and higher than almost every other developed country.

“Wages have been increasing, cost of living increases have been modest, and interest rates are at 50-year lows.

“There are 50,000 more jobs in the economy than two years ago, although unemployment does remain too high and attracting new investment that creates jobs is a particular focus for the Government.

“The fiscal outlook has improved markedly as a result of the Government’s sound management and we are on track to surplus in 2014/15.

“These are real achievements that are benefitting New Zealanders and their families. Budget 2013 is about building momentum in this programme.”

The Government’s main priorities for this term are:

Responsibly managing its finances.
Building a more productive and competitive economy.
Delivering better public services.
Supporting the rebuilding of Christchurch.

Responsibly managing the Government’s finances

The Budget confirms the Government is on track to meet its two key fiscal targets – to get back to surplus by 2014/15 and to bring net core Crown debt back down to no higher than 20 per cent of GDP by 2020.

Forecasts show an operating surplus before gains and losses of $75 million in 2014/15. The Government is achieving this while still spending $5.1 billion on new initiatives in the current year and over the next four years in Budget 2013 – funded in part by reprioritising existing spending. A surplus is forecast because tax revenue is picking up and the Government is continuing to restrict growth in expenses.

“The Government’s return to surplus is not dependent on the Mighty River Power share sale,” Mr English says. “The share offer programme effectively swaps one type of asset for another – electricity company shares for cash – so its primary effect is on the mix of assets and debt that the Government owns, rather than on the operating balance.”

Net core Crown debt is forecast to peak at 28.7 per cent of GDP in 2014/15, before falling. Longer-term projections show net debt dropping to 17.6 per cent of GDP by 2020/21 – compared with Budget 2009 showing that, without policy changes, net debt would exceed 60 per cent of GDP by the early 2020s.

“So this is a remarkable turnaround in the books,” Mr English says.

However, when expressed in dollar terms, net core Crown debt is still rising by around $130 million a week and is expected to peak at $70 billion in 2016/17.

“As households around New Zealand know, carrying substantial debt is neither comfortable nor financially prudent. So the Government is firmly focused on capping, then reducing this debt.”

Budget 2013 confirms decisions to help achieve that:

The operating allowance is $900 million in Budget 2013, compared with $800 million signalled previously, and will be $1 billion in Budget 2014, compared with $1.2 billion signalled previously. From 2015 onwards, operating allowances will grow by 2 per cent per Budget.
The Government intends to delay contributions to the New Zealand Superannuation Fund until net core Crown debt is no higher than 20 per cent of GDP. Contributions are now expected to resume in 2020/21.

Building a more productive and competitive economy

A feature of Budget 2013 is a $100 million-a-year internationally-focused growth package, providing extra research and development assistance to businesses, additional funding for tourism, and more resources for marketing New Zealand to international students.

“This growth package acknowledges New Zealand’s need to pay its way in the world through increased trade and investment, which in turn creates jobs and opportunities for New Zealanders,” Mr English says.

Within the package, science and innovation funding is increased by $50 million a year. This takes the Government’s annual investment in research and development to $1.36 billion in 2013/14, which is the highest ever.

Additional Budget measures to build a more productive and competitive economy include:

Allowing for ACC levy reductions of around $300 million in 2014/15, increasing to around $1 billion in 2015/16. When combined with the $630 million levy reduction in 2012/13, these changes will amount to around 40 per cent lower ACC levy rates for households and businesses, with the impact varying over the different accounts.
Confirming a further $1.5 billion to be invested using proceeds from the Government’s share offer programme, including in redeveloping Christchurch’s hospitals, building modern schools and classrooms, and supporting irrigation infrastructure.
Announcing that Meridian Energy will be the next company to be prepared for a partial share offer, in the second half of 2013.
Legislation to improve housing affordability, which will deliver flexible regulatory tools to councils under accords between the Government and councils in areas where housing is least affordable.
A memorandum of understanding with the Reserve Bank Governor confirming a range of measures, if required, to protect the economy from periods of excessive growth in credit and asset prices, reduce reliance on unstable sources of funding, and require banks and other financial institutions to better manage their own risks.
A number of revenue measures, including a proposal to allow loss-making start-up companies to claim tax losses on research and development.

Delivering better public services within tight financial constraints

Following work by the Ministerial Committee on Poverty, Budget 2013 confirms several important initiatives to support low-income families. They include:

$100 million over three years for the Warm Up New Zealand: Healthy Homes programme targeting low-income households, particularly those with children 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.
Investigating a partnership with NGOs and financial institutions to support the provision of low or no-interest loans for low-income borrowers.
A trial on Housing New Zealand properties of a Warrant of Fitness programme for rental housing.

“It is widely acknowledged that paid employment is the best way to lift vulnerable families out of poverty,” Mr English says. “The Government will invest a further $188.6 million over four years for the next stage of welfare reforms, to help more New Zealanders into work.

“The Budget includes changes to ensure social housing is provided to those most in need. Over four years, it includes an additional $46.8 million for extra income-related rent subsidies, as part of the Government’s wider support for high-needs tenants, and an extra $26.6 million to extend income-related rent subsidies to non-government community housing providers.

“The focus on providing better frontline healthcare and prevention continues. Over the next four years, we will invest $1.6 billion in new initiatives and to meet cost pressures and population growth.

“And the Government is helping more New Zealanders get the skills they need to build successful careers and fulfil their potential. We are lifting student achievement in all levels of the education system.

“Budget 2013 further supports these measures with over $900 million in the current year and over the next four years for new education initiatives across early childhood, primary and secondary education.”

Supporting the rebuild of Christchurch

The total estimated cost of rebuilding Christchurch has increased to around $40 billion from the previous $30 billion estimate. The Government’s share of the cost is around $15 billion – up from the $13 billion estimated previously.

Considerable progress is being made.

The Red Zone offer has been accepted by more than 7,000 households, or over 98 per cent of those eligible.
The infrastructure alliance has completed $700 million worth of work, with over $400 million of projects currently under construction.
The demolition of nearly 1,000 buildings in the Christchurch CBD is almost finished and over $1 billion of new commercial buildings have received consents in Greater Christchurch.
And by the end of this month, the Earthquake Commission will have completed 38,000 repairs and paid out more than $5.3 billion in claims.

The Budget confirms an additional $2.1 billion to support the rebuild. Over $900 million of this funding comes from the Future Investment Fund for projects including the Christchurch and Burwood hospitals redevelopment, funding for the justice and emergency services precinct and tertiary education institutions.

Budget 2013: At a Glance

nospam@example.com (Admin) — Thu, 16 May 2013 15:18:49 +1200

Progress in the Government’s programme while on track to surplus

Provides a suite of measures to build faster economic growth, support more jobs and deliver a more innovative and productive economy.
Forecasts economic growth to average between 2 and 3 per cent a year over the next four years.
Includes a $100 million-a-year internationally-focused growth and innovation package to boost investment in science, research and development, and tourism.
Confirms an additional $1.5 billion of investments from the Future Investment Fund to spend proceeds from the Government’s share offer programme.
Allows for ACC levy cuts on households and businesses of around $300 million in 2014/15, increasing to around $1 billion in 2015/16.
Provides significant extra money to help low-income families through a number of targeted initiatives.
$5.1 billion of new operating spending in the current year and over the next four years for initiatives across areas such as health, education, welfare, and housing.
Confirms an additional $2.1 billion to help rebuild Christchurch, taking the Government’s total share of the rebuild to around $15 billion.

Budget initiatives at a glance
(All figures for four years to 2016/17 unless otherwise stated).
Responsibly managing the Government’s finances
The Budget confirms the Government remains on track to meet its two key fiscal targets – returning to surplus by 2014/15 and bringing net government debt back down to 20 per cent of GDP by 2020.

Forecasts show an operating surplus before gains and losses of $75 million in 2014/15 – a remarkable turnaround from the record $18.4 billion deficit in 2010/11.
Net core Crown debt is forecast to peak at 28.7 per cent of GDP in 2014/15, before falling to 17.6 per cent of GDP by 2020/21.
Core Crown expenses are expected to drop below 31 per cent of GDP by 2014/15, down from 35 per cent of GDP two years ago.

Budget 2013 confirms decisions to ensure that debt is capped and then reduced:

The operating allowance is $900 million in Budget 2013, compared with $800 million signalled previously, and $1 billion in Budget 2014, compared with $1.2 billion signalled previously. From 2015 onwards, operating allowances will grow by 2 per cent per Budget.
The Government intends to delay contributions to the New Zealand Superannuation Fund until net core Crown debt is no higher than 20 per cent of GDP. This is expected in 2020/21.

Building a more productive and competitive economy
Budget 2013 continues the Government’s unwavering focus on increasing longer-term growth, productive investment and exports by investing heavily in measures to help businesses become more competitive.

A $100 million-a-year internationally-focused growth package to provide extra research and development assistance to businesses, additional funding for the tourism sector, and international education marketing.
Allowing for ACC levy reductions of around $300 million in 2014/15, increasing to around $1 billion in 2015/16. When combined with the $630 million levy reduction in 2012/13, these changes will amount to around 40 per cent lower ACC levy rates for households and businesses.
Budget 2013 confirms a further $1.5 billion of new capital investment from the Future Investment Fund, which was established to invest proceeds from the Government’s share offer programme. It includes:
$426 million for the redevelopment of Christchurch and Burwood Hospitals. As announced previously, this will be the single biggest hospital investment in New Zealand’s history.
$50 million to speed up the School Network Upgrade Project which enhances the technological capability of schools.
A further $94 million for the fourth year of KiwiRail’s Turnaround Plan.
$80 million for irrigation projects, as announced previously.
Meridian Energy will be the next company prepared for a share offer to New Zealanders, in the second half of 2013.
Legislation will be introduced to improve housing affordability by delivering flexible regulatory tools to councils under accords between the Government and councils in areas where housing is least affordable.

A memorandum of understanding with the Reserve Bank Governor confirms a range of measures, if required, to protect the economy from periods of excessive growth in credit and asset prices, and to promote financial system stability.
A number of revenue measures, including a proposal to allow loss-making start-up companies to claim tax losses on research and development.

Better public services
The Ministerial Committee on Poverty has endorsed a number of important initiatives to help low-income families. They include:

$100 million over three years for the Warm Up New Zealand: Healthy Homes programme targeting low-income households, particularly those with children 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 or no interest loans for low-income borrowers.
The trial on Housing New Zealand properties of a Warrant of Fitness programme for rental housing.

Welfare
$188.6 million over four years for the next stage of welfare reform to help more New Zealanders off benefits and into work. This follows a $287.5 million investment in Budget 2012, and includes:

354 extra Work and Income staff to provide intensive help and support.
People receiving the sole parent support or supported living payments, who go off the benefit and don’t have work expectations to retain some of their benefit in the first few weeks.
Additional funding to allow Work and Income to contract external providers to deliver case management and wrap-around services for particular groups of beneficiaries.
Further developing the investment approach to welfare.
Additional funding to provide for an independent workability assessment by experts to establish a client’s work-readiness.

Health
Over the next four years, $1.6 billion for new health initiatives and to meet cost pressures and population growth. This takes total health spending to $14.7 billion in 2013/14. $1 billion of this extra funding goes to District Health Boards to take account of population changes and inflationary pressures.
Extra health spending over the next four years includes:

$70 million for aged care and dementia services.
$35.5 million for diabetes and heart disease.
$100 million extra to meet population changes and cost pressures in disability support services.
$48 million for more elective operations such as hip replacements and cataracts.
$25 million to increase the number of people being screened for diseases, particularly breast cancer.
More than $21 million to reduce the incidence of rheumatic fever and undertake rheumatic fever vaccine research.
$18.2 million for a new mothers and babies initiative, with details to be announced shortly.
$12.8 million for patients with long-term conditions such as diabetes and asthma.
$7.3 million for 20 additional medical student places.
$7 million to increase coverage of preventative health tests for four-year olds.
$4.3 million to improve care and men’s awareness of prostate cancer.

Education
In the current year and over the next four years, around $900 million for education initiatives across early childhood, primary and secondary education. This takes total spending on these sectors to $9.7 billion in 2013/14.
Extra education spending in the current year and over the next four years includes:

$173 million for early childhood education, including $41 million for equity funding and $39 million for universal subsidies.
$215 million for schooling, including nearly $80 million for operations grants, $64 million for Positive Behaviour for Learning and $38 million for teaching quality initiatives.
$92.4 million for Greater Christchurch Education Recovery and Renewal and 21st Century Schools.
$73.1 million of operating expenditure to support the ongoing maintenance and costs of the school property network.

More than $130 million over four years of new investment and reprioritised funding in tertiary education. It includes:

$36 million for the expansion of M?ori and Pasifika trades training.
$27 million to boost funding for science and engineering courses.
Nearly $29 million to equalise funding rates between Private Training Establishments and Tertiary Education Institutions.
$32 million to support an increase in the proportion of young people with higher-level qualifications.

Law and order

Police will reprioritise more than $160 million over several years to give frontline officers access to new technology such as smartphones and tablets, which will improve their performance and productivity.
The Ministry of Justice will receive $4.4 million from the Justice Sector Fund to expand its restorative justice services.
The Department of Corrections will invest $10 million over two years from the Justice Sector Fund to increase support for offenders after their release, with the goal of reducing reoffending.

Housing

$26.6 million to extend the income-related rent subsidy scheme to
non-government providers.
Legislation will allow community housing providers to become registered prior to receiving an income related rent subsidy for new, eligible tenants.
$46.8 million to extend reviewable tenancies to all Housing Corporation tenants who signed up to their existing properties before 1 July 2011.
Responsibility for assessing entitlement to social housing support will be shifted from Housing New Zealand to the Ministry of Social Development.

Rebuilding Christchurch

The total estimated cost of the earthquake damage in our second largest city has been increased to $40 billion from the $30 billion of previous estimates.

Budget 2013 confirms $2.1 billion of additional government funding to the earthquake recovery, including $900 million of new capital from the Future Investment Fund. This will take the Government’s total share of the rebuild to around $15 billion. This extra funding includes:
An additional $300 million earmarked for the Central City recovery.
Funding for final land zoning decisions.
Work of the Canterbury Earthquake Recovery Authority.
Redevelopment of the Christchurch and Burwood hospitals, a justice and emergency services precinct, and tertiary education institutions.

SUMMARY OF BUDGET ECONOMIC AND FISCAL FORECASTS

	2012	2013	2014	2015	2016	2017
	Actual	Forecast	Forecast	Forecast	Forecast	Forecast
Economic (March years, %)
Economic growth1	1.9	2.5	2.4	3.0	2.6	2.2
Unemployment rate2	6.7	6.9	6.0	5.9	5.5	5.2
CPI inflation3	1.6	0.9	1.9	2.0	2.0	2.2
Current account balance4	-4.4	-4.8	-4.8	-5.2	-5.8	-6.5
(ex-rebuild)4	-4.2	-4.1	-3.5	-3.5	-4.0	-4.8

Fiscal (June years, $ billions)
Core Crown revenue	60.6	63.8	68.4	72.3	75.8	79.5
Core Crown expenses	69.1	71.6	72.4	73.5	75.2	77.2
Total Crown OBEGAL5	-9.2	-6.3	-2.0	0.1	0.8	2.6
(ex-earthquake)5	-7.3	-4.9	-2.0	0.3	0.9	2.8
Net core Crown debt6	50.7	57.9	64.8	68.2	69.7	70.3

1     Real production GDP, annual average percentage change
2     Percent of labour force, March quarter, seasonally adjusted
3     Consumers Price Index (CPI), annual percentage change, 2013 actual
4     % of GDP
5     Total Crown operating balance before gains and losses (OBEGAL)
6     Net core Crown debt excluding the New Zealand Superannuation Fund and advances

Government books in good shape, English says

nospam@example.com (Admin) — Thu, 16 May 2013 15:18:22 +1200

Choosing sound fiscal and economic policies, and being disciplined in adhering to them, means the Government’s books are in good shape as it presents its fifth Budget, Finance Minister Bill English says.

Budget 2013 forecasts an operating surplus before gains and losses of $75 million in 2014/15 – a sharp improvement from a deficit of $18.4 billion in 2010/11.

Net core Crown debt is forecast to peak at 28.7 per cent of GDP in 2014/15, and decline thereafter. Longer-term projections show net debt dropping to 17.6 per cent of GDP in 2020/21, therefore meeting the Government’s key long-term objective to bring net debt back to no higher than 20 per cent of GDP by 2020.

“This is a remarkable turnaround,” Mr English says.

“We came into office in a recession, were rocked by the global financial crisis, and were then confronted by one of the most expensive natural disasters in history. To now be so close to getting back to surplus and starting to repay debt is a real achievement.

“Projections in Budget 2009, for example, showed that without any policy response net debt would exceed 60 per cent of GDP by the early 2020s unless major changes were made.

“However, although we are making good progress, there is still much to be done. While it was entirely appropriate to take on more debt over the past few years to support the economy and cushion New Zealanders and their families from major shocks, this cannot continue indefinitely,” Mr English says.

“In dollar terms, net debt is still rising by around $130 million a week and is expected to peak at $70 billion in 2016/17. That is around $15,000 for each and every New Zealander. As households know, carrying substantial debt is neither comfortable nor financially prudent.

“The Government is firmly focused on capping, then reducing, this debt. That will be made possible by us sticking to the sound fiscal and economic management that has got us this far.

“The Accident Compensation Corporation’s improved financial performance means the Government is now satisfied that there is scope for significant and sustainable reductions in ACC levies,” Mr English says.

The Government has allowed for ACC levy reductions of around $300 million in 2014/15, increasing to around $1 billion in 2015/16. When combined with the $630 million levy reduction in 2012/13, these proposed changes would amount to around 40 per cent lower ACC levy rates for households and businesses.

“To help the Government achieve its fiscal targets, two other changes have been made to our fiscal parameters,” Mr English says.

First, the annual operating allowance is now $900 million in Budget 2013, compared with the $800 million signalled previously and will be $1 billion in Budget 2014, compared with $1.2 billion indicated previously. From 2015 onwards, operating allowances will grow by 2 per cent per Budget.

“These changes to future allowances will mean bigger surpluses and a greater ability to pay down debt.”

Second, the Government intends delaying the resumption of contributions to the New Zealand Superannuation Fund until its long-term debt target is reached – that is, until net debt is no higher than 20 per cent of GDP.

“This means Super Fund contributions are now expected to resume in 2020/21 - two years later than projected in last year’s Half Year Economic and Fiscal Update,” Mr English says. “The expected timeframe for resuming contributions is now back to where it was when they were first suspended in Budget 2009.

“This short delay in resuming contributions will not in any way affect New Zealanders’ entitlement to New Zealand Superannuation, either now or in the future.

“The choice is whether we use future cash surpluses to reduce debt to more prudent levels, or whether we put money into world sharemarkets while holding higher debt. The first course is clearly the more responsible one.”

The Budget also confirms there will continue to be no new money set aside for capital spending over this and the following three Budgets. New capital spending will be funded from the Crown’s balance sheet and in particular from the proceeds of the Government’s share offer programme, which are expected to free up $5 billion to $7 billion for new investment in public assets.

We’re spending well, not spending up - English

nospam@example.com (Admin) — Thu, 16 May 2013 15:17:52 +1200

Budget 2013 has freed up a further $1.5 billion by redirecting spending to where it delivers the best results, Finance Minister Bill English says.

This takes the total amount of reprioritised government spending since Budget 2009 to $14.9 billion.

“At a time when the Government’s finances are constrained, reprioritising spending allows significant additional funding for new or proven initiatives that get better results for New Zealanders,” Mr English says.

“It’s about spending well, not spending up.”

In total, Budget 2013 includes new spending initiatives worth $5.1 billion in the current year and over the next four years, paid for by a combination of new spending and $1.5 billion in reprioritisation and new revenue initiatives. Those savings and revenue initiatives include:

Tax and revenue changes that net an extra $313 million over four years.
Reprioritisation of $641 million to new spending initiatives within Budget votes.
Reprioritisation of $252 million of savings from across budget votes into significant new spending initiatives in areas like health, education, welfare reform, and science and innovation.
$303 million from existing contingencies.

“These savings are consistent with the Government’s approach across its five Budgets, which have together reprioritised almost $15 billion of spending,” Mr English says.

“New Zealanders were conditioned in the 2000s to believe that Budgets should be about the novelty of new, expensive spending programmes that held out promises of economic and social transformation. Those promises were illusory.

“There was no sustainable revenue stream to pay for the increased spending and there was nothing genuinely transformational to show for it.

“Governments should be judged on what they achieve rather than on what they spend. The value of our spending is a better measure than the amount of our spending. This Government is focused on results, and it’s paying off.

“For example, recorded crime is at a 24-year low, and we’re rolling out new technology for frontline police officers, but the baseline funding for Police is not being increased. Instead, Police are finding more efficient and effective ways of doing their job which is generating savings they can reinvest.

“At a time when many governments overseas are undertaking radical cuts to get their books in order, we are enhancing high-quality frontline public services while maintaining support for our most vulnerable citizens. That is a real achievement.

“The Government will ensure future Budgets continue to focus on improving frontline public services to deliver better results for New Zealanders, at the same time as improving value for money from more than $70 billion of public spending every year,” Mr English says.

Reprioritised spending – at a glance

Revenue

$20 million over three years from 2014/15 from extending and refining the scope of the thin capitalisation rules for foreign controlled (non-resident) investment in New Zealand.
$135 million over three years from 2014/15 from extending the Budget 2010 property compliance initiative. This focuses on improving the integrity of the tax system by ensuring the appropriate level of tax is assessed on speculative activity in the residential property market and, more generally, on property-related tax compliance.

Student Support

$18.7 million over four years from extending the stand-down period for permanent residents to three years.
$9.3 million over four years from restricting student allowance eligibility for over 40s to 120 weeks.
$7.9 million over four years from removing student allowance eligibility for over 65s.

Education

Using contingency funding from previous Budgets for the School Network Upgrade Project, National Education Network Trial, Network for Learning, and School Property Expansion ($196.4 million over four years).
A line-by-line review of Vote Education identified $228.5 million in the current year and over the next four years by refocusing existing spending on the Government's education targets and priority learners. The savings include:
- A total of $29.9 million in savings over four years within Early Childhood Education, largely from grants and study awards discontinued because of declining demand. Funding has also been reprioritised to a stronger and more effective initiative that can be targeted to poorly-performing ECE services working with priority communities.
- $70.5 million in savings over four years from both within Vote Education and Vote Social Development as a result of revisions to the Teach NZ scholarship scheme due to changes in the teacher supply environment. New teachers have been struggling to find jobs as vacancies fell to a ten-year low and remain flat. However, scholarships will remain in place where there are pockets within the system where schools and kura find it difficult to recruit teachers.

Health

$88 million in the current year and over the next five years consisting of $54 million underspends and reprioritisation from the Risk Pool, $20 million from less DHB deficit provisioning due to reduced deficits, and $14 million from further 2012/13 underspends in areas such as public health service contracts.
$48 million over four years from more efficient disability support contracting.
$30 million over four years from rationalising, consolidating and integrating various public health service contracts.
$12 million over four years from lower-than-forecast costs of the Voluntary Bonding Scheme.

Housing

$28.7 million over four years, and $2.7 million in 2012/13 from underspends in Weathertight Services.
$11 million over the next three years from Canterbury Earthquakes: emergency and temporary accommodation for the Canterbury Earthquake Recovery Programme.

Meridian Energy to be readied for partial sale

nospam@example.com (Admin) — Thu, 16 May 2013 15:17:24 +1200

The Government is taking the next step in its share offer programme and preparing Meridian Energy for partial sale later this year, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

This follows the successful listing last week of Mighty River Power on the New Zealand Stock Exchange.

“The Mighty River Power offer demonstrated that the Government’s share offer programme works,” Mr English says. “It raised $1.7 billion, which will be used to invest in hospitals, schools and other assets our communities want and need.

“At the same time, 113,000 New Zealanders took the opportunity to invest in a strong local enterprise. Mighty River Power now has the benefits of greater access to capital, better monitoring and oversight, and the market discipline that comes from being a listed company.

“Meridian will benefit from that same process, and New Zealanders will once again have the opportunity to invest in the Initial Public Offering of a large New Zealand company.”

Ministers have instructed Treasury to ready Meridian for a share offer of up to 49 per cent of the company, in the second half of this year, depending on market conditions, Mr Ryall says.

“A key first step in the offer process is for the half-year financial results of Meridian to be independently audited, and this will commence as soon as the results are confirmed after 30 June,” Mr Ryall says.

Meanwhile, Treasury will proceed with appointing key advisers, drawing from the panels established at the start of the Government’s share offer programme. Legal and capital markets advisers are due to be contracted by June.

Proceeds from the share offers go to the Future Investment Fund, which is expected to receive between $5 billion and $7 billion from the programme. The money is being used to pay for priority public assets, with $1 billion from the fund earmarked for each of health and education.

Disclaimer:

The contents of this announcement are not permitted to be made available to persons in any country other than New Zealand. The Crown’s shares in Mighty River Power Limited, Genesis Power Limited, Meridian Energy Limited and Air New Zealand Limited have not been and will not be registered under the United States Securities Act of 1933, as amended (the "United States Securities Act") or the securities laws of any state of the United States and may not be offered or sold in the United States unless the shares are registered under the United States Securities Act, or an exemption from the registration requirements of the United States Securities Act and applicable United States state securities laws is available.

An extra $1.5b allocated from Future Fund

nospam@example.com (Admin) — Thu, 16 May 2013 15:16:49 +1200

Schools, Christchurch hospitals, KiwiRail and irrigation are four of the biggest recipients of new capital allocated from the Future Investment Fund in Budget 2013, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

Budget 2013 allocates $1.5 billion of new capital from the fund, which over the next few years is expected to receive and distribute between $5 billion and $7 billion in proceeds from the Government’s share offer programme. The $1.7 billion raised from last week’s successful float of 49 per cent of Mighty River Power provided the first tranche of money into the fund.

The Government is today announcing that it intends to sell up to 49 per cent of Meridian Energy later this year, if market conditions are suitable.

“These proceeds are only a small percentage of the Government’s overall spending,” Mr English says. “But without them, we would either have to borrow more money overseas, or go without some of the new or upgraded hospitals, schools and other infrastructure and investment that our communities require.

“The proceeds from the share offers provide another avenue to pay for those assets and I’m pleased that Budget 2013 allocates $1.5 billion of new capital from the fund. This is on top of $569 million allocated in last year’s Budget, bringing the total allocated so far to $2.1 billion.”

Future Investment Fund commitments confirmed in Budget 2013 include:

$426 million for the redevelopment of Christchurch and Burwood hospitals. As announced previously, this will be the single biggest building project in the history of New Zealand’s public health system.
$50 million to speed up the School Network Upgrade Project which enhances the technological capability of schools.
$94 million for the fourth year of KiwiRail’s Turnaround Plan.
$80 million for irrigation projects, as announced previously.

Budget 2013 also sets aside over $700 million in contingency for key projects, including:

Building new schools.
Christchurch’s new justice and emergency services precinct.
Supporting Canterbury tertiary institutions in their recovery from the effects of the earthquakes.

Because most of these projects will involve commercial negotiations, the exact breakdown of figures remains confidential.

The Government has also agreed that over the life of the Future Investment Fund, $1 billion will be allocated to hospitals and other health projects,” Mr Ryall says. “This includes the $426 million for the Christchurch and Burwood hospitals redevelopment.”

The Government has previously said that $1 billion of the fund will be ring-fenced for modernising and transforming schools as part of the 21st Century Schools Programme. In total, $219 million of that amount has so far been allocated.

“The Government has also said it would support the rebuilding of Christchurch, and that is exactly what we are doing,” Mr Ryall says.

“Now estimated to cost $40 billion, it is the biggest building project in New Zealand’s history. This Budget allocates more than $900 million from the Future Investment Fund to support the rebuilding of Christchurch.

“It’s appropriate that some of the proceeds from the share offer programme are put towards building new assets that only the Government can pay for.”

Disclaimer:

The Crown is considering offering shares to the public in one or more of Genesis Power Limited, Meridian Energy Limited and Air New Zealand Limited. No money is currently being sought and no applications for shares will be accepted or money received until after an investment statement containing information about the relevant offer of shares is available.

The contents of this announcement are not permitted to be made available to persons in any country other than New Zealand. The Crown’s shares in Genesis Power Limited, Meridian Energy Limited and Air New Zealand Limited have not been and will not be registered under the United States Securities Act of 1933, as amended (the "United States Securities Act") or the securities laws of any state of the United States and may not be offered or sold in the United States unless the shares are registered under the United States Securities Act, or an exemption from the registration requirements of the United States Securities Act and applicable United States state securities laws is available.

Housing package improves affordability, access

nospam@example.com (Admin) — Thu, 16 May 2013 15:16:14 +1200

Budget 2013 contains an ambitious and comprehensive package of measures aimed at making houses more affordable and improving access to social housing, Finance Minister Bill English and Housing Minister Nick Smith say.

“Too many New Zealanders have to spend too much of their incomes on housing, and that’s bad for them and for the economy,” Mr English says.

“High housing costs contribute to New Zealand’s indebtedness and create growing demand for state housing assistance. In addition, rising house prices affect financial stability and put pressure on interest rates and the exchange rate. This Government is determined to address the factors that make New Zealand houses so expensive to build and buy,” Mr English says.

Dr Smith says: “The Government will work with councils to create accords aimed at improving housing affordability by increasing land supply and streamlining planning and consent processes.”

The first accord has been agreed with the Auckland Council and the first special housing areas are expected to be designated later this year.

“These steps address concerns around land supply raised by the Productivity Commission in its 2012 report into housing affordability,” Dr Smith says.

The Government is also undertaking major reforms in social housing, including opening income-related rent to non-government community housing providers, extending reviewable tenancies to ensure those with highest housing needs have priority, and taking a more holistic approach to housing needs assessment.

“These changes build on the recommendations of the Housing Shareholders Advisory Group’s report and will deliver better results, greater fairness and better social outcomes from the Government’s significant investment in housing,” Dr Smith says.

Budget 2013 measures to improve housing supply and affordability include:

Introduction of the Housing Accords and Special Housing Areas Bill, which will enable the Government to work urgently with councils on streamlining resource consents for new housing developments in areas of poor housing affordability.
Introduction of the Social Housing Reform Bill to extend income-related rents to community housing providers, transfer the housing needs assessment process to the Ministry of Social Development, and provide for reviewable tenancies for all Housing New Zealand tenants.
A record $2.9 billion investment by Housing New Zealand over three years. This includes:
- $1.6 billion on new housing developments and repairs to Canterbury properties.
- Project 324, which will put 2,000 extra bedrooms on existing houses.
- 500 new infill two-bedroom homes on existing land.
- Completing around 46,000 home insulations.
- Major earthquake upgrades and repairs, including the repair of 5,000 state houses in Canterbury and the building of 700 new ones.
The development and trial of a Housing Warrant of Fitness. It is intended that this will first be applied to Housing New Zealand properties and then to other social housing providers. Policy work will be undertaken on applying the WoF more widely.

“This is an ambitious package of legislative reform and investment to address New Zealand’s housing needs,” Dr Smith says. “It will deliver more homes at more affordable price as well as ensuring smarter use of the Government’s considerable investment in social housing.”

Budget boosts support for low-income families

nospam@example.com (Admin) — Thu, 16 May 2013 15:15:50 +1200

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.

New tools agreed to enhance financial stability

nospam@example.com (Admin) — Thu, 16 May 2013 15:13:50 +1200

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/

IMF confirms New Zealand has the right balance

nospam@example.com (Admin) — Wed, 15 May 2013 10:36:53 +1200

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

Updated Budget 2013 app goes interactive

nospam@example.com (Admin) — Tue, 14 May 2013 13:19:08 +1200

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.

Flickr photoset: Opening of Mighty River Power on the sharemarket

nospam@example.com (Admin) — Fri, 10 May 2013 19:04:18 +1200

With Finance Minister Bill English and SOE Minister Tony Ryall

Created with flickr slideshow.

Restraint and higher revenue boost Govt books

nospam@example.com (Admin) — Mon, 06 May 2013 10:23:09 +1200

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.

Budget will confirm track to surplus in 2014/15

nospam@example.com (Admin) — Thu, 11 Apr 2013 12:31:49 +1200

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.