The Government has revealed it has freed up $1.4 billion of funding a year over the next four years.
Finance Ministers Grant Robertson disclosed the figure in a speech delivered at a breakfast hosted by Westpac on Tuesday, ahead of the Budget being released on May 17.
"Within five months, we have been able to reprioritise around $700 million of funding over the next four years," he said.
“Combined with our moves to crack down on speculators, tax dodgers and ensuring multi-nationals pay their fair share of tax, we have freed up $1.4 billion worth of funding for this Government’s priorities and investments over the next four years."
Asked by interest.co.nz to detail exactly how the $700 million ($175 million a year) would be reprioritised, Robertson remained tight-lipped, but said the “obvious and most high profile” change would come from the Government’s removal of irrigation subsidies.
“That’s an example of where we’ve just got a major policy difference with the previous Government, and as I say, you’ll see the remainder of those reprioritisations in the Budget…
“Across the board we’ve looked at things small and large. Some of them are relatively small amounts of expenditure, but are areas where the departments have self-identified that actually a programme hasn’t worked or isn’t delivering value for money. Sometimes its differences in our approach in areas like education or health.
As for the increased tax revenue, Robertson said in his speech: “A person’s ability to hire an expensive accountant to get them around their tax obligations should not define how much tax they pay.
“By investing in the IRD’s compliance capability, we will generate a greater return by ensuring tax dodgers are caught and made to contribute, just like all of the hard-working New Zealanders who pay tax out of every pay cheque.
“We are also cracking down on property speculators by extending the bright line test on the sale of investment properties, and we are ensuring a level playing field for all taxpayers by ending the practice of negative gearing for those with an investment property portfolio.
“And we are also aggressively pursuing those foreign and multi-national companies which do not pay their fair share of tax in New Zealand.”
Surpluses won’t be 'built off underfunding of critical sectors'
Robertson clarified “the re-building of critical public services” would be at the core of the Budget, which “begins an economic and social transformation”.
“Health and Education will get long overdue boosts to their capital and operating funding to deal with cost pressures and ensure that our hospitals and schools are fit for purpose.
“Housing initiatives will receive a boost on top of the $2 billion we announced in the December mini-Budget for KiwiBuild.
“These plans, along with the Families Package, which lifts children out of poverty and reduces inequality, are the bedrock of establishing a more inclusive economy.”
Robertson reiterated he wasn’t taking off his fiscal straight jacket and remained committed to reducing net Crown debt as a percentage of GDP to 20% within five years of taking office.
“Budget 2018 will deliver a surplus… It is what we promised, and it is what we are delivering, as a responsible Government.”
Robertson told interest.co.nz: “The surpluses we’ll generate will be sustainable. They won’t be ones built off underfunding critical sectors, and so you’ll see the scale of those surpluses on the 17th of May.
“They’re also part of making sure we’ve got the resources to pay down debt and do the things we need to do in the economy. It’s important that we generate those surpluses, but they’re at a level that is designed to enable us to meet the needs in those critical public services.”
‘Optimistic’ about Treasury’s upbeat economic forecasts
Robertson also confirmed he remained confident in Treasury’s economic growth projections, criticised by bank economists after the release of the Half Year Economic and Fiscal Update (HYEFU) for being too rosy.
“I think Treasury’s long-term record is pretty good when it comes to forecasting. There clearly will always be different views.
“What we know is that growth will be a little bit lower than what it’s been - I think everyone agrees on that - and perhaps will tick around (as it was at HYEFU) 3% or a little lower.
“But then you’ve got to remember that as we go through 2019 and 2020, we start to see some of the investments the Government’s making have an impact on the books - particularly things like KiwiBuild in terms of residential investments, but also changes to the minimum wage and further investments in the productive side of the economy.
"Growth will then pick up…I’m optimistic it will do that.”
50 Comments
Old folks who got free education ranting at the mere idea of providing such benefits to following generations. How sadly selfish.
Makes a change from cutting provisions to the younger generations to give Boomers tax cuts, while keeping their own benefits unchanged.
Investing in free education for young Kiwis surely makes more sense than subsidising property investors via the Accommodation Supplement, Working for Families, the First Home Buyers grant etc.. And subsidising for-profit trucking companies' damage to road networks. Things unfortunately both our major parties seem to wedded to.
At least an educated workforce is better for productivity.
I would imagine it'll increase participation over time, if not initially. However, I also reckon we need to focus on higher academic standards rather than only pushing as many people through as possible. Moreover, the point was that funding an educated workforce is better for productivity than merely redistributing money to property investors.
Re other outcomes, is it better to have a heavily indebted cohort entering the workforce and the market for consumption, or one not heavily indebted?
Would you really not have a problem with the idea? I am skeptical.
Introducing fees didn't have much effect on participation, so why would removing them?
Student loan debt doesn't really figure, according to the young people I have spoken to. The debt just gets paid off automatically at source, and they don't see it any differently from income tax.
And they tend to think that introducing fees free for the first year is a stupid idea because it will just encourage wasters. They think that fees free for the final year would make much more sense.
Those are some quite differently opinioned young Kiwis from the ones I've generally seen and heard from then. If only older Kiwis were not so grudging when it came to an increase in tax, eh.
But if you're right, sounds like young Kiwis are really ripe for pushing down. We should be cutting more of their benefits so we can cut our taxes and preserve benefits for older Kiwis! They won't notice!
This is what you get when the government assumes it knows more than all the experts out there.
NZ Productivity Commission suggested providing free education to students enrolled in areas of long-term skill shortage.
I guess we are comfortable in our endless reliance on imported labour to earn the premium on wages in skill shortage areas while taxpayers foot the bill for more young Kiwis wasting resources on studying sociology and international relations.
In regards to 6. that also means "useful" degrees such as engineering, computer science, mathematics and so on. If you like qualitative-style qualifications. I personally refuse to condemn arts degrees, despite some of the more ridiculous papers, as NZ does need some sort of ongoing non-qualitative cultural enhancement at least for us descendants of British colonials (I don't want watered down British culture, mashed in with advertising & media driven consumerism, making nice boring drones out of everyone)
But, yeah, it shouldn't have been the first year that's fees free.
The COL is hell bent on not just tax but removing subsidies and banning stuff without consultation ..........that could have unintended consequences .
They would if they could :-
Ban oil
Ban gas
Ban Oil Companies
Ban irrigation
Ban bottled water exports
Ban immigrants
Ban housing investors
Ban foreign investors
Ban the Bra
Ban V8's
Ban Diesel engines
Ban Petrol engines
Ban smoking ( but legalize cannabis )
Ban middle aged white males
Ban profit-making ( then see how much tax they collect)
They are going to ban poverty , which has been with us since Biblical times ........ pigs will also fly in due course .
Implying Labour will do anything about immigration. So far the only immigration they've turned down are the South African farmers who're being murdered and tortured every day.
It seems like Lees-Galloway is receiving envelopes under the table: https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12037904
" The minister last month also cancelled the deportation notices of the man's first wife and her children. "
" He would not say why they had been allowed to stay when immigration rules did not allow for multiple partners or marriages. "
I wouldn't be surprised to see a few Labour heads getting added to the payroll of NZ Chinese companies in the future. Phil Goff certainly got a bunch of money of them recently.
"going to ban poverty, which has been with us since Biblical times"
Hmm, I'm guessing poverty didn't exist for the 10,000+ years prior to biblical times. What can we learn from this? What was humanity getting right that it is now getting wrong? Maybe the introduction of fiat currency by the Romans created poverty?
A useful degree is one which raises your earning potential relative to that of someone who instead does something like learn a trade. Let’s define it as making at least 50% more than a tradie 8 years after leaving high school. ( 3 years for a degree plus 5 years to get to a senior level) http://www.educationcounts.govt.nz/publications/80898/the-post-study-ea…
For every successful author there is a successful science graduate, the sum total net worth of the ones you listed have not even 10% of Bill Gates’s net worth...
You mean Bill Gates who dropped out of university? Mark Zuckerberg - drop out, Steve Jobs another university drop out?
Those arts folks mentioned, they're worth a hell of a lot more than you, if you want to play the who earns more game. Don't knock the arts, they have their uses.
Both Gates and Zuckerberg have Harvard degrees ( Google it, I believe Gates only got his law degree in 2007). Regardless, that doesn’t say arts degrees are useful, I would actually go so far as to contend that not having a degree is better than having many arts degrees. Those artist are also 3x my age!
For curiosity sake I worked out what George RR Martin’s worth would have been at my age assuming 11% wealth accumulation per year ( return on investment + additional contribution from income). He would only have been worth about $600,000 which makes us roughly evenly matched! He is a champion of the arts, whilst I am a generic science graduate!
Why do we insist in only seeing future earnings in money terms as the "value" of education? Imagine the world we'd live in if everyone was a STEM graduate? We'd have the certain utopia of the IT geek. Now IT geeks have many good points especially when your laptop freezes (and they have a tendency to anarchy which I sort of like) - but a solid grasp of philosophy, cultural history, literature, history.....not so much. Hence Bitcoin. Beautiful technology in a way but completely hopeless as an actual currency due to a failure to grasp basic anthropological research on money and economic history and theory - i.e. deflationary monetary system not really much use to anyone.
My MA gave me a modicum of extra income - but probably less than a tradie - but it gave me so much more in terms of intellectual curiosity, a love of learning and dare I say it, a reason to live. I could be a bag person or in jail for life but survive because I'd be able at least to read and learn (assuming access to some books). No matter how bad life gets materially, with an education there is always the life of the mind. People forget that education is not just to serve the economic machine - it is to make the world more interesting for people and give them the keys to understanding our cumulative knowledge. I suspect some people denigrate humanistic education because it actually promotes anti-materialistic attitudes and that scares them in terms of anti-consumerism and its obvious political associations.
It's interesting that 'fair share' depends on whom you talk to, half the working age population pays zero net tax and most of them are actually draining the coffers. However this govt has found its red herring in the combined forms of dairy farmers and property investors and a new set of rules about what is 'fair'
A complete pile of rubbish, GR cannot impress anyone with his twisted facts and crocodile tears no more than his mate PT does.
The whole thing is a croc of BS ... and does not make sense to cut on promises and services to make surpluses and pay debt at the end of the year !!
They keep blowing things out of proportion and their lies are just too obvious.
the 2020 world reception will throw this CoL out of office
What will be interesting is how the lions share of benefit money needed for pensioners is going to magically appear with a rapidly ageing population. Any government that suggests means testing or raising the retirement age can only expect to be tossed out. Yet all that benefit money cannot easily be found year on year without significant debt, (large % in accommodation allowances, rebates to private international companies etc only adding to the deficit). What will be curious is if not this government what will the next one need to do. That issue has been snowballing and is so weighty that most people will bemoan the benefit costs yet fail to see the pensions they take as part of that because they fear being associated with it in any way.
Hence one party advocating those who will form the bubble contributing to a fund to help alleviate the bubble, and the other advocating that those who follow on from themselves simply receive less.
Agree, it is slightly difficult that over half our welfare budget is handed out regardless of need, a universal income just for reaching a certain age, and it's a benefit seen as an absolute entitlement. We must put off infrastructure investment so we can hand out money to those who don't need it.
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