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Hon Steven Joyce

Minister of Finance

25 May 2017

Budget 2017: Overview

Budget 2017 is a Budget that will deliver for New Zealanders
(All figures for four years to 2020/21 unless otherwise stated)

Economic Outlook

  • Economic growth is forecast to average over 3.1 per cent over the next five years, peaking at around 3.8 per cent in 2019.
  • By 2020, the unemployment rate is expected to drop to 4.3 per cent.
  • Over 200,000 more people are in work now than three years ago. The Treasury forecasts another 215,000 jobs will be created by 2021.
  • By 2021 the average wage is expected to rise to $64,300 a year – that will be $17,000 a year more than when National first came to office.
  • The operating balance before gains and losses (OBEGAL) surpluses are expected to be $2.9 billion in 2017/18 and $4.1 billion in 2018/19, increasing to $6.1 billion in 2019/20 and $7.2 billion by 2020/21.
  • Core Crown expenses have fallen from almost 34 per cent of GDP in 2008/09 to 28.8 per cent of GDP this year. They are expected to decline further to 27.5 per cent of GDP by 2020/21.
  • Net debt is expected to decline further to 19.3 per cent by 2020/21.
  • The new operating allowance for this year is $1.8 billion and $1.7 billion in Budget 2018, increasing by 2 per cent per annum thereafter.
  • The new capital spending allowances are $4 billion in Budget 2017, $2 billion in Budget 2018, and increases to $2.5 billion from Budget 2019 onwards.
  • The Government's capital investments offset the OBEGAL surplus so that core Crown cash surpluses over the forecast period will be broadly neutral.

Family Incomes Package

The Government’s $2 billion per year Family Incomes Package will make changes to tax thresholds, Working for Families and the Accommodation Supplement to help Kiwi families get ahead.

From 1 April 2018, the Package:

  • Increases the $14,000 income tax threshold to $22,000, and the $48,000 tax threshold to $52,000.
  • Discontinues the Independent Earner Tax Credit.
  • Increases the Family Tax Credit rates for young children to the level of those for children aged 16 to 18.
  • Increases the Accommodation Supplement maximum amounts to reflect 2016 rents and makes some changes to Accommodation Supplement areas.
  • Increases weekly Accommodation Benefit payments by up to $20 for eligible Student Allowance recipients.

Business Growth Agenda

  • $372.8 million for the second round of the Government’s Innovative New Zealand programme. It includes:
    • $203 million for Science and Innovation
    • $31.1 million for Economic Development
    • $132.1 million for Tertiary Education, Skills and Employment
  • $30.5 million to upgrade and modernise the fisheries management system.
  • $18.4 million to further strengthen the biosecurity system and protect our borders.
  • $4 million to progress New Zealand’s climate change work programme to meet Paris Agreement 2030 emissions targets.
  • $8.7 million for initiatives to support pay equity dispute resolution and Holidays Act compliance.

Public Services for a Growing Country

The Government is allocating $7 billion in Budget 2017 to sustain and expand public services, including:

  • $3.9 billion in New Zealand’s Health Sector, including $1.76 billion in direct new money for District Health Boards, $1.54 billion for care and support workers plus increased investments in disability support services, ambulance services, pharmaceuticals, mental health services, elective surgery and primary health care.
  • $1.1 billion in New Zealand’s Education Sector, including $767 million for funding roll growth and demand, a $61 million increase in operational grant funding for schools, and $35 million in targeted additional funding for early childhood centres.
  • $1.2 billion for law and order, including for a 10 per cent increase in police staff numbers and funding to meet increased demand for justice, courts and corrections services, plus new initiatives in burglary prevention, reducing youth reoffending, and supporting at-risk prisoners.
  • $803 million for other social services, including $184.7 million for social housing services, $64.4 million for supporting people into employment, and $424.4 million for the new Ministry for Vulnerable Children Oranga Tamariki.

Budget 2017 includes $321 million in funding for fourteen cross-agency Social Investment initiatives that are designed to tackle long term social issues for vulnerable New Zealanders.

Infrastructure for a Growing Economy

The Government is allocating $4 billion in new capital infrastructure spend in Budget 2017 to build the necessary infrastructure for a growing economy, including:

  • $812 million for the reinstatement of State Highway One north and south of Kaikōura.
  • $450 million for rail infrastructure and rolling stock for KiwiRail’s rail freight business, $436 million for the first stage of Auckland’s City Rail Link, and $98.4 million for upgrades to Wellington’s commuter rail network.
  • $392.4 million for six new schools, two school expansions, 11 special education satellite units, and 305 additional classrooms nationwide.
  • $150 million in additional capital towards the new building programme for hospitals around New Zealand.
  • $576 million for the Defence Force for new equipment and the commencement of the upgrading of the Defence Estate.
  • $763.3 million for new prison capacity around New Zealand.
  • $100 million to expand the Government’s programme to release Crown land for housing development around the country.
  • $63 million for investing in new water storage infrastructure in regional New Zealand.

Māori Development

Budget 2017 includes $93 million for Māori Development, including:

  • $10 million boost to Whānau Ora support across the country.
  • $21 million for Māori language initiatives to support the continued revitalisation of te reo and Māori culture.
  • $10 million for New Zealand Māori Tourism – Te Tāpoi Ararau - will allow it to extend support for Māori tourism operators.

Other initiatives

  • An additional $11.4 million for Radio New Zealand to allow for investment in new technology and improved capability.
  • $5 million of operating funding over the next three years for the Encounters 250 programme.
  • $4.8 million for the operation of Pukeahu National War Memorial Park, the Queen Elizabeth ll Education Centre, and for continued investment in newly found Māori heritage treasured objects taonga tuturu.
  • $3.4 million to complete works for the Pitt Island Wharf resilience programme in the Chatham Islands.
  • $9.6 million for New Zealand’s continued presence in Antarctica.


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