A plan that’s working Hon Bill English, Minister of Finance 21 May

A responsible Budget Falling unemployment - below 5% in 2016  More jobs – another 150,000 expected by mid-2019 Increasing wages - average wages to grow to $63,000 by mid-2019 Reducing hardship among children in New Zealand’s poorest families  $790m child hardship package is at the heart of the Budget  Targets around 160,000 families (with 300,000 children) earning less than $36,350 a year

Outlook for solid economic growth

Wages up, unemployment down ,000 52,000 54,000 56,000 58,000 60,000 62,000 64, Average annual wagesUnemployment rate (RHS) $ %

Current account deficit has improved Current Account Balance Budget 2010Budget 2012Budget 2014Budget 2015 % of GDP (annual)

Lower-than-expected inflation

Responsible government spending

$176m surplus forecast in 2015/16

Net debt 20 per cent of GDP by 2020

Strong fiscal position internationally

$790m child hardship package Greater work obligations for beneficiary parents, including most sole parents looking for work when their youngest child turns three A $25 a week after tax rise in benefit rates for families with children Up to $12.50 a week more in WFF for lower-income families not on a benefit  For very low-income working families, an extra $12 on top of that, making an increase of $24.50 a week An increase in Childcare Assistance for low-income families, from $4 to $5 an hour, for up to 50 hours of childcare a week per child

$790m child hardship package Family Category Change to entitlement (per week) Number of families impacted Beneficiary families $25 increase to benefit110,000 families Working families (less than $27,000) $24.50 increase to WFF4,000 families Working families ($27,000 - $36,350) $12.50 increase to WFF50,000 families

Delivering better public services $1.7b health package, total health spend $15.9b  $1.3b for DHBs for extra services, cost pressures and population  New support for elective surgeries, palliative care, bowel cancer screening Over $680m education package, taking the ECE and schools budget to $10.8b  $75m for ECE and $42m to boost schools’ operating grants  $63m to continue teacher aide support for 1,500 additional students  $244m for new schools and classrooms from the FIF

Investing in a growing economy $80m for research and development growth grants and $25m to establish Regional Research Institutes to undertake scientific research $113m for New Zealand’s higher education system, including $86m for targeted increases in tuition rates Further ACC levy cuts of around $375m in 2016/17 and $120m in 2017/18, subject to consultation $210m from the FIF for the extension of Ultra-Fast Broadband $210m from the FIF for KiwiRail to maintain the national rail network $100m from the FIF for Lincoln University to rebuild its science facilities

Improving housing affordability Making better use of Crown-owned land in Auckland  Redevelopment of HNZ estate including $200m loan for Tamaki  Accelerating development of Crown-owned land with $52m fund Increasing investment in social housing  $35m to implement social housing reform, and $35m for Maori housing  Tendering the first 300 of 3,000 additional social housing places Cutting red tape Extra steps to bolster and enforce the tax rules on property, subject to consultation, from 1 October this year

KiwiSaver kick-start and border levy KiwiSaver now has 2.5m members but has cost $2.5b in kick-start payments since 2007 Removing $1,000 kick-start payment saves more than $500m  This change does not affect existing members  Annual ‘member tax credit’ and employer contributions unaffected New levy for passenger biosecurity and customs activities at our border, raising around $100m a year  It is fairer that these costs fall on travellers rather than the taxpayer

Christchurch support reaches $16.5b

A focus on social investment 1 per cent of five year olds: are known to CYFS, and have been supported by benefits for more than 40 months, and have a parent who has had contact with Corrections This 1 per cent is around 600 children per year, but over 20 years creates a pipeline of 12,000 at high risk

A focus on social investment On average, each child in this group will cost taxpayers $320,000 by age 35 – some over $1m At age five… By twenty one… …four will have been on a benefit long-term (40%) At thirty five… …a quarter will have been in prison (24%) After high school… …seven would not have NCEA2 (74.6%) … a group of ten of these high-risk children

Looking ahead – our approach New Zealand is well placed – but there’s more to do. We will:  Relentlessly focus on a strong economy and jobs  Continue investing to support families in need  Responsibly manage spending and revenue  Increase resilience to global risks We’ll build on a plan that’s working

A plan that’s working Hon Bill English, Minister of Finance 21 May