The Government will be changing New Zealand's tax threshold for the first time in 14 years – delivering its much anticipated $14.7 billion tax relief promise.
Finance Minister Nicola Willis delivered her maiden Budget today which she said prioritises tax relief and investments to frontline public services.
However, there is one major election promise the National Party has not delivered on this Budget – funding 13 new cancer drugs.
The Government has touted this year's Budget as a "fiscally responsible Budget".
It's found 240 saving initiatives saying it has slashed public service spending from the "back office" and moved it to the frontline.
Some of the things the Government is slashing include free prescription fees and changing the tertiary Free Fees scheme, but it also introduced new schemes such as rebate for early childcare and extending free mammograms. National kapa haka festival Te Matatini has also been given $48.7 million over three years in funding in the Budget.
Of course, the Budget didn't come without taking a swing at the Opposition. Willis called it a "clean-up job" after six years of "economic mismanagement" under the previous Government.
"We are welcoming in a new era of careful government spending, lower taxes for hardworking New Zealanders and a strong focus on rebuilding the economy," Willis said.
"This Budget won’t fix all of New Zealand’s economic challenges on its own and there is much more to do, but it does show what is possible with care and discipline."
Budget 2024 is delivered against a grim economic outlook with the cost of living crisis still continuing to bite and inflation running high (although not as high as previous years). The economic downturn New Zealand faces is deeper and more persistent than previously expected; however, the Treasury is forecasting a pickup with inflation returning to target later this year and subsequently interest rates falling.
The Government is looking at a path back to surplus in 2027/28, rather than 2026/27 as previously expected.
The operating allowance for Budget 2024 is $3.2 billion per annum – the lowest since Budget 2018 before the COVID-19 pandemic hit. The previous Labour Government's 2023 Budget had an operating spend of $4.8 billion, and in 2022 it was $5.9 billion.
Tax relief
The National Party has long campaigned for what it calls "modest but meaningful" fully funded tax cuts and today delivered the same tax policy as promised in the election.
The $14.7 billion over four years tax package also includes FamilyBoost, restoring interest deductibility for landlords and adjusting the Brightline test.
The tax cuts will come into effect from July 31 in the form of adjusting tax brackets.
For an average income household, under the tax changes they should receive an extra $102 a fortnight ($51 a week). For a single person earning $55,000 a year they should get $51 a fortnight ($25.50 a week).
- Click here to calculate what your tax cut should be.
National has consistently denied all assertions there was not enough money to fund their tax cuts – and today has revealed what it is cutting to deliver its top election promise.
The Government is also increasing the in-work tax credit by $50 a fortnight ($25 a week) and the new FamilyBoost payment will give young families up to $150 a fortnight ($75 a week).
Infrastructure
This year's Budget includes a significant boost to infrastructure funding which aims to fix the country's infrastructure deficit.
It includes $1.2 billion for the Regional Infrastructure Fund over three years.
One of the first projects funded under the scheme will be flood protection and resilience projects. They include upgrades to stopbanks and floodwalls on the Whakatāne-Tauranga rivers scheme in the Bay of Plenty, upgrading the flood capacity of the lower Wairau River in Marlborough and upgrades to stopbanks on Wairoa River between Dargaville and Te Kōpuru in Northland.
The Budget also confirms a $2.68 billion investment in roads, rail, and public transport.
Transport programmes include supporting KiwiRail and metro rail, a pothole prevention fund, decarbonising the bus fleet, investment for Airways NZ and Civil Aviation Authority, supporting Surf Life Saving and Coastgaurd.
The Government previously has announced funding for Roads of National Significance, Roads of Regional Significance and major public transport projects (completion of City Rail Link and Eastern busway, Northwest Rapid Transit corridor, Airport to Botany Busway and Lower North Island Rail Integrated Mobility).
Health
National has not been able to deliver its promise of funding 13 cancer drugs in this Budget.
Health Minister Dr Shane Reti said the Government had to spend $1.77 billion towards Pharmac's budget after Labour left a "funding cliff". However, he has not ruled out funding the drugs in future budgets.
"We have prioritised this essential investment and anticipate that future Budgets will help widen medicine access, including to cancer treatments," Dr Reti said.
Health will get $5.72 billion over four years to fund the frontline services.
The Government is extending free breast screening for women up to the age 74. The current screening age for the programme is women aged 45 to 69.
The Coalition will also increase security in hospital emergency departments, proving an extra four full-time security staff at eight high risk EDs (Waitakere, North Shore, Auckland City, Middlemore, Waikato, Wellington, Christchurch and Dunedin hospitals).
The $5 prescription fees will be back after the previous Labour Government removed them. Prescriptions will continue for Community Services Card holders and their dependents, people aged under 14 and people 65 and over.
By re-introducing prescription fees, the Government said it would free up $116.143 over five years to be reinvested into frontline services.
The Coalition Government is also giving $1.1 billion over five years to support disabled people to address demand and cost pressures on the support services funded by the Ministry of Disabled People – Whaikaha.
The Government is also giving $24 million to charity I Am Hope's Gumboot Friday which provides youth counselling services.
Law and order
The Government insists it will be able to add 500 new police officers over its first two years in the Parliamentary term as part of National and NZ First's coalition promise.
"It is expected that the funding will go towards increasing police presence in communities, improving responsiveness to emergency calls, addressing serious youth crime, and preventing gang intimidation," Associate Police Minister Casey Costello said.
Police will receive an extra $651 million over four years, which includes the reinvestment of $55.11 million in "back office" savings, the Government claims.
The Budget includes $424.9 million to support frontline policing, which just under half of this funding will go towards boosts to police pay.
The investment also includes $226.1 million over four years towards the recruitment and retention of 500 more sworn police officers, increasing constable numbers to 10,711 by the end of 2025. Included in this funding is $34.6 million in capital over two years towards ensuring officers are properly equipped to do there job. This includes paying for equipment to keep police safe such as body armer and vehicles, as well as refurbish some buildings and facilities.
The Government is also committing funding towards bootcamps for youth offenders and is expanding Waikeria Prison by 810 beds.
Defence will receive $570.7 million for defence force pay and projects including updating vehicles and infrastructure.
Education
The Government is changing Labour's Fees Free policy for tertiary education, calling it an "expensive failure".
The scheme will be changed from the first year to the last year of study which the Government said will incentivise students to complete their studies. Eligibility for the scheme will start from January 2025.
Tertiary Education Minister Penny Simmonds the change will save the Government $877 million.
The Coalition Government is investing $2.9 billion of new funding in education over four years to try and lift student outcomes. It includes finding for new classrooms, 1500 new teachers, additional teacher support and early childhood education.
The healthy school lunches programme will also continue, which was announced before the Budget. However, it will be changed in a way the Government claims means it will feed more children at a cheaper cost.
Climate
The Government will continue its commitment to the goal of carbon net-zero by 2050.
"Budget 2024 makes new investments in support of these goals, including funding specific climate resilience projects like stop banks and floodwalls through the Regional Infrastructure Fund, a $200 million boost for the Rail Network Improvement Programme, and extending the reach of the Waste Disposal Levy to support a wider range of waste related and environmental activities," Climate Minister Simon Watts said.
The Government will introduce a grant scheme for heavy vehicles and a public network of electric vehicle charging infrastructure. However, half price public transport has ended.
More than $1 billion will go towards Cyclone Gabrielle relief, resilience and emergency preparedness.
