Young Nats Policy Chair Nick Cross breaks down the essential elements of today’s budget.
1) Back into Surplus
The final budget delivered by Michael Cullen in 2008 predicted a decade of deficits, leaving a legacy of debt for today’s young New Zealanders. Despite running surpluses during the good times, Labour’s 3rd term spending binge had prepared New Zealand poorly for the GFC. This budget confirms that National has succeeded in turning that around in two terms, with a small surplus of $372 million predicted for the 2014/15 financial year. That surplus is set to grow to $1.3 billion in 15/16.
Most importantly the government is doing this without raising taxes which would burden the recovery. The government has also announced what might qualify as the most miniscule tax cut in history by abolishing cheque duty. Hopefully there will be more news on this front before the election.
2) Long Term Debt is tracking downwards
One of the government’s core goals was to get Net Core Crown Debt to 20% of GDP by 2020, and this budget shows we are on track to achieve that. That would effectively put debt at very manageable, pre-GFC levels. Debt was previously projected to blow out to 40% and beyond.
3) Economic Growth: Full Speed Ahead
You only need one figure: Real GDP growth is set to hit 4% or just under for 2014. That’s huge for New Zealand, and the growth will flow through to wages and jobs as it’s already doing.
Average weekly wages grew by 3.2% over the last year, with inflation being just 1.5%. There are also 84,000 more people with jobs now than a year ago, a figure that reflects National’s commitment not just to create jobs, but to help break the cycle of dependence for welfare recipients who previously wouldn’t have been looking for work (and thus wouldn’t have been considered unemployed). Labour force participation increases from 67.9% in 2013 to 69% in 2014.
4) Focus on the things that matter in Education
Rather than making the education portfolio a cash cow for middle class welfare recipients, the government continues to focus on the most vulnerable and in need. $359 million has been allocated towards the government’s executive teachers and principal’s policy to put top teachers into underperforming schools. $156 million more will go to early childhood education, which is where evidence shows the most difference can be made. Lifting participation in ECE has been a core benchmark for improving long term outcomes for those most in need. $11 million more will go into assisting vulnerable children, following the progress of Paula Bennett’s Vulnerable Children’s Bill.
5) A focus on Science, Innovation and Jobs in Tertiary
Of the $198.6 million more allocated towards tertiary education, $136 million goes towards science and innovation in the tertiary portfolio. This will ensure lower fees for many courses in science, agriculture and health through a fee subsidy. $57 million more goes into science and $58 million into research and development. Science is a key part of the long term future of the New Zealand economy. There is also funding for 6000 more apprentices and $100 million to assist those on welfare into work. This will assist with unemployment falling to 4.4% over the next three years.