Personal

2013 - 14 Budget Brief

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Personal

No changes have been announced to personal income tax rates, Working for Families tax credits, KiwiSaver rules or national superannuation entitlements.   Additional funding has been announced for the SuperGold Card off-peak public transport concession scheme for superannuitants.

The Government has announced a further delay in any resumption of government contributions to the New Zealand Superannuation Fund until it reaches its long term debt target of net debt no higher than 20% of GDP.  Resumption of such contributions is not now expected until 2020/21, two years later than previously projected.

Eligibility for student allowances will be restricted, targeting such support to younger students, those in the earlier years of their tertiary study and those from low-income families.  Interest-free student loans will be maintained but there will be new initiatives to reduce defaults and increase repayments of student loans owed by overseas-based borrowers.  They include:

  • Introducing fixed repayment obligations and higher repayments so that overseas borrowers should repay their loans more quickly.
  • Introducing new sanctions to extend the child support border arrest system for overseas-based borrowers with high levels of default in their student loan repayments. 
  • Engaging a private sector debt collection agency in Australia for initial assistance in locating defaulting borrowers.
  • Effecting an ongoing information-sharing agreement between Inland Revenue and Internal Affairs to collect contact details from passport applications.
  • Extending student loan and allowance stand-down periods for permanent residents and Australian citizens from two to three years from 1 January 2014.

Other announcements relevant to businesses and investors include:

  • The announcement Meridian Energy will be the next SOE to be partially floated – 49% is proposed to be put up for sale later this year, if market conditions are suitable.  Proceeds would go into the Future Investment Fund to be used for priority public assets such as those in health, education rail and irrigation.
    • New measures agreed between the Minister of Finance and Reserve Bank Governor with the aim of enhancing stability in New Zealand’s finance system.  While the official cash rate will remain the primary monetary policy instrument, the new measures will allow the Reserve Bank to require registered banks to:
    • Hold additional balance sheet capital as a buffer during economy-wide credit booms.
    • Hold additional capital against loans in specific sectors if risks emerge in those sectors.
    • Adjust their funding ratios to use more stable funding sources to avoid short-term funding shortages.
    • Apply quantitative restrictions on the share of high loan-to-value ratio loans in the housing sector.
  • Funding for science, innovation and research - $200 million of new funding will be provided over the next four years which will include some $75.2 million for business R&D grants, $31.3 million for repayable grants for start-up businesses (to be matched by private sector incubator funding and expertise), $73.5 million for the National Science Challenges and $20 million for the Marsden Fund.  Revised business R&D grants (Growth Grants, Project Grants and Student Grants) are intended to provide a simpler and more certain approach for business applicants.Confirmation of the $158 million recently announced to be spent over the next four years to boost tourism, including $40 million additional funding over four years to market and promote New Zealand’s international education sector.
  • Confirmation of $80 million funding for regional irrigation projects, as announced in January.  A new Crown company will be set up on 1 July 2013 to act as a bridging investor for irrigation projects through short-term, minority investments to kick-start regional projects.
  • Confirmation of an additional $2.1 billion in funding for the Christchurch earthquake rebuild, which includies funding for the Christchurch and Burwood hospital redevelopments, the justice and emergency services precinct and tertiary education institutions.
  • Government’s intention to work together with financial institutions and non-government organisations to explore alternative sources of financing, such as low- and no-interest microfinancing schemes provided through community-based organisations, for people on low incomes or with currently unsustainable high debt levels.  The government is also working to procure whiteware through preferred suppliers at cheaper prices to ensure beneficiaries and others on low incomes can obtain more reliable appliances at lower long-term costs to them and to Government.