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Dear John,
The big news of the week is of course Budget 2024 which was delivered yesterday afternoon by Nicola Willis. I had a bit of a helping hand, ceremonially distributing the Budget documents at 2pm and in helping put it together in the weeks leading up to yesterday as Associate Minister of Finance. The Coalition is working really together and it’s been a pleasure working alongside David Seymour, Shane Jones, Nicola and the PM.
Budget 2024 is delivered in tough economic times. NZ is experiencing a downturn. We suffered a cost of living crisis in 2022 and 2023. Interest rates have risen sharply. The Official Cash Rate has gone from 0.25 to 5.5 per cent. We are in the hangover from the big spending party the night before. Government spending, tax and debt went up hugely under Labour to the point where Treasury says we’re in a structural deficit. We’re now bearing the consequences of the last government’s addiction to spending.
The Budget starts the process of getting the country back on track. Here are the fiscal highlights:
- A return to surplus forecast for 2026/7 (on Labour’s track it would have been at least 2031)
- An operating allowance (new money) of $3.2 billion in 2024 and $2.5 billion in 2025/6/7 (Labour’s final two alloances were $5.9 billion in 2022 and $4.8 billion in 2023)
- Government on track to return to net debt of under 40% of GDP.
The centrepiece of the Budget is tax relief. Kiwis haven’t had adjustments to tax brackets since 2010! Fourteen years. The median full-time wage and salary earner now earns $73,000 a year and is in one of the highest tax brackets. A minimum wage worker can face a marginal tax rate of 30 per cent. So there are adjustment to brackets, changes to the in-work tax credit, and the introduction of FamilyBoost, all of which tilt the benefits of the tax package to low-to-middle income working families with children.
An estimated 727,000 households will benefit by at least $75 a fortnight, and 187,000 will benefit by at least $100 a fortnight. I encourage you to look at the tax calculator on the Budget website and enter your details!
Alongside tax relief our careful reprioritisation means there is increased investment in health, education and law and order. 2/3rds of all of the new investment goes to those areas – meaning more police, more doctors, more nurses – and frontline public services.
Infrastructure is obviously my big focus and the Budget contains the biggest infrastructure investment in history - including money for a Regional Infrastructure Fund, billions for our Roads of National Significance (plus maintenance), school property (new builds and maintenance), defence and social housing. A comprehensive programme of work is underway to establish a 30-year National Infrastructure Plan, develop a new consenting framework to get infrastructure built faster, and utilise new funding tools like tolls, PPPs and value capture so we can make that pipeline of projects even bigger.
What did you think of the Budget? I'd welcome your thoughts. We can't solve everything wrong in New Zealand with one Budget but I reckon we've made a good start.
Apart from getting ready for the Budget, it's been a very busy couple of weeks. Last Monday I released the independent review into the government's state house company, Kainga Ora. It's a mess and financially unsustainable, according to Sir Bill English and two other expert reviewers. We have appointed ex Spark CEO Simon Moutter as the new Chair, we are refreshing the Board, and we've demanded a turnaround plan.
Last week I also announced we're funding 1500 new social houses delivered by community housing providers like the Salvation Army, introduced a new Bill to end Labour's war on landlords, introduced a new Bill to make quick changes to the RMA to get Wellington out of farming, spoke to an infrastructure summit... and that was all before Friday!
Around the Hutt: It was a real pleasure to host the Prime Minister in the Hutt last Thursday. We started with a business lunch, then cut the ribbon on the new lazer cutting machine at Metco (in a nice piece of symmetry, 8 years ago John Key opened their new facility), and then the PM spoke to all of the student leaders from Hutt secondary schools about leadership. We finished off the day at the awesome Hutt Valley Sports Awards. Once again it was a fantastic night with over 1300 people celebrating the best of Hutt Valley sport, and paying tribute to Mark Sorensen who was inducted as a Hutt Valley Sporting Legend.
Have a great long weekend. I'm going to try and get a couple of days off - it's been a massive couple of weeks!
As always, if you need a hand with anything, please let me know.
Chris
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