Budget 2016

The surprise in the this year is that there is no surprise!

The last few years there has been a significant surprise such as the increase in welfare benefits or free primary health care for under 13s. There was no surprise this year, just the normal allocation of spending.

There’s nothing in the Budget to get particularly excited about, but also nothing to condemn. Of course that won’t stop the usual suspects condemning it in strident tones, but the reality is that the Government has spent all the money it has, and spent it in the areas you’d expect them to.

What is pleasing is that surpluses of $700 million are projected for this year and next year. That’s a very small surplus, but we are one of the few developed countries around that has managed a surplus. Most of our peers are not forecast to hit surplus until at least 2020.

The Economy

  • Average economic growth of 2.8% projected
  • NZ has been 7th fastest growing economy over last five years, among developed countries
  • Surplus for this year projected to be $700 million and the same for next year. Then in 2018 hits $2.5b and $5.0b in 2019. So unlikely to see tax cuts until 2019.
  • 200,000 more people in work than three years ago and further 170,000 jobs projected
  • Average wage projected to hit $63,000 a year – was $47,000 in 2008
  • Net debt to peak next year at 25.6% of GDP then fall to 19.3%


  • Operating Allowance are around $1.5 billion a year compared to $4.3b a year of last term of Labour
  • Core crown expenses at 29.7% of GDP, down from 34%.


  • $2.2 billion extra for health over four years
  • $1.6b for DHBs
  • $169m for disability support
  • $124m for Pharmac


  • $2.1 billion more for infrastructure being $1.4 capex and $0.7 opex
  • $857m for the new IRD system to replace the 25 year old system
  • $883m for schools funding 480 new classrooms, nine new schools and rebuilding Christchurch schools
  • $115m for regional roads
  • $190m for Kiwirail


  • $761 million for innovation being $411m for science and innovation and $257m for tertiary education.
  • $97m more for health research
  • $95m for regional economic development
  • A 49% increase in funding for the Marsden Fund

Social Investment

  • $640 million for social investment including $200 million for replacing CYF
  • $200 million more for housing for 750 more places for those with most pressing housing needs, $42m for 3,000 emergency housing places, a new emergency housing grant and $36 million to continue home insulation. Also $100m to free up land in Auckland for housing


  • $17m more for Antarctica NZ
  • ETS two for one subsidy to end, saving $356 million
  • $100 million for freshwater improvement
  • Cumulative spending commitments on Christchurch now reaches $17b
  • Tobacco excise tax to continue to increase at 10% a year taking a pack of 20 from $20 to $30. An extra $425m of tax revenue
  • The top 10% of income earners now pay 45% of income tax. The bottom 50% of income earners pay 10% of income tax
  • Those on the top tax rate (earning over $70,000) contribute 60% of income tax revenue

Comments (66)

Login to comment or vote