Gone are the days when governments used to keep their annual budgets as a closely guarded secret, presenting their revenue and expenditure provisions in Parliament. These are days of leaks and speculation, which is perhaps why, governments increasingly give vent to their ‘fiscal intentions’ either as ‘forecasts’ or as statements by ministers.
Finance Minister Bill English is due to present his Budget for 2012-2013 in Parliament on May 24 but much of what is to come is already out on the public domain. Save for a few last minute tweaks, it is evident that the forthcoming Budget would somewhat be lukewarm, with little relief for ordinary New Zealanders. Businesses may expect some incentives, but there is little hope of further tax concessions.
Students may have reason to complain as their loan scheme undergoes changes.
Tertiary Education Minister Steven Joyce has said that the compulsory student loan repayment would rise from 10% t0 12% and that allowances for any study over four years would be cancelled.
The government is also likely to withdraw, from March 2013, the loan repayment incentive (introduced by National), offering 10% discount on voluntary repayments and introduce a four-year squeeze on the parental income threshold for eligibility to student allowances.
The changes sound reasonable. For instance, the increase of 2% in repayment would mean an additional amount of $2.27 per week (in absolute terms, from $11.38 to $13.65 per week) for those earning $25,000 per year.
The Government has also set out a plan for the next three years, which involves returning to budget surplus in 2014/15 and a reduction of net government debt as a proportion of the Gross Domestic Product (GDP).
Mr English has signalled that within these fiscal parameters, he would proceed with several microeconomic reforms, “driving better results and better value for money from public services and rebuilding Christchurch.”
The government’s Budget Policy Statement confirms operating allowances of $800 million for Budgets 2012 and 2013, returning to $1.2 billion for Budget 2014 and growing thereafter at 2 per cent per annum.
We would present a detailed analysis of Budget 2012 in our next issue.
