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BUDGET BOOST FOR SERVICES

By Lawrence Johnston

THREE billion New Zealand dollars for health, NZ$1.68 billion for education, and NZ$900 million on fighting crime, are among provisions over the next four years, contained in the Budget announced in May.
There is also NZ$290 million to kick start the government's NZ1.5 billion plan for ultra-fast broadband to the home, and NZ$81.6 million for FreshStart young offender initiatives.
Affordable housing initiatives receive a NZ$40 million boost and there is NZ$50 million to create a series of regional cycle tracks with the long-term aim of creating a national network.
A further NZ$190 million will go on a new Primary Growth Partnership to boost primary sector growth and innovation, and NZ$18.6 million will be used to lock National Superannuation payments in at 66 per cent of the average wage to be paid at age 65.
Of the NZ$900 million crime-fighting quota, NZ182.5 million will be used to put 600 more police on the streets by 2011.
Another share - NZ$255.9 million - will be used to recruit 246 more probation officers, 29 frontline managers and 26 psychologists, to improve the quality of parole and home detention management.
A further share - NZ$385.4 million - will be used to create 1,000 extra prison beds through double bunking at five prisons and planning for additional capacity.
Finance Minister Bill English said the Budget would lift economic growth, help New Zealanders through the recession and strengthen the government's books.
It also directly supported jobs over the next four years. (see story back page)
"This Budget takes significant steps towards meeting key election commitments like improving frontline services in health, lifting educational achievement and boosting law and order," he told Parliament.
It fulfilled the National Government's commitment to 'significantly' lift infrastructure investment, boost the nation's long-term economic performance and permanently raise New Zealanders' living standards.
"At the heart of this Budget are steps to future-proof the government's financial position as it takes a hit from the biggest and most co-ordinated global recession since the 1930s.
"We believe these measures, taken together, will put New Zealand firmly on the road to recovery," Mr English said.
The Budget would ensure that forecasts of skyrocketing debt would not eventuate.
Over the next four years, the government would increase new spending by NZ$5.8 billion to help maintain economic activity and to support jobs. But in the medium-term, it was essential for the nation to overcome its debt problems.
"A growing mountain of debt would act as a handbrake on the economy and could lead to an adverse reaction from foreign investors and credit agencies. That would mean higher borrowing costs for businesses and households," he said.
Suppressing debt was also essential if the government was to maintain public services and preserve entitlements such as New Zealand Superannuation, Working for Families and welfare benefits at their current levels.
As a result, the government had taken considered decisions now to avoid having to make harsher ones later.
One of those decisions was to defer the second and third tranches of planned tax cuts in 2010 and 2011 to avoid incurring further debt.
The government remained committed to lower personal income taxes and they would be assessed in future Budgets.
Other decisions included:

Suspending automatic contributions to the New Zealand Super Fund until the operating balance excluding gains and losses (OBEGAL) returns to surplus. A payment of NZ$250 million will be made in 2009/10 and future partial contributions will be considered annually.
Revising down the annual operating allowance to NZ$1.45 billion for 2009/10, compared with NZ$1.75 billion indicated in the Budget Policy Statement in December. It will be capped at NZ$1.1 billion in 2010/11 and adjusted by two per cent in following years, and
Reprioritising NZ$2 billion of the previous Labour-led government's planned spending into what the current National-led government considers to be higher quality initiatives that meet its priorities.

Mr English said: "We cut taxes on April 1 because we believe lower income taxes benefit the economy. However, the severity of the recession means tax cuts scheduled for 2010 and 2011 are currently unaffordable. Their timing will be reassessed as part of future budgets.
"We are also suspending full payments to the Superannuation Fund. This will not affect people's entitlements to New Zealand Superannuation. It will continue to be paid at a minimum 66 per cent of the average wage from age 65."
It didn't make sense to borrow big sums to invest in currently uncertain global financial markets while running big deficits. Next year, the government would have had to borrow NZ$1.5 billion extra if it continued with full payments, he said.