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May 16, 2011 | by  | in News | [ssba]

Budget Set to Cause a Jolt

Disagreements have already begun in anticipation of the government’s 2011 Budget which will be announced this week.

Finance Minister Bill English will announce the Government’s spending plan for the year on Thursday.

English says the Budget will focus on three areas: building faster economic growth around higher national savings; setting a path back to surplus and repaying debt; and rebuilding Christchurch.

This year’s Budget has been labelled the ‘zero Budget’ after the Government announced no new money would be spent. Instead, ministers were being asked to find ways to cut $600-$800 million. This money will be re-allocated to education, health and justice.

A number of announcements have already been made regarding the contents of the Budget.

Prime Minister John Key has signalled that programmes including student loans, KiwiSaver and Working for Families will face changes.

“The changes we are making in the Budget will make all of these programmes more affordable and ensure they survive into the future,” Key said.

Key has stated there will be some changes to the student loan scheme but loans will remain interest-free.

He has also announced changes to the KiwiSaver programme. Government contributions, through tax credits, will decrease and individuals and employers will be expected to contribute more to the scheme.

The $1000 ‘kick-start’ for each new KiwiSaver member will not be changed.

Working for Families will also change to be better targeted toward lower-income families and less generous to higher-income families.

Labour Party leader Phil Goff has criticised the government’s plans, saying they hurt lower and middle income earners and do not address key economic issues.

“These cuts will hurt hardworking Kiwis but they won’t address the economic problems created by National where we’re borrowing $380 million a week and are now facing our largest-ever deficit,” he said.


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