Budget 2007 builds on the Labour-led government's progress over the last seven years to transform New Zealand into a more dynamic and innovative economy better able to withstand the economic, social and environmental challenges we face. We are investing to lift the sustainable rate of growth of the economy to allow all families, young and old, to enjoy higher living standards from a more prosperous economy.

 

New Zealanders are wealthier, more secure and enjoying greater opportunity than ever before thanks to consistent economic growth, rising wages and one of the lowest unemployment rates in the world. However, important challenges remain. Economic success has generated inevitable imbalances. We face rising inflation, high interest rates and an over-valued exchange rate. Climate change also poses serious economic, environmental and social challenges.

 

Budget 2007 aims to put New Zealand on a sustainable footing. We have an integrated strategy designed to create a more resilient and flexible economy.

 

That is why saving and investing are centrepieces of Budget 2007. New Zealanders are being encouraged to save more, far earlier in their working lives to help secure their retirement dreams. Tax credits for those who save through KiwiSaver will help New Zealanders grow assets beyond the family home. If we save more, we consume less, easing inflation and so pressure on interest rates and the dollar. It's good for workers, for businesses and the economy.

 

To improve opportunity we also need to grow more globally competitive firms, producing products that command a premium overseas. That's why Budget 2007 invests $3.4 billion over four years in a package of measures designed to encourage greater business investment and improved competitiveness. A lower company tax rate, tax credits for research and development and proposed international tax rules will encourage investment in innovation and expansion, both here and overseas. Exporters also win further market assistance.

 

A highly skilled workforce is critical to lift productivity. This government has revitalised skills training and the business tax measures will further encourage investment in productivity improvements. Budget 2007 also expands support for industry training and provides greater funding for tertiary institutions to ensure they produce more of the right mix of skilled graduates.

 

Investing in world-class infrastructure is also essential to achieve higher sustainable economic growth. The Labour-led government has embarked on the biggest ever road building programme and increased spending on public transport ten fold. Budget 2007 invests further capital to support the construction of state highways. Regional fuel taxes will also improve the ability of regions to fund priority investments. Developing Auckland as an internationally competitive city is vital to drive a more dynamic economy and that's why Budget 2007 continues progress in modernising the city's transport infrastructure. $600 million will be invested over six years for the government’s contribution to urban rail development projects in Auckland and Wellington and $50 million for general track improvements to the national rail network. These investments are key to developing a more sustainable transport network and underscore the government's commitment to ensure New Zealand deals with the challenge of climate change.

 

Budget 2007 encourages businesses to adopt environmentally friendly business practices and gives households a helping hand to improve their lifestyles and have energy efficient homes.

 

Economic transformation: major initiatives:

 

Saving:

• $3.2 billion in tax credits for KiwiSavers and employer contributions

 

Investing

$3.4 billion Business Tax Reform package including:

• $2.1 billion for a company tax rate cut to 30 per cent
  
• $630 million for a tax credit for R&D
  
• $112.5 million for new international tax rules
  
• $87.8 million to expand Market Development Assistance scheme
  
• $53 million to expand industry training

 

World class infrastructure:

• $650 million for electrification of rail in Auckland, improvements in Wellington and for general national track improvements (over six years)
  
• $145 million for the State Highway Cost Guarantee Plan
  
• Regional fuel tax

 

Highly skilled workforce:

• $285.1 million operating funding and $79.7 million of capital funding for tertiary education organisations to fund "investing in a plan" approach.
  
• This total package of funding includes:
  
  
  
  • $53 million provided as part of Business Tax Reform to expand industry training; and
    
  • $28.9 million for student support to improve access to tertiary education

 

Environmental sustainability:

• $72.4 million to encourage energy efficient homes
  
• $30.5 million operating and $1.6 million capital for government, business and household sustainability initiatives

 

 

 

 

Economic Transformation media statements for Budget 2007

 

Investing in a sustainable future

17 May 2007, David Benson-Pope and David Parker joint media statement. Environment, Climate Change Issues

More than $800 million is being invested into making New Zealand more sustainable

 

Towards a sustainable rail network

17 May 2007, Michael Cullen and Annette King joint media statement. Finance; Transport

Budget 2007 funds significant improvements to the Auckland and Wellington rail passenger networks, in a drive to put the economy on a sustainable footing

 

Funding certainty for transport improvements

17 May 2007, Michael Cullen and Annette King joint media statement. Finance; Transport

Budget 2007 paves the way for regions to raise funds through a regional fuel tax for specific transport capital projects

 

Driving land transport investment forward

17 May 2007, Annette King media statement. Transport

Budget 2007 capital injection to ensure the five-year State Highway Construction Plan is delivered in the event of any unanticipated cost increases

 

Investing in sustainable business

17 May 2007, David Benson-Pope media statement. Environment

Helping businesses make the most of the opportunities offered by sustainability is a focal point of funding for the package of sustainability initiatives

 

Helping Kiwi households towards sustainability

17 May 2007, David Benson-Pope media statement. Environment

A household sustainability programme will make it easier for Kiwi households to improve their lifestyles, keep NZ clean and green, and help fight climate change

 

Large investment in warmer, healthier homes

17 May 2007, David Parker and Jeanette Fitzsimons joint media statement. Energy, Climate Change Issues; Energy Efficiency

Budget 2007 provides $72.4 million over four years to help Kiwi families live in warmer, drier, healthier, more energy efficient homes

 

Tertiary sector primed for future

17 May 2007, Michael Cullen media statement. Tertiary Education

Budget 2007 helps the tertiary sector meet NZ's economic, environmental and social challenges

 

Encouraging a more skilled workforce

17 May 2007, Michael Cullen media statement. Tertiary Education

Budget 2007 invests in our training system for more of the right workers needed to increase productivity

 

Supporting students vital for tertiary education

17 May 2007, Michael Cullen media statement. Tertiary Education

Budget 2007 strengthens investment in student support by expanding allowances and scholarships for an extra 12,000 students - primarily from low-income backgrounds

 

Big research investment to transform economy

17 May 2007, Steve Maharey media statement. Research, Science and Technology

Improved business performance and sustainability are aims of a $73.7 million increase for research, science and technology over four years, along with $34.6 million in reallocated funding

 

Supporting firms tapping into offshore markets

17 May 2007, Phil Goff and Trevor Mallard joint media statement. Trade, Economic Development

Budget 2007 reinforces the Labour-led government’s commitment to help firms crack offshore markets,

 

Tougher action on property speculation

17 May 2007, Michael Cullen media statement. Finance

Budget 2007 provides a further $14.6 million over 3 years for Inland Revenue to ensure property speculators pay their fair share of tax

 

Fostering a culture of charitable giving

17 May 2007, Peter Dunne media statement, Revenue

Budget 2007 lays the foundation for a stronger culture of charitable giving in New Zealand.