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The Government believes there is significant merit in extending the mixed ownership model to four state-owned energy companies and reducing the Crown’s majority shareholding in Air New Zealand.

It will help reduce Government debt, increase investment opportunities for mum and dad investors and improve the companies’ financial performance, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

Changes to KiwiSaver will encourage a higher level of private savings, make the scheme more financially sustainable and build a large pool of local capital, Finance Minister Bill English and Revenue Minister Peter Dunne say.

“While KiwiSaver has been very effective in attracting new members, it has done so at a high cost to taxpayers, with the scheme costing the Government over $1 billion a year in subsidies and tax breaks," Mr English says.

Why are changes being made?

1.  35-year old couple on average household income. Ben and Megan are both 35 years old. Ben works full time and earns $52,000 a year and Megan works part time earning $25,000 a year. Their combined income is equivalent to the average household wage. They join KiwiSaver on 1 April 2013 and both contribute the new minimum rate – 3 per cent of their gross wages. Ben contributes $29.92 a week and his employer contributes 3 per cent, or $24.68 a week after tax. He receives the equivalent of $10 a week in government contributions through the annual Member Tax Credit.

The Government is making changes that will better target Working for Families to lower income earners and ensure its cost remains sustainable into the future, Finance Minister Bill English, Social Development Minister Paula Bennett and Revenue Minister Peter Dunne say.

Working for Families will be altered over time so that eventually the scheme has:

Why are changes being made?

1.  Low income one-child family

Lisa is a sole parent. She earns $30,000 a year and has a 10-year-old child. She currently receives $148.04 a week in Working for Families tax credits. From 1 April 2012, this will go up to $152.64 a week – an increase of $4.60. 

2.  High income four-child family

Budget 2011 has freed up $5.2 billion out to 2014/15 – including $700 million in 2011/12 - to invest in improving frontline public services and reducing debt, Finance Minister Bill English says.

“At a time when the Government's finances are constrained as it deals with ongoing costs from the global financial crisis and two Canterbury earthquakes, these savings provide significant funding for better frontline services in areas like health, education, and law and order,” Mr English says.

The Government expects the wider state service to find $980 million in savings over three years to go towards improving frontline public services and reducing debt, Finance Minister Bill English says.

Agencies will be required to find the savings from 1 July 2012. They will comprise two main parts:

New Zealand's broadband, rail and schools are top priorities for about $1.6 billion of further infrastructure spending in Budget 2011, Infrastructure Minister Bill English says.

The spending, which includes over $500 million of reprioritised capital, follows about $3 billion of new spending in infrastructure and other major capital investment in Budgets 2009 and 2010.

Documents released today show the Government has taken a balanced and responsible approach in providing a back-up financial support package for AMI policyholders, Finance Minister Bill English says. 

Treasury today proactively released a range of documents on its website relating to the Government's $500 million back-up support package, which was announced on 7 April.

Improved performance by ACC in the Non-Earners’ Account has freed up $638 million of taxpayer funding over the next four years, Finance Minister Bill English and ACC Minister Nick Smith announced today.

The Budget next week will set a credible path back to budget surplus, after Government financial statements today confirmed a $10.2 billion operating deficit before gains and losses for the nine months to 31 March, Finance Minister Bill English says.

The deficit includes the Earthquake Commission’s $1.5 billion estimated share of costs for the February earthquake in Christchurch. However, it does not include the Government’s support package for AMI policyholders, which was signed after 31 March.

The Government’s Review of Expenditure on Policy Advice identifies several significant issues with the cost, quality and management of policy advice and makes 36 recommendations to address them.

The review, announced last year, will help the Government’s wider programme to control growth in the costs of public sector back office functions and deliver better frontline public services, Finance Minister Bill English says.

However, it does not recommend specific cuts to policy advice spending.

The Government agrees with the OECD that New Zealand should return to budget surplus as soon as possible and the Budget next month will take steps in that direction, Finance Minister Bill English says.

“In its economic survey of New Zealand out today, the OECD points out that achieving faster economic growth requires progress across a broad policy front,” Mr English says.

A report benchmarking the administrative and support functions of state sector agencies shows there is room for further savings that can go towards improving frontline public services, Finance Minister Bill English says.

Treasury today released the results of its benchmarking report, which concludes government agencies could save more than $230 million a year through greater sharing, standardisation and automation of back office processes and systems.

The Government will spend about $8.5 billion over the next few years to help the rebuilding of Christchurch, Finance Minister Bill English said today.

“The earthquakes do not fundamentally change our economic situation or the Government’s programme,” he said in a speech to the Wellington Employers’ Chamber of Commerce. “They simply make the task of returning to surplus a little more difficult.”

Deputy Prime Minister and Finance Minister Bill English leaves for China on Wednesday, where he will attend the annual Bo’ao Forum for Asia and meet senior government and business leaders in Beijing and Shanghai.

The Bo’oa Forum, to be hosted by Chinese President Hu Jintao on the southern Chinese island of Hainan, brings together government, business and academic leaders from across Asia. It aims to promote regional economic integration.

The Government has announced it will provide a back up financial support package for AMI Insurance to give policyholders certainty and to ensure an orderly rebuild of Christchurch in the aftermath of the two earthquakes.

The support package would be called on only as a last resort if AMI’s own reserves have been exhausted – unless the Crown believes it is in the public interest to take control sooner, Finance Minister Bill English said today.

The Government intends to commission two new schools in Hobsonville that will be designed, financed, built and maintained under a public-private partnership, Infrastructure Minister Bill English, Education Minister Anne Tolley and Associate Education Minister Rodney Hide announced today.

The Government will now seek formal expressions of interest from market participants for new primary and secondary schools at Hobsonville Point, north-west of Auckland. Subject to satisfactory bids, the schools will be the first built in New Zealand under a PPP.

A significant impact from the second Canterbury earthquake and revisions to expected Crown recoveries under the Retail Deposit Guarantee Scheme are reflected in the Government’s accounts for the eight months to February.

“The accounts do not include the full costs of the earthquake,” Finance Minister Bill English says. “But they do include an estimate of the Earthquake Commission’s net cost of $1.5 billion.

The new Productivity Commission's first two inquiries will be into housing affordability and international freight services – two areas that affect New Zealand's international competitiveness, Finance Minister Bill English and Regulatory Reform Minister Rodney Hide say.

The Ministers also announced the appointments of Sally Davenport and Graham Scott as commissioners, working alongside New Zealand Productivity Commission chairman Murray Sherwin.

Ministers will initially refer two topics for inquiry to the Productivity Commission:

Change in the public service will need to pick up momentum to meet the Government's goals of high-quality frontline services with little extra money, Finance Minister Bill English says.

"Getting on top of our fiscal position, and rebalancing the economy, necessarily means the Government being a smaller part of the economy than it is now," Mr English said in a speech to the Institute of Public Administration New Zealand (IPANZ) in Wellington today.

The Government has put in place several tax relief measures to help Christchurch residents and businesses trying to get back on their feet after last month’s earthquake, Finance Minister Bill English and Revenue Minister Peter Dunne announced today.

“With the end of the tax year rapidly approaching, businesses and employers in Christchurch and around New Zealand need some certainty about the tax issues arising from the Canterbury earthquakes,” Mr English said.