Today's Budget made three "key" changes to the Government's fiscal parameters, affecting operating allowances for new spending, the Superannuation Fund and ACC levies.
The Government will delay contributions to the Superannuation Fund for an additional two years – until the long-term debt target is reached (net debt being no higher than 20 percent of GDP).
Super contributions are expected to resume in 2020/21, two years later than was projected in the most recent Half Year Update.
"I want to stress that this change in no way affects New Zealanders' entitlement to New Zealand Superannuation, either now or in the future," English said.
"The choice for the Government is whether to use future cash surpluses to reduce debt to more prudent levels, or whether to put money into world sharemarkets while holding higher debt. The first option is clearly more reponsible."
"Significant reductions" could now be made in ACC levies, Finance Minister Bill English said, with a reduction in total Crown revenue and therefore total Crown operating balance.
The Government will allow for a levy reduction of around #300 million in 2014/15, although final figures will be determined after ACC consults on the issue later this year, and this reduction will go to $1 billion in 2015/16.
English pointed to the $630 million reduction in levies in 2012/13 and claimed the combined reduction would amount to around 40 percent lower ACC levy rates for households and businesses.
Lastly, the operating allowances for new spending have been slightly adjusted, to $900 million compared with the $800 million signalled in the most recent Budget Policy Statement.
That will increase to $1 billion in Budget 2014, compared with $1.2 billion in the BPS. From 2015, operating allowances will grow by 2 percent per Budget.
"This will mean bigger surpluses and a greater ability to pay down debt," English said.
New capital spending in Budget 2013 and the next three Budgets will continue to be funded from the Crown's balance sheet, including from the proceeds of the Government's share offer programme.
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).
Idealog is part of ICG. We work with clients like Woolworths New Zealand, All Good, Huffer, Liquorland, Resene, Citta Design, TVNZ, Spark and FCB on their event activations, in-store, in-office or out-of-home signage, content creation and vehicle wraps.