Hon Bill English, Minister of Finance today delivers the National led Government’s eighth budget. On behalf of NZHIT members I have been the associated budget lock-up where we were provided with the Budget 16 details and a presentation from the Finance Minister covering the highlights.
The following is a high level overview that I have prepared for our members so that you have an early indication of the key areas that affect our sector. I have included health, innovation and social welfare as we are increasingly involved across all of these sectors. Indeed, it is a key priority of this Government that services are maximised across government departments to provide more effective and efficient services to New Zealanders.
In this respect I have included the apportionments to Innovation New Zealand as this contains quite a bit in relation to education and training in science, engineering and technology. It also covers the areas of investment in science and health related research.
The attached “Budget at a Glance” provides an excellent overview of the main areas of expenditure and investment. I have expanded on these further in this paper for members.
Investing in a Growing Economy:
- The outlook for the economy is positive and the Crown’s books are in good shape.
- Real GDP growth of 2.8 per cent on average over the next five years
- Rising surpluses and net debt falls to 19.3 per cent of GDP in 2020/21
- Over 200,000 more jobs over the last three years and another 170,000 expected by 2020
- The average wage is expected to rise to $63,000 a year by 2020
New Spending in Budget 2016:
- Net new operating spending averages $1.6 billion a year
- Net new capital expenditure total $1.4 billion. Additional investment funded by capital reprioritisation takes the total new capital spend to $2.6 billion
The Government’s fiscal priorities:
- Maintaining rising surpluses to reduce debt in dollar terms
- Reducing net debt to around 20 per cent of GDP by 2020
- If economic and fiscal conditions allow, beginning to reduce income taxes
- Using any further fiscal headroom to reduce debt further
But elsewhere, New Zealand is reaping the benefits of an increasingly diversified economy with total exports increasing by almost $2 billion last year. This includes the wider ICT sector, which is performing well in terms of export earnings and growth.
Total investment in health will be $16.1 billion in 2016/17 with Health Minister Dr Jonathan Coleman saying that “delivering better health services remains this Government’s number one funding priority”.
“The new Health Strategy sets the direction for a more integrated and patient-centred system. We want more services delivered in the community, with more prevention and self-management,” Dr Coleman says.
An extra $568 million will be invested in 2016/17 – the biggest increase in seven years, and almost $170 million more than last year. This includes an extra $400 million in 2016/17 to invest in services, improve access, and to meet cost pressures and population growth.
Budget 16 includes a $2.2 billion package over four years for new initiatives and to meet cost pressures and population growth.
- $1.6 billion for DHBs
- $169 million for disability support services
- $73 million for primary healthcare including extra support for free GP visits and prescriptions for under 13s
- $15 million to support air and road ambulance services
- $12 million to increase support for primary care and social services to enable people to access mental health services help earlier
- $124 million for Pharmac to provide more access to new medicines
- $96 million to increase surgeries by 4,000 a year, a key Government priority
- $39 million to start the roll out of a national Bowel cancer screening programme*
- $12 million to expand an alcohol and drug support programme for pregnant women
- $18 million to expand the Healthy Homes Initiative which aims to reduce preventable diseases in young children
- A 10% increase on tobacco excise on 1 January each year from 2017-2020
*The bowel screening programme roll-out starts with Hutt Valley and Wairarapa DHBs followed by a progressive roll-out across the country. Additional funding has been set aside in contingency to enable the IT support needed for a national screening programme.
Note: The detailed level of appropriations has not been included in the above overview of the Health Budget. Further analysis of the specific appropriations will follow.
Innovative New Zealand:
A series of 25 initiatives that will see $761 million package over the next four years to help further diversify the economy, and support more jobs and higher wages for New Zealanders in the decade ahead.
“Innovative New Zealand is a major step towards delivering on the vision of the National Statement of Science Investment, and also supports the Business Growth Agenda, which seeks to grown business investment in R&D to over 1 per cent of GDP,” Economic Development Minister Steven Joyce says.
Science and Innovation – $411 million investment in science and innovation, taking the Government’s annual science investment to $1.6 billion by 2020
What is new for over the next four years?
- $114 million for the new Endeavour Fund (previously known as the Ministry of Business Innovation and Employment Contestable Fund)
- $66 million for the Marsden Fund – growing it from $53.6 million in 2015/16 to $79.8 million in 2019/2020
- $63 million for the new Strategic Science Investment Fund
- $97 million for additional health research through the Health Research Council
- $15 million for the new Catalyst International Fund to support initiatives to strengthen international research collaboration
- $12 million for the Pre-Seed Accelerator Fund to support the commercialisation of publicly-funded research
- $3 million to continue the Accelerators Programme to support the rapid formation of early-stage IT and digital start-ups
- $4 million for the Maori Innovation Fund to help more Maori organisations gain the skills, knowledge and networks they need to get new ventures off the ground, grow existing businesses and asset bases
- $20 million over four years for the Global Research Alliance (GRA) to progress GRA research through proof-of-concept to pilot studies and commercialisation. Includes initiatives to address mitigation of emissions from livestock
- $16.7 million for Antarctica New Zealand
Tertiary Education - $257 million for tertiary education and apprenticeship programmes, particularly in the areas of science, engineering and agriculture, to develop the skilled workforce needed for a 21st century economy
What is new for over the next four years?
- $86.1 million for tuition subsidies provided for targeted subsidy increases at degree level…….to grow provision in core areas such as science and technology
- $36.9 million to increase tuition subsidies for sub-degree provision at Level 3 and above 2 per cent
- $14.4 million to fund 5,500 more apprentices by 2020
- $43.5 million for initiatives to help more New Zealand students develop international linkages and connections
- $14.6 million to ensure foundation education at Levels 1 and 2 will be completely fees-free from 2017 to encourage second-chance learners to gain basic skills
- $11 million to fund 600 more places in the 2016 Workplace Literacy and Numeracy programme, and around 900 places from 2017 onwards
- $2.3 million for the Refugee English Fund to support refugees to progress to higher-level tertiary study or employment
- $1. 6 million in additional funding for Engineering to Employment (E2E), which supports the transition from education to employment for the increasing number of engineering graduates – this is a priority of the Government’s Business Growth Agenda
- $35 million in contingency funding for new innovation initiatives in the university sector
- Additional $9.6 million for Maori and Pacific Trades Training
- The annual maximum fee movement for 2017/18, the amount by which tertiary education organisations can increase their domestic fees, is proposed to be reduced to 2 per cent
Regional economic development - $94 million for regional development with initiatives to unlock business opportunities and benefit regional communities
What is new for over the next four years?
- Includes a further $40 million to develop more regional research institutes across New Zealand. MBIE is currently working on business cases with three proposed regional research institutes in Marlborough, Central Otago and Southland
Social investment is about improving the lives of our most vulnerable people by intervening early and tailoring services to their needs. Budget 2016 continues this approach with a $652 million Social Investment package.
- Vulnerable children - $200 million to support the children – part of a $348 million reform of the child care and protection system
- Welfare dependence - $50 million to reduce long-term welfare dependence
- Whanau Ora - $40 million to support around 2,500 additional whanau and families
- Educational achievement - $43 million for schools targeted to children most at risk of not achieving
- Youth services - $61 million to extend the Youth Services to 18 and 19 year olds
- Prisoner reintegration - $20 million to support offenders leaving prison and returning to a community