Families tipped as priority in Budget
A boost to family incomes looks set to be a centrepiece of tomorrow’s Budget.
Finance Minister Steven Joyce confirmed a plan to boost ‘‘family incomes’’ would be outlined in the Budget ‘‘if we get room’’, which suggests the package will be timed to kick in after the September election.
With the economy poised for 10 successive years of growth, tax revenue well ahead of forecasts, and surpluses conservatively estimated at $25 billion to $30b over the next four years, the Government could put aside billions of dollars for its targeted low to middle income families.
Joyce and Prime Minister Bill English have previously dropped some big hints that there will be a focus on tax thresholds, working for families and the accommodation supplement.
Joyce has previously ruled out cuts to tax rates in favour of changes to the tax thresholds, with an emphasis on lower rates on incomes up to $48,000.
After raising benefit levels in 2015, the Government has been under pressure to offer an election year sweetener to low to middle income families whose incomes have failed to keep pace with house price and rental inflation.
Rising costs in other areas such as education and power have also been taking a big chunk out of their discretionary income. But wages have remained low because inflation has remained low in other areas, and government assistance like the accommodation supplement are unchanged since National came to power in 2008.
Speaking at the traditional prebudget photo opportunity as copies of the Budget rolled off the press, Joyce said the Budget would focus on public services and infrastructure for a growing country, debt reduction and ‘‘the opportunity to do something for family incomes’’.
The Ministry of Social Development’s annual Household Incomes Report showed the lower 20 per cent of income earners spent 54 per cent of their income on housing in 2015 compared with 29 per cent in th elate 1980s.
Housing costs are making up a bigger proportion of household spending for all earners, according to the report. The accommodation supplement, a rental subsidy for those on lower incomes, costs around $1.2b annually. Working for Families costs around $2.5b.
Joyce talked down the prospect of a big election year sweetener, saying despite the headline numbers, there was ‘‘not a massive amount of room’’ to move on spending.