Budget 2014: $1b in new spending as surplus returned

Finance Minister Bill English said the Government's much vaunted return to surplus would be $372 million. Photo / APN

Finance Minister Bill English has delivered an election-year Budget that delivers a bigger than forecast surplus, free doctors' visits for 400,000 more children, big cuts to ACC levies and dangles the prospect of tax cuts in front of voters.

Mr English said the Government's much vaunted return to surplus would be $372 million, still slender but well ahead of the wafer-thin $86 million forecast six months ago, thanks to a rosier economic outlook.

With the books back in the black and the economy gathering steam, Mr English said this was the first Budget in six years "to focus on managing a growing economy rather than recovering from a domestic recession and then the global financial crisis".

The $1 billion in new spending is dominated by "a $500 million package of extra support for children and families".

Prime Minister John Key said the Budget was "a reflection of the fact that the Government has worked hard with the people of New Zealand to get back into surplus, and it does give us some room".

"So it's natural that the first place and the focus of attention would be on families and particularly vulnerable children.

But Labour Leader David Cunliffe said the Budget "lacks vision, it lacks substance, it lacks direction, it reinforces privilege, it short changes New Zealanders, it does nothing to solve the housing crisis, this is a fudge-it Budget that takes New Zealand nowhere".

While new spending includes a well-flagged extension to paid parental leave, it also features $90 million over three years from next year to extend free doctors' visits and prescriptions to all children under 13. Previously it was limited to children under 6.

Health Minister Tony Ryall said the move, which takes effect from July next year, would benefit more than 400,000 primary school-aged children and their families.

A $172 million a year extension to paid parental leave will initially take it from the current 14 to 16 weeks on April 1 next year, rising to 18 weeks 12 months later.

Mr English also said eligibility would be extended to "home for life" foster caregivers and those in part time, casual work or with multiple employers.

The Government will also "significantly boost" the parental tax credit available to working families not on a benefit and not receiving paid parental leave. It will go from $150 a week to $200 on April 1 next year.

Mr English also flagged a $480 million cut to ACC levies from next year, including cuts to motor vehicle levies which could cut the average private car levy by about $130 a year.

The Budget shows surpluses rising to $1.3 billion next year and $3.5 billion after that.

New spending in subsequent Budgets would rise to $1.5 billion next year and by 2 per cent a year after that. Mr English said that was the upper limit for increases that would, combined with reprioritised spending, allow for "additional support for New Zealanders, without pushing interest rates higher than they would otherwise be".

•Surplus of $372m
•Paid parental leave extended from 14 to 18 weeks
•Free doctor visits for under 13s

- APN