Act’s Alternative Budget, ‘Time for Truth’, has tax cuts, prison boost

The Act Party’s “Alternative Budget” proposes a two-rate income tax system and hundreds of millions of dollars to increase capacity in New Zealand prisons for both adults and young people.

Party leader David Seymour is unveiling his Budget, “A Time for Truth”, in Auckland today as an alternative to the Government’s Budget to be released on Thursday.

It contains the latest iteration of Act’s long-standing policy for a two-rate income tax system.

Under the system, those earning less than $70,000 would pay 17.5 per cent from the next financial year.

Korowai Manaaki is a Youth Justice Residence, located in Manurewa, Auckland. Photo / Michael Craig.

Those who earned more and currently paid either 33 per cent or 39 per cent would be downgraded in stages to 28 per cent by the beginning of the 2025/26 year.

To offset the higher bottom tax rate, Act would introduce a tax credit for low and middle-income households, alongside a personal carbon tax refund from the revenue earned through the Emissions Trading Scheme of almost $250 in 2024 and falling slightly to $186 in 2027.

Prison capacity would be another area receiving a significant funding boost under Act. The Department of Corrections would be resourced to hold 524 more prisoners up to a total capacity increase of 2094 by 2026/27.

Corrections would also be given the responsibility of managing youth offenders. This currently sits with Oranga Tamariki. Act aims to build 200 specialised youth justice beds, costing about $500 million in capital expenditure.

This year’s Alternative Budget includes an increase in Defence spending to 2 per cent of GDP, like last year, which Seymour said would bring New Zealand into line with its allies. That would mean $7.6 billion in extra capital expenditure over the next four years, almost double what Labour would spend, according to figures from last year.

Other longstanding policies in Act’s Alternative Budget include performance-based pay for teachers and the gradual increase of the superannuation age to 67 at a rate of two months per year from the 2023/24 financial year before being indexed to life expectancy.

Several programmes intended to reduce carbon emissions would be cut, including the Climate Change Commission, the Clean Car Discount and Climate Emergency Response Fund spending.

The same goes for several ministries and other entities - all of the Ministry for Women, Ministry for Pacific Peoples, Ministry for Māori Development (Te Puni Kōkiri), Ministry for Ethnic Communities, Office for Māori-Crown Relations (Te Arawhiti) and the Human Rights Commission would be abolished.

“Kiwis need lower, flatter taxes, paid for by reducing wasteful spending,” Seymour said in a statement.

“We need to scrap government departments that don’t add value. We need less red tape on hardworking New Zealanders.

“We’ve been poorly served by two major political parties who each say the other is ruining the country but will run it the same way if it gets them into office.

“Our country will face a real choice in five months’ time, between parties offering more of the same and one promising real change.”