Budget 2015

There are plenty of budget commentaries around. Here is our snapshot of the stuff we thought you should know

Key Announcement Summary

Prime Minister John Key and Finance Minister Bill English believe that through Budget 2015, the National-led Government will:

  • Return a $176 million surplus next year with larger surpluses in subsequent years.
  • Reduce government debt to less than 20 per cent of GDP by 2020/21 when they can resume contributions to the NZ Super Fund.
  • Invest $790 million over the next four years for package of measures aimed at helping children living in hardship, which includes:
    • Greater work obligations for parents on a benefit. o More childcare support for low-income families to help parents be in work, education or training.
    • An increase in benefits for families with children of $25 a week.
    • An increase in Working for Families payments to low-income families of $12.50 a week in most cases.
  • Invest $1.7 billion in health over the next four years, bringing the health budget to a record $15.9 billion in 2015/16.
  • Boost funding to education by $686.7 million over the next four years, bringing spending on early childhood, primary, and secondary education next year to a record $10.8 billion, while the tertiary spend will be $3.1 billion.
  • Continue their programme to make housing more affordable.
  • Invest a further $360 million to deliver on their commitment to roll-out world-class internet connectivity for New Zealanders, bringing the total investment to $2 billion.
  • Deliver further cuts to ACC levies – they’re forecast to drop by around $500 million in 2016 and 2017


  • The 2015 Budget sees a continuation of fiscal restraint with new initiatives being funded out of the new allocation allowance along with some reprioritisation of other spending.
  • Revenue forecasts have been lowered again as a result of lower nominal GDP growth but it is still forecast to rise as a proportion of GDP over the projection period.
  • As has been well flagged the achievement of an operating surplus has been delayed to 2015/16. However the trend improvement in the operating balance remains in place which is important for markets and rating agencies. 
  • Economic assumptions underpinning the Budget are broadly in line with our own and therefore appear reasonable. Key judgements about the risks to the outlook also appear reasonable.
  • Key policy initiatives include a package of measures to support children in hardship in return for greater work obligations as well as the earlier announced reduction in ACC levies and measures to tighten the tax treatment of housing.
  • As expected the bond program remains largely unchanged and the fiscal impulse remains negative on average over the projection period. This Budget should hold no surprises for financial markets


A full summary from AMP Chief Ecomomist Bevan Graham can be found here


Watch a 2 minute summary video from our Independent Research Partners Mercer, here