“It takes the next steps in the Government’s plan to build sustainable long-term growth based on more exports, higher savings, and more effective investment,” he says.

“Budget 2012 invests significantly in health, education, science and innovation, and welfare, while bringing down long-term costs of public services and delivering better results for New Zealanders.

“And the Budget continues the Government’s focus on addressing the imbalances built up in the economy during the 2000s.

“It does those things while keeping the Government on track to surplus in 2014/15, when New Zealand will be one of the very few developed countries not running deficits and increasing public debt.

“Good fiscal management is important because it helps us pursue the Government’s other economic priorities,” Mr English says.

The Government’s main priorities

During the next three years, the Government’s main priorities are:

• Responsibly managing the Government’s finances.
• Building a more productive and competitive economy.
• Delivering better public services within tight financial constraints.
• Rebuilding Christchurch.

“Budget 2012 focuses on implementing that plan,” Mr English says.

Responsibly managing the Government’s finances

The Budget shows the Government remains on track to surplus, with $4.4 billion of new operating spending over the next four years matched by a combination of savings and revenue initiatives.

“So the Government is making significant new investment in priority areas, while at the same time keeping a tight rein on growth in spending and public debt,” Mr English says.

Budget forecasts show an operating deficit before gains and losses of $8.4 billion in 2011/12, which compares with the $12.1 billion deficit forecast in the Budget Policy Statement in February. This reflects lower-than-expected government spending and a delay in some expenses, such as earthquake costs.

The forecast deficit falls to $7.9 billion in 2012/13 and $2 billion in 2013/14, before a $197 million surplus in 2014/15.

The forecasts also show Budget decisions will keep net core Crown debt below 30 per cent of gross domestic product. It is forecast to peak at 28.7 per cent of GDP in 2013/14.

The Government is proposing changes to the fiscal responsibility provisions of the Public Finance Act, including seeking parliamentary support to legislate for a limit on increased spending based on inflation and population growth.

Budget forecasts also show economic growth picking up from 2 per cent this calendar year to more than 3 per cent in 2014 and 2015.

The Treasury expects a further 154,000 New Zealanders to gain work over the next four years, on top of the 60,000 increase in employment over the past two years.

Building a more productive and competitive economy

Budget 2012 invests heavily in infrastructure, innovation, and skills – ingredients in creating a more productive and competitive economy that support more jobs and higher incomes.

“New jobs are created and incomes grow only when businesses have the confidence to invest, to take risks to employ more people, and to pay higher wages,” Mr English says. “The Budget supports those businesses with more investment in innovation and science.”

The Government’s annual spending on science and innovation will increase by $385 million over the next four years, taking total science and innovation spending across government to more than $1.3 billion by 2015/16.

Budget 2012 further invests in improving transitions for young New Zealanders from school into work or training, by providing an additional 3,000 free Youth Guarantee places at a cost of $37.7 million over four years.

The Government is establishing the new Future Investment Fund to invest the expected $5 billion to $7 billion proceeds from selling minority shares in five SOEs, into modern schools and hospitals, innovation, and transport.

Budget 2012 confirms the allocation of the fund’s first $558.8 million, including:

• The first $33.8 million of $1 billion ring-fenced for modernising and transforming New Zealand schools as part of the Government’s 21st Century Schools programme.
• A further $250 million towards the KiwiRail Turnaround Plan.
• $88.1 million for the health sector, most of which will go towards hospital redevelopments.
• $76.1 million for the creation of the Advanced Technology Institute.

Delivering better public services within tight financial constraints

The Government is creating a more innovative and efficient public sector to deliver better results to meet the modern demands of New Zealanders.

“Two months ago, the Prime Minister set 10 challenging and specific results for the public service to achieve over the next three to five years,” Mr English says.

“They include difficult issues like reducing crime, reducing long-term welfare dependency, and reducing educational under-achievement. At the same time, they will require a sharp focus on costs.”

In addition to the previously announced target of having 85 per cent of 18-year-olds achieving NCEA Level 2 or equivalent qualification in five years, the Budget today confirms two more measurable targets for the next three to five years:

• Reducing prisoner reoffending by 25 per cent by 2017. Reaching this target would mean 18,500 fewer victims of crime every year.
• Increasing the rate of participation in early childhood education to 98 per cent by 2016 from 94.7 per cent currently.

The Government is embarking on an ambitious welfare reform programme, which focuses on supporting New Zealanders into work.

In the first phase of welfare reform, Budget 2012 invests $287.5 million on education and training. This includes $148.8 million over four years for youth services, including wrap-around support.

Despite tight financial constraints, investing in better frontline health services remains a priority for the Government.

Over the next four years, the Government is committing almost $1.5 billion extra to health. District Health Boards will receive $1.11 billion of additional funding.

Education will focus on increasing student achievement. Over the next four years, the Government will commit $511.9 million towards new early childhood and schooling initiatives, in addition to setting aside further funding in tagged contingencies. In tertiary education, the Government will continue to better target student assistance to where it is most needed and ensure better value for taxpayers.

Rebuilding Christchurch

Budget 2012 continues the Government’s commitment to rebuilding Christchurch.

“The total cost of the damage is estimated at more than $20 billion, so it is without doubt the largest – and most complex – economic project we’ve seen in this country,” Mr English says. “The Government is providing considerable resources for the Canterbury rebuild.

“We set aside $5.5 billion in Budget 2011 for the Canterbury Earthquake Recovery Fund and we established the Canterbury Earthquake Recovery Authority. More than $3.46 billion of the Recovery Fund will have been spent by June 2013 and the rest will be spent by 2015/16.”

The Government is developing a blueprint for central Christchurch to take forward the draft central city plan. It has also assisted with supplying land for housing by using special earthquake recovery powers to allow re-zoning of residential subdivisions.

“Finalising the remaining residential land zoning decisions and settling outstanding insurance claims are therefore priorities,” Mr English says.

Budget 2012 – Investing In Our Future

Builds a platform for growth, while returning to surplus in 2014/15

• Returns the Budget to surplus in 2014/15, lifting national savings and reducing the need for Government borrowing.
• Forecasts economic growth to average about 3 per cent a year over the next four years, with 154,000 net new jobs being created – adding to the 60,000 net new jobs in the past two years.
• Increases spending on science and innovation to help build a more productive and competitive economy.
• Sets up the Future Investment Fund to spend the proceeds of the Government’s partial share sales on infrastructure, such as modern schools, transport projects, and hospital redevelopments.
• Invests $4.42 billion in new spending initiatives focused on improving frontline public services and getting better results in areas like health, education, law and order, and welfare reform. This spending is paid for by $4.39 billion of savings and new revenue initiatives.
• Continues to invest in the Government’s share of rebuilding Christchurch.

Budget initiatives at a glance
(All figures for four years to 2015/16 unless otherwise stated)

Responsibly managing the Government’s finances

The Budget returns the Government’s books to surplus in 2014/15 despite a $1.2 billion deterioration in the forecasts since the Budget Policy Statement in February. It achieves this by close to zero net new spending.

• Total net new Government spending of just $26.5 million over the next four years, compared with a planned new operating allowance of $800 million a year.
• Spends $4.42 billion on improving frontline services by redirecting savings and new revenue to areas where it gets the best results.
• Finds $3 billion of savings in lower-priority spending and raises almost $1.4 billion in new revenue by increasing tobacco excise tax, greater targeting of tax avoidance, closing tax loopholes, and ending outdated tax credits.
• The forecast OBEGAL deficit falls to $7.9 billion in 2012/13, $2 billion in 2013/14, before a $197 million surplus in 2014/15.
• Reduces the forecast peak in government debt to 28.7 per cent of GDP in 2013/14.
• Confirms new operating spending allowances of $800 million for Budget 2013 and $1.2 billion for Budget 2014.

Building a more competitive economy

Budget 2012 invests heavily in infrastructure, innovation, and skills to help create a more productive and competitive economy that supports more jobs and higher incomes.

• Increases science and innovation funding across government to more than $1.3 billion a year by 2015/16.
• $166 million extra (operating and capital) to develop the new Advanced Technology Institute.
• $60 million extra for National Science Challenges.
• $100 million extra to increase the Performance-Based Research Fund.
• New disclosure rules for KiwiSaver so investors can better compare the performance and fees of KiwiSaver funds.
• A review of KiwiSaver default providers to ensure they are operating in the best interests of investors.

Future Investment Fund

Budget 2012 establishes the Future Investment Fund to invest the $5 billion to $7 billion of proceeds of the Government’s partial share sales of four SOEs and Air New Zealand into modern infrastructure. This includes $558.8 million in Budget 2012.

• $33.8 million to fit out schools for ultra-fast broadband – the first of
  $1 billion planned spending on 21st Century Schools.
• $88.1 million for the health sector, most of which will go towards hospital redevelopments.
• $250 million for the third year of KiwiRail’s Turnaround Plan.

Better public services

Budget 2012 focuses spending on areas where it will get better results for New Zealanders. It also sets measurable targets for two more of the 10 areas in which the Government has committed to public targets. The three measurable targets set so far are:

• 85 per cent of 18-year-olds having NCEA Level 2 or equivalent by 2017– up from 68 per cent.
• Reducing prisoner reoffending by 25 per cent by 2017. Reaching this target would mean 18,500 fewer victims of crime every year.
• Increasing the rate of participation in early childhood education to 98 per cent, from 94.7 per cent currently, by 2016.

Health

• Almost $1.5 billion of extra funding for health, pushing total health spending to $14.1 billion in 2012/13.

• $32.4 million for better, faster cancer treatment, including dedicated cancer nurses to support patients through the course of their treatment.
• $16 million to speed up diagnostic tests for patients.
• $48 million for more and faster elective surgery.
• $20.5 million to strengthen maternity services and boost PlunketLine and WellChild services.
• $132.7 million to improve services and access for people with disabilities.
• Increasing tobacco excise tax by 10 per cent a year on 1 January in each of the next four years as part of a wider Government programme to prevent smoking.
• $1.68 million for more public health screening.

Education

• $511.9 million of operating funding for new initiatives in education, pushing total funding for early childhood education and schooling to $9.6 billion in 2012/13.
• $59.8 million to invest in teacher quality to support the professional development of teachers and principals.
• $256.8 million to fund forecast changes in schooling expenditure, which is almost entirely an investment to retain a more skilled and qualified teaching workforce.
• $82.6 million to increase the operations grant, giving schools the flexibility to provide resources based on the needs of their learners.
• $33.8 million capital funding in 2012/13 and $16.8 million operating funding over the next four years for the expansion of the School Network Upgrade Project, to upgrade schools’ internal ICT infrastructure.
• $59.4 million over the next four years, and $391,000 in 2011/12 in operating funding, along with $1.5 million capital funding in 2012/13, for further schooling proposals.
• Targeting cost adjustments for ECE through $47.9 million in new operating funding.
• $19.1 million to improve access to Māori immersion ECE services.
• $33 million in operating funding to accelerate achievement for priority learners. 

Tertiary education

• $59 million extra to boost funding for science and engineering tertiary courses.
• $37.7 million more for an additional 3,000 Youth Guarantee places to further improve the transition for young New Zealanders from school into work or training.
• $29.5 million operating spending for Private Training Establishments (PTEs), to create a fairer funding system that rewards competitive innovation across the tertiary sector.

Welfare

• $287.5 million up-front investment in the first phase of the Government’s welfare reforms to support more long-term beneficiaries into work. This includes:

• $80 million for early childhood education childcare and the Guaranteed Childcare Assistance Payment.
• $55.1 million for 155 dedicated Work and Income staff to support job seekers and sole parents into work.
• $1 million for financial assistance to access long-acting reversible contraception.
• $148.8 million for youth services including wrap-around support.

Law and Order

• $65 million in operating spending for new and expanded rehabilitation and reintegration programmes to help meet the Government’s target of reducing reoffending by 25 per cent by 2017.
• A new Justice Sector Fund that will give the justice sector flexibility to invest in areas that deliver better results for New Zealanders. Corrections has reprioritised $87 million towards the Fund.

Housing

• $104 million more for the Social Housing Fund, which supports community housing groups to provide affordable housing where it is most needed.
• $11 million towards insulation for 41,000 more homes as part of the Government’s Warm Up New Zealand: Heat Smart programme. The boost will bring the total homes covered by the scheme to 230,000.

Rebuilding Christchurch

• Of the Government’s $5.5 billion Canterbury Earthquake Recovery Fund (CERF), almost $1.6 billion was spent in 2010/11, and most of the remaining funding is expected to be spent by 2014/15.
• $114.9 million extra funding for the Canterbury Earthquake Recovery Authority (CERA) to oversee the reconstruction of Christchurch.
• $13 million in Social Development funding for NGO-led initiatives to support Cantabrians and assist with the recovery.
• $800,000 for Land Information New Zealand to continue re-surveying the Canterbury region.
• Residential investment is forecast to increase by 29 per cent in the March 2013 year and 41 per cent in the following year.

SUMMARY OF BUDGET ECONOMIC AND FISCAL FORECASTS

“New Zealand will then be one of the few developed countries not running deficits and increasing debt.

“Getting back to surplus is one of the most important contributions the Government can make to increasing genuine national savings and building a more competitive economy.

“It will reduce upwards pressure on interest and exchange rates. It will stop our debt rising and allow us to start reducing it.

“A significant surplus will give us choices about public services we don’t have while we’re running deficits,” Mr English says.

Budget forecasts show a fiscal surplus of $197 million in 2014/15, despite a $1.2 billion deterioration in the fiscal outlook for that year since the Budget Policy Statement in February.

“Since receiving preliminary Budget estimates, ministers have taken a number of decisions to ensure we remain on track to surplus,” Mr English says. “They have focused on continuing effective government programmes that deliver results to New Zealanders and curbing programmes that do not.”

Budget decisions include:

• Running a zero Budget this year for the second consecutive year. Net new government spending out to 2015/16 totals just $26.5 million.
• Reprioritising $4.4 billion of existing spending over the next four years to ensure New Zealanders receive better public services, especially in health, education, science and innovation, welfare, and law and order.
• Confirming the operating allowance will remain at $800 million for 2013/14 and $1.2 billion in 2014/15.
• Building on revenue measures of recent years by closing tax loopholes around livestock and mixed-use assets. The livestock changes will reverse an estimated $184 million fall in revenue and the mixed-use asset changes will save $109 million over four years. 
• Providing Inland Revenue with an extra $78.4 million to further improve its audit and compliance functions. This is expected to have a net $345.4 million positive impact on the operating balance over the next four years.
• Removing three tax credits that no longer serve their original purpose, including the income-under-$9,880 tax credit, the childcare and housekeeper tax credit, and the tax credit for the active income of children. This will save $117 million over the next four years.

“These are balanced decisions spread across all of the Government’s spending areas,” Mr English says.

“As a result, we remain on track for surplus while continuing to invest in priority areas that matter to New Zealanders, and which will help build the more competitive economy necessary to create new jobs and higher incomes.”

Between 2006 and 2008, final year spending on new discretionary operating and revenue initiatives totalled around $15 billion. In the past four years, this spending has grown by only around $750 million.

“Despite this, government debt has increased sharply in recent years, due to the impact of the domestic recession, the Global Financial Crisis and substantial costs of the Canterbury earthquakes,” Mr English says.

In 2008, net government debt was $10 billion. It has since increased to $50 billion and is forecast to reach more than $70 billion, before the Government returns to surplus and debt stops rising.

Budget forecasts show an operating deficit before gains and losses of $8.4 billion in 2011/12, falling to $7.9 billion in 2012/13 and $2 billion in 2013/14, before the $197 million surplus in 2014/15.

They also show Budget decisions will keep net core Crown debt below 30 per cent of gross domestic product. It is forecast to peak at 28.7 per cent of GDP in 2013/14, before the Government returns to surplus and starts reducing debt.

“At a time when the Government’s finances are constrained, these savings provide significant funding to put into new initiatives aimed at improving frontline public services and getting better results for New Zealanders,” Mr English says.

“At the same time, they allow the Government to run a zero Budget, ensuring a return to surplus in 2014/15, based on Budget forecasts.

“The Government is committed to getting better results with limited resources. Redirecting lower priority spending and raising some extra revenue by closing tax loopholes plays a key role in meeting this goal.”

In total, Budget 2012 includes new spending initiatives worth $4.42 billion in the current year and over the next four years, paid for by $4.39 billion in savings and new revenue initiatives. Savings and revenue initiatives include:

• Tax and excise changes that net an extra $1.36 billion over four years.
• Reprioritisation of $1.28 billion to new spending initiatives within budget votes.
• Reprioritisation of $982 million of savings from across budget votes into significant new spending initiatives in areas like health, education, welfare reform, and science and innovation.
• $772 million from contingencies.

“These savings are consistent with the Government’s approach across the past three Budgets, which have included reprioritising about $9 billion of spending.

“This Government is focused on getting better results rather than just increasing inputs. If something works, we’ll keep on doing it. If it doesn’t, then we will stop it and put the money into an area that yields better results,” Mr English says.

“At a time when many governments overseas are undertaking radical measures to get their books in order, finding these savings while maintaining high-quality frontline public services and income support to the most vulnerable is an achievement.

“The Government will ensure future Budgets continue to focus on improving frontline public services to deliver better results for New Zealanders, at the same time as improving value for money from more than $70 billion of public spending every year,” Mr English says.

“This Government is focused on getting better results, rather than just increasing inputs. It’s time to measure success by better outcomes, rather than by how much extra money we are spending, as was the case for much of the 2000s,” Mr English says.

“Two months ago, the Prime Minister set 10 challenging and specific results for the public service to achieve over the next three to five years, including difficult issues like reducing crime, reducing long-term welfare dependency, and reducing educational under-achievement.

“We’ve already announced one of the results targets – 85 per cent of 18-year-olds having NCEA Level 2 or equivalent in five years – and we are announcing more as part of Budget 2012.”

The targets are:

• Reducing prisoner reoffending by 25 per cent by 2017. Reaching this target would mean 18,500 fewer victims of crime every year.
• Increasing the rate of participation in early childhood education to 98 per cent by 2016, from 94.7 per cent currently.

“Achieving these results will be demanding and difficult, but we are determined to get better results for taxpayers and the users of government services,” Mr English says. “The other results targets will be announced by 30 June.

 “Progress towards achieving these targets will be reported publicly so New Zealanders can judge for themselves how well we are doing.

“This is a fundamental shift that requires different thinking. We are not a government that thinks spending more money on something is an end in itself. We are a government that thinks getting results is what’s really important.

“If a programme can get results, we are much more likely to spend money on it. If it doesn’t contribute to better results, we are much more likely to reduce spending on it,” Mr English says.

Despite tight financial constraints, Budget 2012 contains a number of initiatives and decisions aimed at improving frontline public services and getting real results for New Zealanders, including:

• A $287.5 million up-front investment over the next four years in the first phase of the Government’s welfare reforms, which provide more support to help people off welfare and into work. These changes are expected to reduce an individual’s likelihood of becoming long-term welfare dependent.
• $65 million over the next four years, reprioritised from within the Department of Corrections, to boost prisoner rehabilitation and reintegration programmes and to support the Government’s target of reducing reoffending by 25 per cent by 2017.
• Almost $1.5 billion of new funding over the next four years for health initiatives, including faster cancer treatment, more elective surgery, and strengthened maternity and disability services.
• $511.9 million over the next four years, and some additional funding set aside in contingency, for new education initiatives. This includes supporting the development of quality teachers and principals, and targeting additional ECE funding where it is most needed.

“In many cases, new initiatives have been paid for by reprioritising funding from lower priority activities, consistent with the approach we have taken in previous Budgets to improve frontline services and get better results with little or no new money,” Mr English says.

The Government’s 10 public service results

The Government has set 10 key results for the next three to five years. Specific and measurable targets will underpin each result area. Three of these have been agreed and the other seven will be finalised by 30 June.

The 10 results areas are:

Reducing long-term welfare dependency

• Reduce the number of people who have been on a working age benefit for more than 12 months.

(Lead Minister: Paula Bennett and Lead CE: Ministry of Social Development chief executive Brendan Boyle).

Supporting vulnerable children

• Increase participation in early childhood education. 

Specific target: Increase the ECE participation rate to 98 per cent by 2016, up from 94.7 per cent now.

(Lead Ministers: Tony Ryall and Hekia Parata and Lead CE: Ministry of Social Development chief executive Brendan Boyle, supported by Ministry of Education chief executive Lesley Longstone).

• Increase infant immunisation rates and reduce the incidence of rheumatic fever.

(Lead Minister: Tony Ryall and Lead CE: Ministry of Social Development chief executive Brendan Boyle, supported by Ministry of Health Director-General Kevin Woods).

• Reduce the number of assaults on children.

(Lead Ministers: Tony Ryall and Paula Bennett and Lead CE: Ministry of Social Development chief executive Brendan Boyle).

Boosting skills and employment

• Increase the proportion of 18-year-olds with NCEA Level 2 or equivalent qualification.

Specific target: Increase the proportion of 18-year-olds with NCEA Level 2 to 85 per cent by 2017, up from around 68 per cent now.

(Lead Minister: Hekia Parata and Lead CE: Ministry of Education chief executive Lesley Longstone).

• Increase the proportion of 25 to 34-year-olds with advanced trade qualifications, diplomas and degrees (at level 4 or above).

(Lead Minister: Steven Joyce and Lead CE: Ministry of Education chief executive Lesley Longstone).

Reducing crime

• Reduce the rates of total crime, violent crime and youth crime.

• Reduce re-offending.

Specific target: Reduce prisoner reoffending by 25 per cent by 2017 (which will reduce the annual reconviction rate from 30.4 per cent to 22.8 per cent and the annual re-imprisonment rate from 27.1 per cent to 20.3 per cent).

(Lead Minister: Judith Collins and Lead CE: Ministry of Justice chief executive Andrew Bridgman).

Improving interaction with government

• New Zealand businesses have a one-stop online shop for all government advice and support they need to run and grow their business.

(Lead Minister: Steven Joyce and Lead CE: Ministry of Economic Development chief executive David Smol).

• New Zealanders can complete their transactions with government easily in a digital environment.

(Lead Minister: Chris Tremain and Lead CE: Department of Internal Affairs chief executive Colin MacDonald.

"The Government is committed to investing in modern infrastructure that helps build a faster-growing economy with more exports and more real jobs, without borrowing more from overseas lenders,” Mr English says.

“That’s precisely what the partial sale of shares is all about. The Treasury is forecasting sale proceeds of $5 billion to $7 billion over the next three to five years.

“That money will go into the Future Investment Fund and be used to pay for better public assets such as modern schools, hospitals, and transport infrastructure, while reducing the Government’s borrowing by $5 billion to $7 billion.”

Budget 2012 allocates an initial $558.8 million, including:

• The first $33.8 million of $1 billion ring-fenced for modernising and transforming New Zealand schools as part of the Government’s 21st Century Schools programme. More of this money will be allocated in future Budgets, after a review of school property management.
• A further $250 million towards the KiwiRail Turnaround Plan.
• $88.1 million for the health sector, most of which will go towards hospital redevelopments.
• $76.1 million for the creation of the new Advanced Technology Institute.

The fund is notional, like the Canterbury Earthquake Recovery Fund. Spending and receipts will be smoothed over the fund’s lifetime.

“Investing the share sale proceeds in this way will result in valuable assets that are owned by the Crown, as part of a growing asset pool, on behalf of all New Zealanders,” Mr English says.

“The SOE share sale programme is a win-win. New Zealand savers get to invest in large Kiwi companies, and the Government frees up $5 billion to $7 billion to buy new assets without extra borrowing.

“Being listed on the stock exchange will provide greater transparency and discipline for the companies.”

The Government has confirmed Mighty River Power will be the first energy SOE to be partially floated – likely to be in the third quarter of this year, subject to market conditions.

The other companies in the share offer programme are Genesis, Meridian, Solid Energy, and Air New Zealand.

“The Government expects 85 to 90 per cent New Zealand ownership after the partial share floats, including the Government’s commitment to retain a controlling stake of at least 51 per cent in each company,” Mr English says.

“Details of the structure of the Mighty River Power initial public offer and share allocation will be announced after legislation is passed later this year.”

The $558.8 million allocated from the fund in Budget 2012 builds on $4.3 billion of new infrastructure spending over the past three Budgets for projects such as schools and ultra-fast broadband, and billions of dollars more to pay for the Government’s share of rebuilding Christchurch.

In addition to Budget initiatives, the Government is investing about $12 billion over the next 10 years to improve the State highway network and $4.6 billion through Transpower over the next 10 years to upgrade the national grid.

“Well-targeted investment in infrastructure helps lift productivity which, over time, will mean better wages and higher living standards for New Zealand families,” Mr English says. “The Government’s large investment is also directly supporting thousands of jobs – and indirectly supporting many thousands more.”

Pre-Prospectus Disclaimer
The Crown is considering offering shares to the public in one or more of Genesis Power Limited, Meridian Energy Limited, Mighty River Power Limited, Solid Energy New Zealand Limited and Air New Zealand Limited. No money is currently being sought and no applications for shares will be accepted or money received until after an investment statement containing information about the relevant offer of shares is available.

“The Government is committed to lifting national savings to reduce New Zealand’s longstanding debt to overseas lenders and to deepen our capital markets, so businesses can access the funds they need to grow,” Mr English says.

“Last year’s Budget made several changes to KiwiSaver to lift national savings, including raising the level of private contributions from 1 April 2013 and reducing the amount the Government is borrowing to subsidise the scheme.

“KiwiSaver has continued to grow rapidly in the past year – about 15,000 New Zealanders a month have joined, taking total membership to about 1.9 million. In the past year, total KiwiSaver funds have grown from $9 billion to more than $12 billion.

“This year we are focused on ensuring KiwiSaver is operating as well as it can, and that investors have better information to compare fund performance, so they can make informed choices about where to invest,” Mr English says.

Budget 2012 changes include:

• New disclosure rules, from 1 April 2013, requiring fund managers to report their performance and returns, fees and costs, assets and portfolio holdings, liquidity and liabilities, and key personnel, along with any conflicts of interest, in a standardised format on their websites.
• The Government’s review of current default provider arrangements to ensure such arrangements are in the best interests of investors.

Mr Foss says the new disclosure rules will ensure rigorous scrutiny of providers’ fees and performance, lifting competition and investor confidence.

“Under the changes, investors will be able to compile league tables. This will increase competition between providers, and allow investors to make direct performance comparisons.

“As a result, investors will be able to make more informed decisions. This should lead to improved industry performance and better overall returns.

“Reassessing the number, design, and investment mandate of KiwiSaver default providers will ensure these funds are operating in the best interests of 500,000 New Zealanders who haven’t actively chosen a KiwiSaver fund,” Mr Foss says.  

The Government has today issued terms of reference for the KiwiSaver default provider review, and a discussion document will be released later this year.

The Government is also deferring its auto enrolment exercise for KiwiSaver, originally planned for 2014/15. The Government said it would proceed when it had sufficient surpluses to meet the forecast cost of up to $514 million over four years.

“Proceeding with auto enrolment in 2014/15 is not now possible without putting the surplus at risk,” Mr English says. “Public consultation will now be deferred until after 2012 and the policy won’t be implemented until after 2014/15.”

The KiwiSaver changes are part of a wider Government programme to build genuine national savings. This includes:

• Returning to Budget surplus in 2014/15 – one of the most significant contributions the Government can make to increasing national savings.
• Budget 2010 changes that reduce tax on work and savings, and increasing tax on property speculation and spending.
• Providing New Zealanders with investment options through the sale of minority shareholdings in four SOEs and Air New Zealand.
• A commitment to resume contributions to the New Zealand Superannuation Fund when the Government returns to sufficient surplus and can contribute genuine savings, rather than borrowing.
  

24 May 2012

Fact sheet – KiwiSaver changes

What is changing?

• New disclosure rules will require all KiwiSaver fund managers to report their performance and returns, fees and costs, and other key information in a standardised format on their websites, enabling investors to make direct performance comparisons between funds.
• The Government is reviewing the rules and arrangements of KiwiSaver default providers. There are currently six default providers. Investors are assigned to one of these if they don’t actively choose a fund.

• The Government is deferring an auto enrolment exercise for KiwiSaver, originally planned for 2014/15, along with consultation on the change. Auto enrolment involves automatically enrolling all workers who are not already in KiwiSaver.
• As a result of Budget 2011 changes, on 1 April 2013 minimum employee contributions will rise from 2 per cent of an employee’s gross pay to 3 per cent.

Why are changes being made?

• The Government is tightening the disclosure rules for KiwiSaver providers to make it easier to compare fees and overall performance. This greater scrutiny will enable investors to make informed choices about what fund they invest in and, over time, should lead to better investor outcomes and overall returns.

• The Government wants to ensure the number, structure, and investment mandates of default providers are set up to get the best possible results for the 500,000 New Zealanders in default funds. The review will enable any changes to be put in place before the six current KiwiSaver default providers’ seven-year term expires on 30 June 2014.
• The Government said it would proceed with auto enrolment when it had sufficient surpluses to pay for the up to $514 million four-year cost. Going ahead in 2014/15 is not now possible without putting the surplus at risk.
• Budget 2011 changes, which increase the rate of minimum employee contributions from 2 per cent to 3 per cent, will lift the level of private savings in KiwiSaver and help increase national savings.

When will changes take effect?

• The new KiwiSaver disclosure rules will take effect on 1 April 2013.
• The Ministry of Economic Development will issue a discussion paper on the review of KiwiSaver default providers later this year. Any changes will be implemented ahead of 30 June 2014.

• KiwiSaver auto enrolment will proceed when there are sufficient surpluses to pay for it.
• The increase in minimum employee KiwiSaver contributions takes effect on 1 April 2013.

Key facts

• Under the new disclosure rules, KiwiSaver providers will have to produce four quarterly reports, and one larger annual report, for each KiwiSaver fund they run, using a standard template.
• The reports will contain information on returns, fees and charges, asset holdings, who manages the fund and any conflict of interests.
• Quarterly reports will be published within 10 working days from the end of each quarter, and an annual report will be published within 90 days of the end of the financial year. The reports will also be sent to the Financial Markets Authority.
• The review of default providers will consider the objectives of the current arrangements, how they have performed, and the structure, number of default products, and their investment mandates. 
• Default funds currently have a conservative mandate and are restricted to holding no less than 15 per cent and no more than 25 per cent in growth assets.
• The public will be able to make submissions on the default provider review after the discussion document is released later this year.

Where can I find more information?

• More information about the new disclosure rules is available on the Ministry of Economic Development website: www.med.govt.nz/kiwisaver-disclosure.
• More information about the review of KiwiSaver default providers, including terms of reference, is also available on the Ministry of Economic Development’s website: www.med.govt.nz/kiwisaver-tor.
  

Terms of Reference for Review of KiwiSaver Default Providers

Context

The six current KiwiSaver default providers (AMP, ASB, AXA, OnePath, Mercer and Tower) were appointed for a seven-year term, which is due to expire on 30 June 2014.

Prior to retendering, the current arrangements will be reviewed to determine whether they remain appropriate.

Objectives

The review will set out to answer the following broad questions:

• How have existing default arrangements performed from operational, administrative, regulatory and policy effectiveness perspectives?
• What should be the objectives for the default provider arrangements and what are the best institutional arrangements and investment settings to deliver these objectives?
• What is the optimal process for managing any transitions from existing arrangements?

• Review process

• Data sources:

• Scan of academic research.
• Existing KiwiSaver evaluation and performance information.
• KiwiSaver providers (default and non-default).
• Associated intermediaries.
• Industry organisations and research institutes.
• Relevant regulators and government agencies.
• Overseas providers.
• Public submissions.

• Outputs:
•  
• Discussion document for public consultation released mid-to-late 2012.
• Final decisions December 2012.

• Consultation:
•  
• This terms of reference for the review will be published on MED’s website.
• A discussion document will be released for public consultation and submissions sought. A series of open forums will be held in Auckland and Wellington to give an opportunity for stakeholders to engage with officials informally.
  

KiwiSaver tables – 1 April 2013 changes

Assumptions: Assumes start date of 1 April 2013; all balances at 65 are in today's dollars and rounded to nearest $2500; funds earn a real rate of return after fees of 4%; and real wages grow at a rate of 1.5% per annum; Neither tax rates, nor the member tax credit are indexed for inflation.

“Over the past 12 months, the Canterbury Earthquake Recovery Authority (CERA) has used the Recovery Fund to kick-start the rebuild and improve the lives of Cantabrians,” Mr Brownlee says.

The Government’s major and ongoing decision-making task in response to the earthquakes is the zoning of residential land, based on damage, to provide all Cantabrians with better options for the future.

Owners of the 7,256 most badly-damaged and quake-damage-prone properties are eligible for Crown purchase offers, and to date 6,162 owners have been sent offers.

“So far, we’ve paid out almost $600 million in residential red zone property settlements ahead of expected insurance payments, to enable people to move on with their lives,” Mr Brownlee says. “Many more settlements will occur over the next year and we expect the dollar figure to at least double.

“We know residents are concerned about ongoing maintenance and security in the residential red zone, so $94.7 million operating spending has been allocated in 2011/12 and 2012/13 for management of these properties.

“In the CBD, nearly $60 million has been spent on demolition in the past year.  We are successfully recovering that money from building owners, with nearly $35 million recovered already. Recovery of costs will continue.

 “An additional $29.9 million in operating funding will be provided over four years for the new Christchurch Central Development Unit (CCDU), which will manage the rebuilding of the CBD.

“The people of Canterbury can be confident this Government will continue to provide the support they need to rebuild a dynamic, innovative, and first-class city,” Mr Brownlee says. 

“The health and wellbeing of Cantabrians have been at the forefront of the Government’s earthquake response.

“Extra funding and resources from the ministries of Health and Social Development ensured rapid response, going back to the first major quake in September 2010, and throughout 2011.

“Recognising the importance of consistent, easily accessible and reliable engagement with the people of Canterbury, Budget 2012 has confirmed an operating budget in excess of $2.8 million in 2012/13 for CERA’s Community Wellbeing team.

“Over the coming year, CERA will work closely with its partners across the social, health, insurance, business, and local government sectors. There are services and resources available to Cantabrians in need and we’re working hard to ensure they know that,” Mr Brownlee says.

SUMMARY OF GOVERNMENT EARTHQUAKE RECOVERY SUPPORT

The Budget 2012 appropriation is the final round of a three-year $750 million Government funding package supporting the objectives of KiwiRail’s Turnaround Plan.

“The plan is designed to help the rail freight business become sustainable by 2020 so it can fund its business solely from customer revenue.

“While the lion’s share of the investment is coming from the business itself, Government funding over three years demonstates our commitment to improving the rail freight network by providing capital investment to kick-start the growth process,” Mr Brownlee says.

KiwiRail has successfully undertaken a significant investment programme over the previous two years, including:

• New locomotives and wagons, and refurbishment of the current locomotive fleet.
• Renewals and upgrades of the rail network to improve transit times, remove capacity constraints, and improve reliability.
• The Aratere Cook Strait ferry extension – creating 30 per cent more capacity for rail and trucks, and improving passenger facilities.

“Most of the Government funding will be spent on KiwiRail’s freight services and network improvements, contributing to the ongoing investment in locomotives and wagons, infrastructure upgrades and track renewals. This will continue to remove capacity constraints and improve reliability,” Mr Brownlee says.

“Some progress has been made in increasing freight revenue and volume on rail corridors where investment has been made.”

The Government has also provided an additional $3.7 million in operating spending for the 2012/13 financial year for the SuperGold Card off-peak public transport scheme.

This brings total government operating funding of the scheme to $21.7 million for the 2012/13 financial year.

“The off-peak public transport concession has developed into a much-valued part of the SuperGold Card scheme and is making a significant contribution to providing improved mobility for older people,” Mr Brownlee says.

“This extra funding will help the scheme keep up with growing demand over the next 12 months.”

“Science and technological innovation are major drivers of growth and international competitiveness, which is why we have continued to increase funding for them despite tight fiscal constraints,” Science and Innovation Minister Steven Joyce says.

“The only way we can create jobs, pay for public services, and lift New Zealanders’ living standards is through faster, sustainable economic growth.”

The Government’s total cross-portfolio funding for science, innovation, and research rises from $1.16 billion in 2011/12 to $1.24 billion in 2012/13*. Total direct cross-portfolio science, innovation, and research funding has risen by 17 per cent over the past four years. 

New funding over the next four years includes:

• $90 million operating funding and $76.1 million capital funding to create the Advanced Technology Institute (ATI) to work with the high-tech manufacturing and services sector.
• $60 million operating funding for National Science Challenges to find innovative solutions to some of the most fundamental issues New Zealand faces.
• $100 million additional research funding (from Vote Tertiary Education) by increasing the size of the Performance-Based Research Fund to $300 million by 2016.

“The ATI and National Science Challenges will help boost the economy and improve New Zealand’s health, society, and environment,” Mr Joyce says.

“The creation of the ATI will better link business and science, and help create new high-tech products and services.

“The National Science Challenges will focus multi-disciplinary teams of researchers on addressing challenges that are fundamental to New Zealand’s future prosperity and wellbeing.

“Science and innovation are a crucial part of the Government’s business growth agenda, as well as the key to solving many of the other issues New Zealand faces.”

* The Government’s total cross-portfolio funding for science, innovation and research in 2012/13 includes:

Vote Science and Innovation                   $833 million
Vote Education (Tertiary)                        $301 million
Vote Primary Industries                          $88 million
Other Government Budgets (estimate)     $18 million
Total $1.24 billion                                                     

“We have one of the most generous student support systems in the world.  Rebalancing it allows us to free up money we can reinvest in improving the quality of tertiary education we provide, and help our overall fiscal position,” Mr Joyce says.

Key changes include:

• Increasing the student loan repayment rate for all New Zealand-based borrowers over the repayment threshold from 10 cents to 12 cents in the dollar, saving $184.2 million operating over four years.
• Broadening the definition of ‘income’ for student loan repayment purposes, saving $3.1 million operating over four years.
• Removing the voluntary repayment bonus, saving $43.5 million operating over four years.
• Implementing information-matching between Inland Revenue and the New Zealand Customs Service to identify borrowers in serious default.
• Limiting the number of courses students can borrow for in one year to two effective fulltime equivalents (EFTS).
• Keeping the parental income threshold at current rates until 31 March 2016, saving $12.7 million operating over four years.
• Removing eligibility for student allowances for postgraduate study, saving $33 million operating over four years.

The student support changes in Budget 2012 will provide operating savings of $240.3 million in 2011/12. A further $65 to $74 million a year of operating savings over the next four years will be largely re-invested across the wider tertiary system.

“The Government is committed to interest-free student loans, but we are determined to reduce the write-off on taxpayers’ investment.

“Since coming into government, we’ve reduced the write-off from 47 cents in each dollar of student loans down to 45 cents. Changes we are announcing today will reduce it further to 41 cents – close to our target of 40 cents,” Mr Joyce says.

“From 1 April 2013, graduates and ex-students will have to pay off their student loans faster so the Government can invest more in the next generation of students. This involves increasing the repayment rate from 10 cents to 12 cents for each dollar of income above $19,084 a year. 

“We will cancel the voluntary repayment bonus, because it is not creating the increase in repayments we were hoping for, and we now have other priorities for expenditure. That will save around $43.5 million over the next four years.

“We will introduce measures to start tackling the blow-out in the cost of student allowances. Costs have increased from $385 million in 2007/08 to $624 million in 2010/11, due in part to policy settings of the previous government.

“We are going to focus student allowances on the initial years of study – and to assist low-income families who need it most.

“We will freeze the parental income threshold at its current rate until 31 March 2016, and ensure the limit of 200 weeks’ access to student allowances is consistently applied.

“Postgraduate students will no longer be eligible for student allowances. This refocuses allowances on students working towards a first qualification, and acknowledges that students studying at postgraduate level gain a higher private return from their study. Those students will continue to have access to interest-free loans.

“Alongside these changes, we have recently consulted on our commitment to limit the annual amount a student can borrow on their loan to that equivalent to the workload of two fulltime students, stopping people over-using government support.”

Other key Budget savings over the next four years (unless stated otherwise) include:

• Removing short-term funding to support the embedding of literacy and numeracy into level 1 to 3 programmes, which is now largely completed. This will mean a saving of $22.4 million.
• $5.4 million from the Government ceasing funding for Adult and Community Education in universities. The Government will instead fund some of these programmes directly through community providers.
• $8.9 million over one year due to reduced demand in industry training courses following the operational policy changes. This will be reinvested in the university sector. 

“Changes in Budget 2012 release $240.3 million in 2011/12 and $276.3 million over the next four years in student support funding for the Government to reprioritise, while reinvesting in strengthening overall tertiary education provision for students in priority areas like engineering, science, and research.”

“New Zealand has an under-supply of engineers and we are training about only half the number we require,” he says.

“We also need to increase our investment in training scientists to help fuel the innovation required to grow the economy. The Budget addresses these issues by increasing funding for tuition subsidy rates in engineering and science programmes.”

New initiatives over the next four years include:

• Additional $42 million operating funding for engineering (an 8.8 per cent funding increase per equivalent fulltime student).
• Additional $17 million operating funding for science (a 2 per cent funding increase per equivalent fulltime student).
• $100 million operating funding to increase the size of the Performance-Based Research Fund from $250 million to $300 million a year by 2016. This funding is part of a wider increase in Government investment in science, innovation, and research of $326 million in Budget 2012.

“An 8.8 per cent funding increase for engineering is about encouraging our tertiary institutions to focus on growing the number of engineering graduates,” Mr Joyce says. “This will also complement the Government’s investment in the new Advanced Technology Institute.

“The increase in funding for science provision and the Performance-Based Research Fund recognises how vital science and research is to innovation and, in turn, to stronger economic growth.

“The reality is, if we want faster economic growth for our country then we must invest in areas that will help grow the economy. To retain our competiveness internationally, we need increased investment in engineering, science, and research.”

“Despite tight financial times, the Government is spending $14.12 billion in 2012/13 on health – the biggest investment ever,” he says. “This demonstrates the National Government’s commitment to protecting and growing our public health services.”

Budget 2012 provides an extra $1.5 billion for public health services over the next four years. This includes $435 million for new initiatives and cost pressures in 2012/13.

This is made up of $358 million in new money for health, $47 million of savings and under-spends, and $30 million from drugs coming off patent.

“District health boards will have around $350 million available this year – as well as additional funding from the Ministry of Health for service contracts,” says Mr Ryall.

The extra funding over four years will fund cost pressures and new initiatives including:

• $33 million for better, faster cancer treatment, including dedicated cancer nurses to support patients through the course of their treatment.
• $16 million to speed up diagnostic tests for patients.
• $48 million for more and faster elective surgery.
• $20.5 million to strengthen maternity services and boost PlunketLine and WellChild services.
• $133 million to improve services and access for people with disabilities.
• $28 million to provide free after-hours doctors’ visits for under-sixes.
• $12 million to provide more support services for older people.
• $40 million for increased dementia services.

“Around $47 million of savings and under-spends in Health have been shifted to higher priority frontline public health services in 2012/13,” Mr Ryall says. 

“Budget 2012 also changes the adjustment for the residential care exemption from a flat increase of $10,000 a year to an annual inflation adjustment in line with other aged-care support adjustments.

“The Government has previously announced the pharmacy co-payment will rise from $3 to $5 per prescription, the first increase in this payment in 20 years. No family will pay more than $40 extra in a year as a result of these changes.

“Importantly, there will still be no charge for under-sixes or those with a Pharmaceutical Subsidy Card.

“The Government is investing in improving key services for New Zealand patients,” he says. “Despite tight financial constraints, it is maintaining its commitment to protecting and growing our public health services.”

This takes the Government’s total investment in early childhood education and schooling to $9.6 billion for 2012/13.

“Our education system is among the best in the world,’’ says Ms Parata. “Four out of five kids are successful and we must celebrate their success and the outstanding professionals in the education system who make that possible.

 “But our education plan is about getting five out of five.

“We want to see 98 per cent of all new school entrants having participated in early childhood education, and at least 85 per cent of 18-year-olds achieving NCEA Level 2 or an equivalent qualification in 2016.

“Reaching these goals means resources must be managed to get better results for all students. That is the focus of Budget 2012,” Ms Parata says.

The $511.9 million allocated to new frontline education initiatives ensures the Government continues to provide quality education to all learners and better target resources to priority groups.

“We know the single most important thing we can do to raise achievement is to improve teaching quality,’’ Ms Parata says.

“We are setting aside an extra $59.8 million over the next four years to support the development of teachers and principals.

 “This money is in addition to the $304 million we are spending on learning and development for professionals in primary and secondary education over the next four years.’’

Participating in early childhood education before starting school has considerable benefits for children, especially those from vulnerable families, Ms Parata says.

Budget 2012 continues to target areas of high need, with $47.9 million in operating funding over the next four years invested in Equity Funding. 

Early childhood education services will be expected to use Equity Funding to increase the participation of children from priority groups, for example, by keeping fees low for vulnerable families, and encouraging and supporting families to actively engage with the early learning outcomes of their children.

“We have tripled the value of the Equity Funding pool since 2011,” Ms Parata says.

A further $19.1 million in operating funding will be invested over four years to support Māori medium ECE services.

Budget 2012 also targets $82.6 million of operating funding over the next four years to schools’ operational grants, giving them the flexibility to provide resources based on the needs of their students.

“The $511.9 million of new spending over the next four years will ensure we can continue to provide quality education to all learners and better target resources to raise achievement for all,’’ Ms Parata says.

New initiatives in Vote Education over the next four years include:

• $59.8 million to invest in teacher quality to support the development of teachers and principals.
• $82.6 million to increase schools’ operations grants.
• $33.8 million capital funding in 2012/13 and $16.8 million operating funding over the next four years for the expansion of the School Network Upgrade Project, to upgrade schools’ internal ICT infrastructure.
• $59.4 million over the next four years for operational funding which includes:
• $4.2 million for assistive technology for learners with special education needs.
• $15 million to fully implement Positive Behaviour for Learning in 2012/13.
• $4 million for extra parenting programmes and relationship education in schools.
• $15.4 million operating funding for the Prime Minister’s youth mental health initiatives.
• $8.5 million targeted for the alignment of achievement standards to Te Mārautanga o Aotearoa.
• $3.1 million for extra staffing for composite schools.

Funding in Budget 2012 will improve education outcomes for priority groups by:

• Targeted cost adjustments for ECE equity funding of $47.9 million in new operating funding over the next four years.
• $19.1 million over the next four years to improve access to Māori immersion ECE services.
• $33 million in operating funding over the next four years for initiatives to accelerate achievement for priority learners. 

“We always said welfare reform would cost more up-front to save over the longer term and that translates to more support to help people off welfare into work,” Mrs Bennett says.

The phase 1 funding includes $81.5 million of additional money, with the remainder reprioritised from within Social Development spending.

The second phase of reforms will be funded in Budget 2013. The entire welfare package is expected to cost at least $520 million and is expected to save $1 billion over four years.

“Added to the current $7.6 billion annual cost of welfare, this extra investment provides support – such as childcare and staff – that is vital to the reforms,” Mrs Bennett says.

Budget 2012 includes:

• $80 million over four years for early childhood education childcare and the Guaranteed Childcare Assistance Payment.
• $55.1 million over four years for 155 dedicated Work and Income staff to support job seekers and sole parents into work.
• $1 million over four years for financial assistance to access long-acting reversible contraception.
• $1.1 million over four years for Work and Income’s board.
• $148.8 million over four years for youth services, including wrap-around support.

Funding for youth services will provide budgeting and parenting courses, milestone payments to providers and wrap-around support, as well as financial assistance to young people.

“Youth providers will have unprecedented flexibility to work with disengaged or unemployed young people and teen parents to get them into education, attaining NCEA level 2, or into training,” Mrs Bennett says.

Financial assistance for contraception is included in Budget 2012.

“We know some on welfare find cost is a barrier to accessing long-acting reversible contraception, so we’re removing that barrier.”

The Government’s wider welfare changes also include:

• A new work-focused benefit called Jobseeker Support.
• Part-time work expectation for sole parents with children aged over five.
• Fulltime work expectation for sole parents with children aged over 14.
• A new Sole Parent Support benefit to replace the DPB.
• A new Supported Living Payment to replace the Invalid’s Benefit and DPB care of sick and infirm.
• An investment-based approach to the benefit system.

“The investment approach tailors support to get the best results, based on an individual’s likelihood of becoming long-term welfare dependent,” Mrs Bennett says.

A new Work and Income board, led by Paula Rebstock, will oversee the changes.

The first bill in the National-led Government’s comprehensive programme of welfare reform is before select committee and, if passed, will take effect from July.

A second bill containing an overhaul of benefit categories will be introduced this year and, if passed, will take effect from mid-2013.

“Young people can be among our most vulnerable and need specific support to address their needs,” she says. “I’m pleased to be putting more funding into mental health services for young people, including youth workers and One-Stop Shops.”

Twelve youth-focused One-Stop Shops will deliver a range of health and social services around the country. This funding will boost these services to meet the demand of mild to moderate mental health issues.

Budget 2012 operating funding from Vote Social Development for youth mental health includes:

• Youth One-Stop Shops ($600,000 in 2012/13).
• Mental health information and support for families and parents ($1 million over four years).
• Mental health youth workers in secondary schools ($8.7 million over four years).
• The Social Media Innovations Fund ($2 million over four years).
• Support for vulnerable children ($6 million over four years).

“We know it makes a difference for young people to be able to go to a youth worker in their own school to get support,” Mrs Bennett says.

“Youth One-Stop Shops are an important part of the picture because they provide a trusted place for young people to go to for health and social needs.”

The Ministry of Social Development will also administer a new contestable fund for non-government organisations to get information to parents, families and friends who are worried about young people.

“Parents, families and friends are usually the first to identify mental health issues in a young person they are close to. It’s vital they know what to do and how to support them,” Mrs Bennett says.

“We’ve also recognised young people live in a tech-savvy world and it’s time we lifted our game to keep up with the kids.”

The Social Media Innovations Fund will help service providers use social media to reach young people with mental health issues.

The Government will also step up protection of vulnerable children through better data matching and information sharing.

“The Government’s White Paper on vulnerable children will be released later this year and will be largely funded through Budget 2013, but there are some things we can do now,” Mrs Bennett says.

Funding of $6 million over four years will allow the groundwork to begin with some of the more complex work requiring systems changes like information sharing.

“This Government continues to put children and young people at the centre of decision-making, which is driving a focus on services that will make a real difference,” Mrs Bennett says.

Reprioritising Corrections funding and maintaining funding for Police supports the Government’s focus on preventing and reducing crime, and making communities safer.

“Both Police and Corrections are working smarter and better, which is leading to far fewer victims of crime,” Mrs Tolley says. “By working more efficiently they are also providing a better service to taxpayers and reducing the pressure on the wider justice sector.”

The Government is maintaining its annual operating spending on Police at $1.49 billion, with an increased emphasis on frontline policing.

“Recorded crime is at a 15-year low and the crime rate per 100,000 of population is at a 30-year low, but much more needs to be done,” Mrs Tolley says.

“Neighbourhood Policing Teams and mobile technology are allowing officers to spend more time on the frontline in communities, preventing crime and resulting in fewer victims of crime.

“As the Prevention First and Policing Excellence programmes continue to be rolled out, Police are on course to reach their existing target of a 13 per cent reduction in crime by 2014/15.”

Budget 2012 confirms another of the specific and measurable targets within the 10 Better Public Service results areas announced by the Prime Minister earlier this year: reducing prisoner reoffending by 25 per cent by 2017.

“Reaching this target would mean 18,500 fewer victims of crime every year,” Mrs Tolley says.

“An announcement will be made soon on other targets for reducing total crime, including violent crime and youth crime, by 2017.” 

The Corrections Department will reprioritise $65 million in operating spending over four years to target the 25 per cent reduction in reoffending. This will be done through new and expanded rehabilitation and reintegration programmes.

This will contribute to:

• 33,100 additional offenders receiving new and expanded drug and alcohol treatment in prisons and in the community.
• 7,855 additional prisoners and community offenders receiving new and expanded rehabilitation services.
• 2,950 additional prisoners in education and employment training.

“Our programmes will also mean that from 2017, there will be 600 fewer prisoners than in 2011 and 4,000 fewer community offenders,” Mrs Tolley says.

The Corrections Department has completed an extensive expenditure review and has identified ways to deliver better and more-focused frontline services.

“This has resulted in $87 million in overall operating savings being transferred to the Justice Sector Fund to reinvest in other important areas across the justice sector.

“Budget 2012 backs the Police and Corrections to continue their excellent work, and to ensure that New Zealanders feel safe in their communities,” Mrs Tolley says.