The New Zealand government revealed its annual budget on Thursday, outlining significant subsidies for early childhood education, medical prescriptions, public transport for children under 13 years old. The budget also includes an expansion of the heating and insulation program to combat energy poverty. According to the Treasury's projections, the budget deficit will widen to NZ$7.6 billion in the 2023-24 fiscal year while the nation's current account deficit is forecasted to recede from a record 8.9% of GDP.
Economic growth is expected at 3.2% in the year through June before slowing down to just 1% over the following year. The Reserve Bank will announce its decision regarding interest rates on May 24th; most economists predict a 25 basis-point increase in the Official Cash Rate (OCR) which would bring it up to 5.5%.
"Our focus remains firmly on supporting those who need it most," said Prime Minister Jacinda Ardern during her press conference announcing these measures.
Under this new budget proposal, two-year-olds will become eligible for free care with up to twenty hours per week at early childhood education centers as part of efforts aimed at easing pressure on households facing financial challenges due to rising living costs.
Furthermore, public transportation fees will be waived for children under thirteen years old—an addition that families across New Zealand are set to greatly benefit from.
In healthcare reforms introduced by this latest spending plan, NZ$5 charges per medical prescription are slated for removal—a move designed specifically with low-income earners' needs in mind.
To address climate concerns and promote environmentally-friendly practices nationwide, New Zealand’s EV charging network is set for expansion too—with plans rolling out every150-200 kilometers along main roads and public charging stations installed within community facilities serving populations greater than or equal-to two thousand residents each.
Digital game development studios will receive a 20% rebate for annual expenditures exceeding NZ$250,000. The budget also highlights tax code revisions with the trust tax rate aligning to match the top individual income tax rate.
Lastly, global anti-base erosion rules are set to impose taxes on select multinational firms operating in New Zealand if their effective income tax rates fall below 15%. This measure is anticipated to generate an additional NZ$25 million over its five-year operational period.
Overall, this latest budget announcement demonstrates New Zealand’s commitment towards easing financial strain on households and promoting sustainable growth through targeted investments in education, healthcare access improvements, and environmentally-friendly infrastructure developments.