Budget 2005: Main points

Labour Finance Minister Dr Michael Cullen delivers the 2005/2006 budget at Parliament. Picture / Fotopress

Key points from today's Budget:

TAXATION
* Personal income tax thresholds to be raised -- but not until April 1, 2008. From that date, the Government says taxpayers earning more than $10,081 will pay $35 less tax each year, those earning more than $40,324 will pay $314 less and those earning more than $63,672 will pay $534 less tax;

* Business tax proposals that will cost $1.42b in lost revenue, or what the Government says is the equivalent of a 2 per cent cut in the corporate tax rate. It will collect around $720 million from the carbon charge it is introducing;

SAVINGS
* Workplace savings scheme KiwiSaver to start April 1, 2007. The Government to make a $1000 upfront contribution to be provided to each new entrant to the scheme;

* KiwiSaver to be linked to a new scheme to assist modest to middle income families with the deposit for a first home. People will receive up to $5000 but there will be limits on household income and the value of the house to be purchased;

ECONOMY
* Economy expected to slow over the next two years to an annual growth rate of about 2.5 per cent from the estimated 4.2 per cent growth in 2004/05.

* The expected $2.4 billion cash surplus this year to near balance in 2005/06 and then go into the red over the following three years with deficits of $1.6b, $2.8b and $1.4b respectively.

* Big spending budgets will not be possible for the next three years, with new spending set at $1.9b a year.

SUPER FUND
* $2.3b contributed to the Cullen super fund in the 2005/06 year with the value of the fund expected to rise from $6.5b as at June 30, 2005, to $19.4b over the next four years.

HEALTH
* $4.09b in new funding for the health sector over the next four years. Health now accounts for 20 per cent of all government spending. Specific initiatives funded in this budget include the establishment of a cancer control council, extension of the free breast cancer screening programme for women aged 45 to 69 and up to 4000 extra cataract operations;

EDUCATION
* $1.4b new spending on education including to put an extra 421 teachers in schools.

* Funding for research at tertiary institutions, bonded scholarships funded to help pay the fees of up to 500 students a year, and adjustments to student allowances part of tertiary package;

POLICE
* The Police vote hits $1.03b in 2005/06 with the budget providing for about another 245 sworn and non-sworn staff, bringing the total number of officers to more than 10,000. The Government has already announced there would be $45.5m over four years to improve the 111 emergency system;

DEFENCE
* $4.6b over the next 10 years on defence;

HOUSING
* $134m over the next four years to provide 1300 new State homes;

FAMILIES
* Continued roll out of Government's Working For Families package.

- NZPA