The Government would also spend about $6 billion in the next financial year on capital expenditure.
Despite lower forecasts, Mr Key said the New Zealand economy continued to expand, with the latest Treasury forecasts putting economic growth at an average of 2.7 per cent over the next five years.
"On average, people's incomes are growing faster than inflation, and the forecasts show continued employment growth.
The Prime Minister's statement is required to be tabled at the start of each year and sets out the Government's programme, which has already been well signalled and includes:
- Increasing the supply of housing in Auckland by making under-utilised and vacant Crown land available for residential development;
- Supporting a further 3000 private sector homes at Hobsonville and 7500 homes in Tamaki;
- Supporting the delivery of 500 extra social housing places in Auckland with a request for a proposed further 1000 places open for response;
- Extending working prisons and developing a drug and alcohol post-release programme;
- Establishing a multi-agency gang intelligence centre led by the Police;
- Releasing a White Paper on Defence to address defence and security needs over the next 25 years;
- Wind up the Canterbury Earthquake Recovery Authority and establish a new organisation, Otakaro Ltd, for anchor projects, to augment Regenerate Christchurch to oversee long-term development issues, planning changes and the residential red zone;
- Introduce a withholding tax on sales of residential property by people living overseas;
- Cutting ACC levies;
- Progress trade agreements with the European Union and upgrade the FTA with China;
- Review the refugee quota programme.
Laws the Government plans to introduce this year include measures to:
- Require insulation and smoke alarms in all rental properties and to boost enforcement of housing standards;
- Strengthen the Domestic Violence Act following the 2015 review;
- Integrate the New Zealand fire services;
- Applying GST to cross-border services and intangibles supplied by offshore suppliers;
- Amend the Resource Management Act to speed up housing consents;
- Allow information on student loan borrowers to be shared with Australian tax authorities.