Date posted: 18/05/2023

A snapshot of NZ Budget 2023

Here are the key highlights from Budget 2023

In brief

  • Net Debt forecast to peak in 2024 at 22% of GDP and then fall by 2026/27 to 18.4% of GDP.
  • Inflation forecast to drop to 3.3% in 2024.
  • Unemployment projected to peak at 5.3% in 2025.

1. Aligning the Trustee tax rate with 39% top tax rate

The Government will align the trustee tax rate with the top personal tax rate of 39% from April 2024, in order to improve the fairness of the tax system. This change is estimated to raise approximately $350 million per year.

2. Removal of $5 prescription co-payments

The Government will remove the $5 prescription co-payment to help ease cost of living pressures. According to the Government, last year more than 29 million items attracted this co-payment and an estimated 3 million people will no longer have to worry about the cost of collecting medication. This initiative will cost $618.6 million.

3. Funding for new National Resilience Plan

The Government is allocating an initial $6 billion for the new National Resilience Plan which will support the investment into medium and long-term infrastructure. This programme will initially focus on the recovery post adverse weather events but will also fund strategic investments to develop long-term resilient infrastructure.

4. Funding for education initiatives

The Government has allocated $3.6 billion to a range of education initiatives designed to boost skills, improve achievement, reduce class sizes, and lift teacher pay. In addition, the Government has allocated $17.1 million for the Apprenticeship Boost programme, $521 million for further tertiary funding and training subsidies, and $63.1 million for rural school property improvements.

5. Continued reduced or free public transport costs

For a cost of $327 million, the Government will extend the Community Connect programme by continuing to provide half price public transport to everyone aged 13 to 24 and Total Mobility Passengers and free public transport will be provided for children aged 5 to 12. According to the Government, this initiative could save an average household of two children who are day-to-day users of public transport over $30 per week, based on typical fares in urban centres.

6. Supporting the cyclone recovery

In addition to the $889 million already provided, the Government has allocated a further $941 million of operating and $195 million of capital for the cyclone recovery. This funding will support infrastructure investment in affected regions, the provision of business and community support and future flood resilience.

7. KiwiSaver contributions for paid parental leave

At a cost of $20 million, the Government will pay a matching KiwiSaver ‘employer’ contribution to paid parental leave recipients, to recognise the unpaid nature of childcare and incentivise recipients of paid parental leave to save for their retirement.

8. Funding the digital transformation

The Government has allocated $75 million for the Industry Transformation Plan, which will be used to fund a digital skills package to address the gaps within the technology sector and the scaling up of New Zealand’s horticulture technology industry. In addition, the Government will introduce a new 20 percent rebate for game development studios, at a cost of $160 million. The Government has also allocated $15.4 million for the Equitable Digital Access programme which provides free home internet access for student households. That programme will continue until 2024.

9. Funding for winter, waitlists and workforce

$1 billion has been allocated to increase health workforce pay rates and boost staff numbers. This funding includes $76 million over four years to develop the health workforce, with a focus on primary care and nurses. Prioritised spending for 2023/2024 includes $99 million for the coming winter and $118 million to help reduce waiting lists.

Return to NZ Budget coverage

Stay up to date with the latest Budget information and commentary from our experts.

Find out more

Search related topics