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Budget Policy Statement 2017

Budget Priorities

Budget 2017 will continue to progress the Government's programme and priorities, which have been updated in light of the recent earthquakes. The Government's broad strategic priorities and policy goals are to:

  • responsibly manage the Government's finances
  • build a more productive and competitive economy
  • deliver better public services within tight financial constraints, and
  • rebuild Christchurch and respond to the Kaikōura earthquakes.

Responsibly managing the Government's finances

The operating allowance for Budget 2017 remains $1.5 billion per year, slightly higher than those in Budgets 2009 to 2015 (Figure 4). This is in part to recognise that higher-than-expected population growth requires some extra investment in health, education, and other key public services.

Future operating allowances remain unchanged at $1.5 billion per year in each Budget through to 2020.

Figure 4 - New operating allowances in each Budget (final-year impact)
Figure 4 - New operating allowances in each Budget (final-year impact).
Source: The Treasury

To support continued solid economic growth and deliver better public services the Government has identified a number of high quality capital and infrastructure projects. The capital allowances have therefore been increased to $3 billion in Budget 2017 and to $2 billion per Budget from Budget 2018 onwards.

Table 4 - Capital allowances
$billions Budget
Capital allowances Half Year Update 2016 3.0 2.0 2.0 2.0
Capital allowances Budget Update 2016 0.9 0.9 0.9 0.9

Source: The Treasury

The new capital allowances are broadly in line with the amount of new capital expenditure in Budget 2016, which included $2.6 billion of new capital and infrastructure projects. The fiscal forecasts in this document and the Half Year Update include these increases.

The Government remains committed to effectively and efficiently managing its large balance sheet, including using private sector capital and disciplines where appropriate, getting better performance from Crown-owned entities and reprioritising capital spending to higher-value uses.

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