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Budget 2007 Home Page Budget Economic and Fiscal Update [2007]

Charges against Future Budgets

As part of its Budget strategy, the Government has put in place some longer-term funding paths for particular sectors. This aids long-term planning and demonstrates the Government’s commitment to specific policies.

Charges against future Budgets do not meet the definition of a ‘risk’ under the PFA, as these items are incorporated in the fiscal forecasts. This section is provided to increase transparency about the provisions for future Budgets.

Business Tax Reform

In Budget 2007 the Government announced the Business Tax Review, a package of reforms to business taxation. This included:

  • reducing the company tax rate from 33% to 30%
  • reducing the maximum tax rate that applies to widely-held savings vehicles and the top portfolio investment entity cap in line with the reduced company tax rate, and
  • introducing a tax credit for research and development.

The package exceeds the $1 billion per annum allowance set aside in Budget 2008 for the Business Tax Review by $129.5 million in outyears. This extra cost is being met by increasing the Budget 2008 allowance.

Charge against Budget 2008
($million)
2008/09 2009/10 2010/11 2011/12 and Outyears
Operating 1,056.3 1,135.4 1,129.5 1,129.5
Capital 3.2 - - -

Defence Funding Package

The Defence Funding Package (DFP) is designed to provide the New Zealand Defence Force (NZDF) with the funding required to address issues identified by the Defence Capability and Resourcing Review, including capability, and maintaining equipment and reserves. Budget 2007 included $58 million per annum as the second tranche of the 10-year plan. The following table shows the additional tranches to be charged against future Budgets.

Budget to be Charged
($million)
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
Budget 2008 69.1 69.1 69.1 69.1 69.1 69.1 69.1
Budget 2009   85.7 85.7 85.7 85.7 85.7 85.7
Budget 2010     108.1 108.1 108.1 108.1 108.1
Budget 2011       66.9 66.9 66.9 66.9
Budget 2012         14.2 14.2 14.2
Budget 2013           58.6 54.2
Budget 2014             0

Health – Pre-commitment

The Government has agreed that the indicative Health allocation of $750 million for Budget 2008 may be pre-committed by $53 million per annum in 2011/12 and outyears. This is to allow for Budget 2007 initiatives that may be further developed in 2007/08 and have a rising profile.

Budget to be Charged
($million)
2008/09 2009/10 2010/11 2011/12 and Outyears
Budget 2008 34 48 53 53

Transport Capital Decisions

The Government has made several long-term capital commitments relating to Transport. This table notes the implications for the capital allowances beyond the forecast period.

Transport Project
($million)
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
Auckland 25 - - - - -
Wellington 20 20 20 20 - -
Western Corridor 125 200 195 10 5 -
Bay of Plenty 25 15 10 10 - -
Waikato 22 22 22 22 22 22
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