The Government has announced its 2013 Budget which will focus on economic growth and staying on track to a return to surplus in 2014.

Key features in this year's budget, which has new spending of $900million, are social housing, reducing debt, reducing the housing bubble, rebuilding Christchurch, healthcare and developing business.

Finance Minister Bill English says New Zealanders can look to the future with well-earned confidence and optimism.

'The New Zealand economy grew 3 per cent last year, which is almost the same as Australia, and higher than almost every other developed country.”

Bill says the fiscal outlook has improved and the Government is on track to make a $75million surplus in 2014/15.

'Wages have been increasing, cost of living increases have been modest, and interest rates are at 50-year lows.

'There are 50,000 more jobs in the economy than two years ago, although unemployment does remain too high and attracting new investment that creates jobs is a particular focus for the Government.”

Meridian Energy has been named the next state-owned asset to go up for sale.

The Government's main priorities for this term are managing its finance, building a more productive and competitive economy, delivering better public services, and supporting the rebuilding of Christchurch.

Forecasts show an operating surplus before gains and losses of $75 million in 2014/15 up from $18.4 billion deficit in 2010/11.

Net core Crown debt is forecast to peak at 28.7 per cent of GDP in 2014/15, before falling to 17.6 per cent of GDP by 2020/21.

Core Crown expenses are expected to drop below 31 per cent of GDP by 2014/15, down from 35 per cent of GDP two years ago.

The Budget also forecasts economic growth to average between 2 and 3 per cent a year in the next four years.

Prime Minister John Key says Budget 2013 builds on the momentum created by the previous four Budgets across the Government's wide-ranging programme.

'Every Budget since 2009 has been presented against the backdrop of extremely challenging economic conditions.

'In particular, the global financial crisis, the Christchurch earthquakes and ongoing uncertainty around the world have affected most New Zealand households and businesses.

'While those challenges remain, improvements across a range of indicators and improving confidence among New Zealanders mean Budget 2013 has been prepared with a fresh sense of optimism,” Mr Key says.

'Growth is better than in most other developed countries, we are on track to surplus in 2014/15, and we are investing in programmes that will support jobs and deliver better public services.”

A key feature of the Budget is a $100 million-a-year internationally-focused growth package, providing extra research and development assistance to businesses, additional funding for tourism, and more resources for marketing New Zealand to international students.

'This important initiative acknowledges New Zealand's need to pay its way in the world through increased trade and investment if we are to create jobs and opportunities for hard-working Kiwis here in New Zealand,” Mr Key says.

'As I announced last month, within this package $158 million over four years will provide a significant boost for overseas tourism marketing, particularly in emerging and high-value markets, and $40 million over four years will be used to encourage and foster international education.

'In addition, science and innovation funding will be increased by $50 million a year. This takes the Government's annual investment in research and development for 2013/14 to a record $1.36 billion.

ACC levy cuts on households and businesses of around $300 million in 2014/15, increasing to around $1 billion in 2015/16.

"The Government is confident that a decrease in ACC levies is sustainable and is allowing for a reduction of around $300 million for 2014/15, increasing to a reduction of around $1 billion in 2015/16,” says ACC Minister Judith Collins.

A total of $5.1billion in new operating spending in the current year and over the next four years for initiatives across areas such as health, education, welfare, and housing.

An additional $1.5 billion of investments from the Future Investment Fund to spend proceeds from the Government's share offer programme.

As well as an additional $2.1billion to help rebuild Christchurch, taking the Government's total share of the rebuild to around $15 billion.

Budget initiatives at a glance

Budget 2013 confirms decisions to ensure that debt is capped and then reduced:

• The operating allowance is $900 million in Budget 2013, compared with $800 million signalled previously, and $1 billion in Budget 2014, compared with $1.2 billion signalled previously. From 2015 onwards, operating allowances will grow by 2 per cent per Budget.
• The Government intends to delay contributions to the New Zealand Superannuation Fund until net core Crown debt is no higher than 20 per cent of GDP. This is expected in 2020/21.

Building a more productive and competitive economy

Budget 2013 continues the Government's unwavering focus on increasing longer-term growth, productive investment and exports by investing heavily in measures to help businesses become more competitive.

• A $100 million-a-year internationally-focused growth package to provide extra research and development assistance to businesses, additional funding for the tourism sector, and international education marketing.
• Allowing for ACC levy reductions of around $300 million in 2014/15, increasing to around $1 billion in 2015/16. When combined with the $630 million levy reduction in 2012/13, these changes will amount to around 40 per cent lower ACC levy rates for households and businesses.
• Budget 2013 confirms a further $1.5 billion of new capital investment from the Future Investment Fund, which was established to invest proceeds from the Government's share offer programme. It includes:

o $426 million for the redevelopment of Christchurch and Burwood Hospitals. As announced previously, this will be the single biggest hospital investment in New Zealand's history.

o $50 million to speed up the School Network Upgrade Project which enhances the technological capability of schools.

o A further $94 million for the fourth year of KiwiRail's Turnaround Plan.

o $80 million for irrigation projects, as announced previously.

• Legislation will be introduced to improve housing affordability by delivering flexible regulatory tools to councils under accords between the Government and councils in areas where housing is least affordable.
• A memorandum of understanding with the Reserve Bank Governor confirms a range of measures, if required, to protect the economy from periods of excessive growth in credit and asset prices, and to promote financial system stability.
• A number of revenue measures, including a proposal to allow loss-making start-up companies to claim tax losses on research and development.

Public services

The Government is investing in a new three-year insulation programme, which will deliver warmer, drier and healthier homes to communities in most need, Energy and Resources Minister Simon Bridges says.

Budget 2013 allocates $100 million of operating funding over three years to the Warm Up New Zealand: Healthy Homes programme, targeting low-income households for home insulation, particularly those families with children and high health needs.

It is expected to insulate around 46,000 additional houses.

'Warmer, drier homes provide real benefits to New Zealanders,” Mr Bridges says. 'As well as energy efficiency gains, insulating homes reduces health risks such as respiratory illnesses and serious diseases like rheumatic fever.

The Government's investment will be matched by significant levels of funding from trusts and other third parties. This will see insulation available to those households in most need, at low or no cost.

'The new programme follows the success of the Warm Up New Zealand: Heat Smart scheme, which has seen around 215,000 homes insulated since 2009. When that scheme ends in September, 230,000 households will have benefited.

'Over the past four years, the National-led Government has changed the thinking in relation to home insulation in New Zealand. Now, when buying or renting, many people ask whether the house is insulated,” Mr Bridges says.

Warm Up New Zealand: Healthy Homes will be delivered through the Energy Efficiency and Conservation Authority (EECA). Programme details will be announced by EECA in coming weeks.

Other initiatives include:

• More than $21 million over the next four years for rheumatic fever prevention.
• An extra $1.5 million for Budgeting Services in 2013/14, in addition to the $8.9 million provided already in 2012/13.
• A whiteware procurement programme to enable beneficiaries to purchase new appliances under warranty using Ministry of Social Development repayable grants.
• A commitment to investigate and pilot a partnership with NGOs and financial institutions to support the provision of low or no interest loans for low-income borrowers.
• The trial on Housing New Zealand properties of a Warrant of Fitness programme for rental housing.

Welfare

Low-income families receive considerable further assistance in Budget 2013 to improve their quality of life, says Bill English.

A total of $188.6 million over four years for the next stage of welfare reform to help more New Zealanders off benefits and into work. This follows a $287.5 million investment in Budget 2012, and includes:

• 354 extra Work and Income staff to provide intensive help and support.
• People receiving the sole parent support or supported living payments, who go off the benefit and don't have work expectations to retain some of their benefit in the first few weeks.
• Additional funding to allow Work and Income to contract external providers to deliver case management and wrap-around services for particular groups of beneficiaries.
• Further developing the investment approach to welfare.
• Additional funding to provide for an independent workability assessment by experts to establish a client's work-readiness.

Health

Over the next four years, $1.6 billion for new health initiatives and to meet cost pressures and population growth. This takes total health spending to $14.7 billion in 2013/14. $1 billion of this extra funding goes to District Health Boards to take account of population changes and inflationary pressures.

Extra health spending over the next four years includes:

• $70 million for aged care and dementia services.
• $35.5 million for diabetes and heart disease.
• $100 million extra to meet population changes and cost pressures in disability support services.
• $48 million for more elective operations such as hip replacements and cataracts.
• $25 million to increase the number of people being screened for diseases, particularly breast cancer.
• More than $21 million to reduce the incidence of rheumatic fever and undertake rheumatic fever vaccine research.
• $18.2 million for a new mothers and babies initiative, with details to be announced shortly.
• $12.8 million for patients with long-term conditions such as diabetes and asthma.
• $7.3 million for 20 additional medical student places.
• $7 million to increase coverage of preventative health tests for four-year olds.
• $4.3 million to improve care and men's awareness of prostate cancer.

Education

In the current year and over the next four years, around $900 million for education initiatives across early childhood, primary and secondary education. This takes total spending on these sectors to $9.7 billion in 2013/14.

Extra education spending in the current year and over the next four years includes:

• $173 million for early childhood education, including $41 million for equity funding and $39 million for universal subsidies.
• $215 million for schooling, including nearly $80 million for operations grants, $64 million for Positive Behaviour for Learning and $38 million for teaching quality initiatives.
• $92.4 million for Greater Christchurch Education Recovery and Renewal and 21st Century Schools.
• $73.1 million of operating expenditure to support the ongoing maintenance and costs of the school property network.

More than $130 million over four years of new investment and reprioritised funding in tertiary education. It includes:

• $36 million for the expansion of Māori and Pasifika trades training.
• $27 million to boost funding for science and engineering courses.
• Nearly $29 million to equalise funding rates between Private Training Establishments and Tertiary Education Institutions.
• $32 million to support an increase in the proportion of young people with higher-level qualifications.

Student Loans

Budget 2013 will target overseas-based student loan borrowers with new initiatives to increase repayments and reduce defaulting, Tertiary Education, Skills and Employment Minister Steven Joyce and Revenue Minister Peter Dunne say.

'Overseas-based borrowers are continuing to let the side down with slow repayments and high levels of loan defaults, compared to those who stay in New Zealand and pay off their loans,” Mr Joyce says.

'While we have made some progress with overseas-based borrowers, it is time to up the ante to ensure they take responsibility for their loans and meet their obligations to taxpayers.

'We have been successful in reducing the cost of the student loan scheme to taxpayers, with the cost of borrowing reducing from around 48 cents in the dollar in 2009 to an estimated 39 cents in the dollar as at 31 March 2013.

New initiatives affecting overseas-based borrowers include:

• Adjusting the overseas-based borrower repayment regime by introducing fixed repayment obligations and higher repayment thresholds for overseas-based borrowers.
• Introducing new sanctions that extend the child support border arrest system for the most non-compliant overseas-based borrowers with high levels of default on their student loan repayments.
• Extending the student loan and allowance stand-down period for permanent residents and Australian citizens from two years to three years from 1 January 2014.
• Putting in place an on-going information-sharing agreement between Inland Revenue and Internal Affairs to collect contact details from passport applications.

'Adding two new repayment thresholds and fixing repayment obligations for overseas-based borrowers will help ensure compliant borrowers are repaying their loans faster,” Mr Dunne says.

'Previously, around 14 per cent of overseas-based borrowers did not meet the interest charged on their loans. We expect this to drop to 3.5 per cent. These changes will reduce repayment times for compliant overseas-based borrowers.”

As part of scaling up its activities, Inland Revenue is also engaging with a private sector debt collection agency in Australia to initially assist them with locating borrowers in default.

Law and order

• Police will reprioritise more than $160 million over several years to give frontline officers access to new technology such as smartphones and tablets, which will improve their performance and productivit
• The Ministry of Justice will receive $4.4 million from the Justice Sector Fund to expand its restorative justice services.
• The Department of Corrections will invest $10 million over two years from the Justice Sector Fund to increase support for offenders after their release, with the goal of reducing reoffending.

Housing

• $26.6 million to extend the income-related rent subsidy scheme to
  non-government providers.
• Legislation will allow community housing providers to become registered prior to receiving an income related rent subsidy for new, eligible tenants.
• $46.8 million to extend reviewable tenancies to all Housing Corporation tenants who signed up to their existing properties before 1 July 2011.
• Responsibility for assessing entitlement to social housing support will be shifted from Housing New Zealand to the Ministry of Social Development.

Rebuilding Christchurch

• The total estimated cost of the earthquake damage in our second largest city has been increased to $40 billion from the $30 billion of previous estimates.