The 2023 budget outlining key initiatives and policies for the upcoming fiscal year has been announced, and as expected, it’s raised some commotion. Here at WOMAN, we think it’s pertinent for us to all be aware of what measures the government is bringing in for 2023, so that we’re informed of any aspects that may impact us!
So without further ado, I’ve provided an overview of the key budgetary highlights taken from both the Labour Party website and the Inland Revenue announcements.
This is a change that impacts us all, but the $5 co-payment for prescription medicines will be removed from July 2023. It’s estimated that three million people will no longer have to worry about the cost of collecting their medication. The Labour Government considers that removing the $5 charge will make it easier and cheaper for Kiwis to access the medicine they need. We think this change is beneficial, especially to those who have multiple prescriptions to fill on a regular basis.
More Affordable Childcare
Childcare is an extremely expensive cost, and the budget is aiming to reduce this by extending 20 hours free early childcare education to two-year olds. The intention of this is to reduce barriers for working parents. Early estimations suggest that this could save an estimated $133.20 a week in childcare costs.
Cheaper Public Transport
From July, there will be free fares on buses, trains and ferries for children aged 5 to 12, and half price discounts for all passengers 13 to 24. Although this is a great way to incentivise public transport after the conundrum that Auckland Transport has gotten itself into recently (actively telling people to not take public transport isn’t a great look), this unfortunately doesn’t beneficially impact the majority of the working and commuting population.
$6 billion has been set aside to build better after the impacts of the Auckland flood and Cyclone Gabrielle, and to predict, prevent and protect Kiwi’s from the increasingly severe weather events. The goal here is to future-proof roads and rails.
The 2023 Budget is committed to $403 million to expand schemes for heating and insulation installations to up to 100,000 more homes.
More Family In Homes
We’re all aware that New Zealand has a long standing housing crisis, so the 2023 Budget has aimed to deliver 3,000 more public housing homes. This is great, however considering how many people have been displaced by the recent severe weather events, more would have been more impactful.
Changes To Trust Taxation
The key tax change is the increase for the trustee tax rate from 33% to 39% effective from April 2024. These changes aim to simplify trust tax rules, improve transparency, and ensure fairness in the tax system by increasing the trustee tax rate to be the same as the new top income tax rate. This change was incentivised by the recent high wealth individuals research project which showed that the richest people in New Zealand are paying the lowest effective tax rates by structuring their arrangements by a number of mechanisms, including trusts. If you have a family trust, we recommend you review the fact sheet provided Fact sheet: Increasing the trustee tax rate to 39% (ird.govt.nz) by IRD.
Increased KiwiSaver Contribution
From 1 July 2024, the government will make a 3% KiwiSaver contribution to people who receive paid parental leave and also make their own contribution of at least 3%.
The Overall Economy:
Inflation is extremely high and sitting at around 6.1% at the end of quarter 1 of 2023. The forecast is that it will drop by 3% by next September (which isn’t a great benchmark considering that this is over a year away). High rates of inflation (as we are currently seeing) means that there’s a reduction in our purchasing power. It’s often associated with high rates of employment, and the forecast is expecting this to peak at 5.3% in late 2024.
Hopefully this overview of the key budget changes will help you to feel informed and prepared for any changes that may come into effect.
Related Article: Women Pay the Highest Price When it Comes to Cost of Childcare