Budget 2012: Summary

The National government has just released its 2012 budget, which will see a number of reasonably minor yet important changes across several sectors.

Bill English’s fourth budget forecasts a surplus in the 2014 – 2015 year through a ‘zero’ budget for the upcoming years. This is briefly summarised in the following paragraphs.

National has announced the tightening of tax rules in an attempt to target those who ‘should’ be paying tax, while the rules around Kiwisaver have also changed. The SOE sales have been defended with the creation a Future Investment Fund, which will hold the sales profits for future investment into infrastructure.

Over the next four years, the economy is projected to grow about 3% and, thus, create more jobs.

Meanwhile, the government is increasing investment into science and technological innovation, as a means to address New Zealand’s key issues and save money in the future. Millions of dollars of National’s budget has been allocated to create the Advanced Technology institute to aid in achieving this purpose. The government is also acknowledging the importance of quality telecommunications for a geographically isolated country like New Zealand, and is maintaining its investments into this sector.

The Health sector was a big focus for the 2012 budget with just under $90million of the budget allocated to it to contribute to: hospital development, District Health Board budgets, targeted cancer treatment, reheumatic fever reduction and enhanced maternity care, public health screening, disability services and other health services. The allocated money will be supplemented by increased tobacco tax and prescription charges, which will rise from $3 to $5.

In transport, the final phase of KiwiRail’s turnaround plan has been allocated $250million of the budget, with investment also being made into improving state highways and local roading. Note that little is mentioned around the many aspects of New Zealand’s public transport system.

In the justice system, a new Justice Sector fund is being created to better allocate money within the sector. The government is also continuing to commit to reducing crime, with the ongoing roll out of the Prevention First and Policing Excellence programmes.

Finally, the government is also looking to invest in upgrading the national electricity grid.

The Highlights

Economy

•    The tax deductibility rules for mixed-use assets ($109 million over four years) and livestock valuation rules ($184 million over four years) will be tightened
•      Three tax credits that are generally no longer used for their original purpose ($117.1 million over four years) will be removed
•     New disclosure rules have been created around Kiwisaver, as well as the level of private contributions from 1 April 2013 being raised and the amount the Government is borrowing to subsidise the scheme being reduced
•    The expected profits from minority share sales of SOEs, expected to be $5-$7billion, will be channelled into a newly created Future Investments Fund. This fund will invest in modern schools and hospitals, innovation, and transport.
•    Economic growth is expected to average about 3 per cent a year over the next four years, with 154,000 net new jobs being created; an extra 40,000 jobs a year

Technology

•         The annual spending on science and innovation will increase by $385 million over the next four years, taking total science and innovation spending across government to more than $1.3 billion by 2015/16, largely split as follows:

§  $76.1million has been allocated to the creation of the Advanced Technology Institute

§  $60 million extra has been allocated for National Science Challenges

§  $100 million extra has been allocated to increase the Performance-Based Research Fund

§  $33.8 million will be used to fit out schools for ultra-fast broadband and an extra $300 million channelled into the Rural Broadband Initiative

§  $59 million to boost funding for science and engineering courses. Funding rates for  engineering degrees will be increased by 8.8 per cent and for science degrees by 2%

Health

•     $88.1million has been allocated to the health sector, most of which will be invested into hospital development
•   Prescription charges will increase from $3 to $5. Note, no family will pay more than $40 extra in a year as a result of these changes and there will still be no charge for under-sixes or those with a Pharmaceutical Subsidy Card
• Tobacco excise tax will increase by 10 per cent a year on 1 January in each of the next four years as part of a wider Government programme to prevent smoking
•   These three sources will fund:

§  An extra $1.11billion allocated to District Health Board budgets over the next four years

§  A ‘continued’ commitment to Frontline health services

§  $32.4 million for better, faster cancer treatment, including dedicated cancer nurses to support patients through the course of their treatment

§  $16 million to speed up diagnostic tests for patients

§  $48 million for more and faster elective surgery

§  $20.5 million to strengthen maternity services and boost PlunketLine and WellChild services.

§  $132.7 million to improve services and access for people with disabilities

§  $1.68 million for more public health screening

§  Residential care exemption will adjust from a flat increase of $10,000 a year to an annual inflation adjustment in line with other aged-care support adjustments

§  Provide $12 million to reduce rheumatic fever

§  Invest $133 million in disability support services

Transport

• $250 million has been allocated to the third and final phase of KiwiRail’s Turnaround Plan, which over the past two years has refurbished the locomotive fleet, renewed and upgraded the rail network to improve transit times, remove capacity constraints, and improve reliability and created the Aratere Cook Strait ferry extension – creating 30% more capacity for rail and trucks, and improving passenger facilities
• Around $12 billion has been allocated to improving state highways over the next 10 years
•  Investing more than $500 million a year in improving and maintaining local roads, and completing the $2.1 billion upgrade of the metro rail systems in Auckland and Wellington
• An additional $3.7 million will be spent for the 2012/13 financial year on operating the SuperGold Card off-peak public transport scheme bringing total government operating funding of the scheme to $21.7 million for the 2012/13 financial year

Justice

• A new Justice Sector Fund will give the justice sector flexibility to invest in areas that deliver better results for New Zealanders. The fund allows money saved in one justice sector agency to be used in another
• The Prevention First and Policing Excellence programmes continue to be rolled out and will help Police remain on course to reach their existing target of a 13% reduction in crime by 2014/15

Energy

• Through Transpower, the Government is investing $4.6 billion in upgrading the national electricity grid over the next 10 years

Just how all-encompassing could Facebook become?

It’s time to make a confession - all of us have done it – we quite like turning off our mobile phones.

Despite the flurry of recent stats claiming people feel physical pain if they cannot access their emails/ Twitter/Facebook accounts, many of us like being incommunicado. No more waiting for that ping which announces a new email and makes everyone around simultaneously wince and reach for their Smartphones.

Which of us doesn’t like being unreachable from time-to-time? But this is rapidly becoming a social taboo. It is now unacceptable to refuse to be a part of our huge and (definitely not brave, judging by the trolls) new world – the online community.

How far will this take us and most importantly, have we really thought about what this ‘brave new world’ will look like?

Facebook has been open about its long-term plan to take over the online world. Zuckerberg is aiming to turn Facebook into an omnipresent platform which influences what we buy, who we listen to and how we interact.

By picking up the breadcrumbs collected from the activities, links and likes that we all generate, Facebook should be able to predict what we're most likely to engage with, be it books or the latest diet.

But at what stage does this turn us into automatons or puppets? And how do we know who is pulling the strings?

At this stage, we know that advertisers have failed to buy into the idea that Facebook could be a channel for successfully advertising products in any traditional way, following the disappointing performance of the recently launched Facebook shares.

Whether this is a genuine scepticism of how effective Facebook is as an advertising vehicle, or simply a smear campaign, the trend is still clear – advertising is not the best commercial use of social media.

The ultimate question is what to do with all that extremely valuable data and how to regulate one entity? The answer isn’t clear yet, but to take a guess, we would say that Facebook will establish itself as a mainframe to host partner services run by companies which have an interest in collecting data based on the behaviour of their customers. For example, partners such as Spotify, LinkedIn and Pinterest, will operate within Facebook where they offer a great service at a price – the price being data collection and distribution to third parties.

These partners will ensure that every aspect of our social and commercial life can be found on Facebook, meaning it will be difficult to opt out in order to fully function in modern society. We will no longer be able to make a decision, visit a place or apply for a job without being watched, monitored and tagged by a huge network of companies. This consumer behaviour will be used as the basis to decide all future commercial and non-commercial ventures.

It’s therefore up to us to decide whether this gives the general public the ultimate power, or ultimately become enslaved within an online world of our own making.

A more long term - and worrying - development, is the planned expansion of Facebook currency. This is currently worth 15% of Facebook revenue and is a method of payment to for example, play Facebook games. But online evolution could see this extend to the official currency of the internet, which is a significant power for any individual country - let alone a company.