Budget 2025: KiwiSaver subsidies & Best Start payments slashed, enormous $6.6b business incentive
Willis' business incentive, will allow firms to deduct 20% of a new productive asset's value from their tax return.
But any return on that investment might be a long time coming for New Zealand's workers. While Treasury advised that ultimately the incentive would be good for growth, it revised up its unemployment forecast and revised down its wage forecast, prepping New Zealanders for another year with the unemployment rate over 5%.
Willis also announced how the tax incentive, along with other parts of the Budget would be paid for, revealing the amount of money the Government would be saving by reforms to the pay equity regime: $12.8b over four years (a figure that includes changes to how the government approaches the funded sector).
The grand total of cuts in the Budget was $21.4b over four years, meaning more than half of the cuts in the Budget have come from changes to pay equity.
Willis said pay equity costs had 'blown out' saying that in 2020, the Labour Government's pay equity regime was expected to cost just $3.7b over the forecast period.
In the Budget lockup, Willis launched a broadside on Labour alleging the cost of the blowout was 'hidden' by the last Government from the public in order to preserve commercially sensitive negotiations.
How much money Willis has left for new pay equity is also sensitive, so the Government has not revealed how much it has set aside to fund claims brought under the new regime.
Bigger cuts than last year - $4.8b a year
Elsewhere, the Government announced a sweep of initiatives to hack back at the growth of Crown expenses – cuts that are even larger than last year's.
Including the pay equity savings, the Government is 'saving' $4.8b a year from cuts. Last year the equivalent figure was $3.8b or $4.4b if you include the Emissions Trading Scheme.
Student loan borrowers will also start paying more, with the Government freezing the repayment threshold, which usually (though not always) rises with inflation, saving $64m. Every dollar a student loan borrower earns over $24,128 will pay 12 cents off their student loan.
Investment Boost
Treasury estimates the centre piece of the Budget, the depreciation changes will actually lift New Zealand's growth, increasing GDP by 1% and wages by 1.5% - but that lift takes place over 20 years (although half the growth occurs in the next 5).
The new rules will begin today, passing under urgency.
The effect of the tax changes will be to encourage businesses to bring forward investment, stimulating the economy.
Willis quoted from a Regulatory Impact Statement on the change that a large amount of the benefit of the credit would flow through to workers, although Treasury's forecasts show that this has not been enough to stop it from revising work-related changes.
KiwiSaver reforms – Government cuts contribution, asks savers to raise theirs
Alongside the cuts to KiwiSaver, the Government will try to get KiwiSaver users to front up more money themselves, lifting the default rate of employee and matching employer KiwiSaver contributions from 3 % to 4%. This will be optional, people can opt to stay at 3% if they choose.
The new rate will be phased-in. Next year it will go to 3.5% and on 1 April 2028 it will go to 4%.
Younger people will be able to contribute with eligibility extended to 16 and 17 year-olds, who will be able to get employer and Government contributions.
The Government is keen to personalise these changes and has launched a calculator on the Treasury website that calculates what they will mean to people's savings over their lifetime.
FOLLOW OUR LIVE BLOG
Do you have questions about the Budget? Ask our experts - business editor at large Liam Dann, senior political correspondent Audrey Young and Wellington business editor Jenee Tibshraeny - in a Herald Premium online Q&A here at nzherald.co.nz at 9.30am, Friday, May 23.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Otago Daily Times
17 minutes ago
- Otago Daily Times
Families adopt more than 10 kids from overseas
By Gill Bonnett of RNZ Some New Zealanders have adopted more than 10 children from overseas and one woman with previous convictions smuggled children into the country, government briefings have revealed. Internal intelligence reports and warnings to Labour and National immigration ministers show concerns about the motives of some parents in adopting children from abroad, but being powerless to act. A Swedish commission recommended last week that international adoptions be stopped after an investigation found a series of abuses and fraud dating back decades. In New Zealand, too, the abuses - and the unchecked pathway for adoptees coming from countries which have not ratified the Hague Convention - have been known about for decades. It has included adoptive parents with previous convictions and children being held as house-slaves or sexually assaulted. Oranga Tamariki and the Family Court here do not need to be consulted - or even notified - before the children are adopted and arrive in New Zealand, which has also prompted fears the lack of oversight could mean other abuses remain undiscovered. An immigration and customs report from June last year, which analysed threats to the New Zealand border, said fraud involved in "non-genuine adoptions" included falsifying family relationships to gain residence or citizenship. A briefing to immigration minister Erica Stanford in January said the majority of intercountry adoptions were genuine, but some young people may be adopted out by birth parents who see it as a way for their children to access New Zealand's better "education, services and labour market". "Several cases of harm to international adoptees, perpetrated by their adoptive families, have been identified in recent years, and there is a risk that the incidents may rise in future. "While the risk of exploitation and abuse exists in both genuine and non-genuine adoptions alike, the latter presents a much higher risk, both at an individual and systemic level. MBIE intelligence evidence, for example, indicates that children and young adults entering New Zealand as a result of a non-genuine adoption are at higher risk of sexual abuse, labour exploitation and domestic servitude, as well as reports of physical abuse, neglect and preventing school-age adoptees from participating in education." The number of such adoptions was expected to increase over time, "potentially exponentially as cohorts of previous adoptees come of age" it said, seeming to suggest adopted children could later adopt children themselves from their home country. Adoptees over 18-years-old The dependent child category residence visa extends to the age of 24 and a "large proportion" of those adopted overseas were over the age of 18 when they were brought to New Zealand, officials said. A 2021 intelligence report said 65% of dependent child category applicants in 2020/21 from one unnamed (redacted) country were aged from 18 to 25, totalling 224 young adults. "While the issues cited above can arise for adoptees of any age, adoptions initiated at a relatively older age tend to present higher risk of some types of harm, such as financial exploitation, and are also more likely to raise questions in respect of their genuineness, with associated risks to the integrity of the immigration system. "While New Zealand law sets age restrictions for domestic adoptions, there is no upper age limit for recognising international adoptions, which creates a situation where adoptees well past the age where standard arguments for genuine adoptions, eg, for the care and protection of a child in the nature of a parent child relationship, may no longer be as applicable, and it is likely that secondary gains, such as securing residence may be the primary motive in many of these cases." Some adoptions over a certain age would be genuine - "Officials do, however, consider that there are likely to be very few situations where adoption at older ages (especially 20+) would be truly genuine." Protection from child welfare services did not extend to the older cohort, who were considered vulnerable because they were young adults in an unfamiliar country. The warnings have been known to ministers for many years. "Once in New Zealand, the children are placed under a high level of control by their adoptive parents," officials told then-immigration minister Iain Lees-Galloway in 2019. "They have their passports taken and movements controlled. They are placed into paid work. However, their wages are controlled by the adoptive parents and they are frequently required to take out substantial loans. The adoptive parents would control these funds, with the children required to pay off the debt." Children smuggled into New Zealand New Zealand-resident parents have "often" adopted more than 10 children or young adults each from overseas, said the same briefing, indicating some appeared to have been physically, sexually or emotionally abused. And in an August 2023 report, MBIE Intelligence said Immigration New Zealand (INZ) reported a woman "alleged to have been adopting children and smuggling them into New Zealand". "INZ has additional concerns around offences against the New Zealand Citizenship Act 1977, convictions of welfare fraud, and family harm incidents with New Zealand Police. INZ has concerns around the welfare of these nationals and has requested additional information to inform decisions on their residency applications." It found she had "highly likely" provided false and misleading information to INZ to secure residence for her adopted children, had a history of misleading government agencies and was unlikely to be a suitable adoptive parent. It said she "occasionally resorts" to violent behaviour towards children under her care, and a redacted section referred to a conviction for which she was discharged. "Given [her] history of violent behaviour, she is unlikely to be an appropriate sponsor to adopt children under her care ... there is no information on the frequency of [her] violent behaviour towards her children. It is unknown whether [she] uses physical discipline against her children on a regular basis." Stanford asked for more policy information after she was alerted to a concerning dependent child category residence visa application in a "no surprises" item in December. The adopted children would be classed as victims of people trafficking if they were later forced into work or unpaid labour, domestic servitude, coerced marriages or suffered sexual exploitation, she was told. Other adverse outcomes ranged from neglect, emotional abuse, limited access to schooling, and trauma and loss from being removed from their biological families and their home countries. "While there are concerns about the nature of the adoption, the Immigration Act and relevant immigration instructions do not provide a pathway for legally declining the application." Where to get help: Need to Talk? Free call or text 1737 any time to speak to a trained counsellor, for any reason. Lifeline: 0800 543 354 or text HELP to 4357. Suicide Crisis Helpline: 0508 828 865 / 0508 TAUTOKO. This is a service for people who may be thinking about suicide, or those who are concerned about family or friends. Depression Helpline: 0800 111 757 or text 4202. Samaritans: 0800 726 666. Youthline: 0800 376 633 or text 234 or email talk@ What's Up: 0800 WHATSUP / 0800 9428 787. This is free counselling for 5 to 19-year-olds. Asian Family Services: 0800 862 342 or text 832. Languages spoken: Mandarin, Cantonese, Korean, Vietnamese, Thai, Japanese, Hindi, Gujarati, Marathi, and English. Rural Support Trust Helpline: 0800 787 254. Healthline: 0800 611 116. Rainbow Youth: (09) 376 4155. OUTLine: 0800 688 5463. If it is an emergency and you feel like you or someone else is at risk, call 111.
Otago Daily Times
31 minutes ago
- Otago Daily Times
Immigration NZ alerted to child smuggling, families adopting more than 10 kids
By Gill Bonnett of RNZ Some New Zealanders have adopted more than 10 children from overseas and one woman with previous convictions smuggled children into the country, government briefings have revealed. Internal intelligence reports and warnings to Labour and National immigration ministers show concerns about the motives of some parents in adopting children from abroad, but being powerless to act. A Swedish commission recommended last week that international adoptions be stopped after an investigation found a series of abuses and fraud dating back decades. In New Zealand, too, the abuses - and the unchecked pathway for adoptees coming from countries which have not ratified the Hague Convention - have been known about for decades. It has included adoptive parents with previous convictions and children being held as house-slaves or sexually assaulted. Oranga Tamariki and the Family Court here do not need to be consulted - or even notified - before the children are adopted and arrive in New Zealand, which has also prompted fears the lack of oversight could mean other abuses remain undiscovered. An immigration and customs report from June last year, which analysed threats to the New Zealand border, said fraud involved in "non-genuine adoptions" included falsifying family relationships to gain residence or citizenship. A briefing to immigration minister Erica Stanford in January said the majority of intercountry adoptions were genuine, but some young people may be adopted out by birth parents who see it as a way for their children to access New Zealand's better "education, services and labour market". "Several cases of harm to international adoptees, perpetrated by their adoptive families, have been identified in recent years, and there is a risk that the incidents may rise in future. "While the risk of exploitation and abuse exists in both genuine and non-genuine adoptions alike, the latter presents a much higher risk, both at an individual and systemic level. MBIE intelligence evidence, for example, indicates that children and young adults entering New Zealand as a result of a non-genuine adoption are at higher risk of sexual abuse, labour exploitation and domestic servitude, as well as reports of physical abuse, neglect and preventing school-age adoptees from participating in education." The number of such adoptions was expected to increase over time, "potentially exponentially as cohorts of previous adoptees come of age" it said, seeming to suggest adopted children could later adopt children themselves from their home country. Adoptees over 18-years-old The dependent child category residence visa extends to the age of 24 and a "large proportion" of those adopted overseas were over the age of 18 when they were brought to New Zealand, officials said. A 2021 intelligence report said 65% of dependent child category applicants in 2020/21 from one unnamed (redacted) country were aged from 18 to 25, totalling 224 young adults. "While the issues cited above can arise for adoptees of any age, adoptions initiated at a relatively older age tend to present higher risk of some types of harm, such as financial exploitation, and are also more likely to raise questions in respect of their genuineness, with associated risks to the integrity of the immigration system. "While New Zealand law sets age restrictions for domestic adoptions, there is no upper age limit for recognising international adoptions, which creates a situation where adoptees well past the age where standard arguments for genuine adoptions, eg, for the care and protection of a child in the nature of a parent child relationship, may no longer be as applicable, and it is likely that secondary gains, such as securing residence may be the primary motive in many of these cases." Some adoptions over a certain age would be genuine - "Officials do, however, consider that there are likely to be very few situations where adoption at older ages (especially 20+) would be truly genuine." Protection from child welfare services did not extend to the older cohort, who were considered vulnerable because they were young adults in an unfamiliar country. The warnings have been known to ministers for many years. "Once in New Zealand, the children are placed under a high level of control by their adoptive parents," officials told then-immigration minister Iain Lees-Galloway in 2019. "They have their passports taken and movements controlled. They are placed into paid work. However, their wages are controlled by the adoptive parents and they are frequently required to take out substantial loans. The adoptive parents would control these funds, with the children required to pay off the debt." Children smuggled into New Zealand New Zealand-resident parents have "often" adopted more than 10 children or young adults each from overseas, said the same briefing, indicating some appeared to have been physically, sexually or emotionally abused. And in an August 2023 report, MBIE Intelligence said Immigration New Zealand (INZ) reported a woman "alleged to have been adopting children and smuggling them into New Zealand". "INZ has additional concerns around offences against the New Zealand Citizenship Act 1977, convictions of welfare fraud, and family harm incidents with New Zealand Police. INZ has concerns around the welfare of these nationals and has requested additional information to inform decisions on their residency applications." It found she had "highly likely" provided false and misleading information to INZ to secure residence for her adopted children, had a history of misleading government agencies and was unlikely to be a suitable adoptive parent. It said she "occasionally resorts" to violent behaviour towards children under her care, and a redacted section referred to a conviction for which she was discharged. "Given [her] history of violent behaviour, she is unlikely to be an appropriate sponsor to adopt children under her care ... there is no information on the frequency of [her] violent behaviour towards her children. It is unknown whether [she] uses physical discipline against her children on a regular basis." Stanford asked for more policy information after she was alerted to a concerning dependent child category residence visa application in a "no surprises" item in December. The adopted children would be classed as victims of people trafficking if they were later forced into work or unpaid labour, domestic servitude, coerced marriages or suffered sexual exploitation, she was told. Other adverse outcomes ranged from neglect, emotional abuse, limited access to schooling, and trauma and loss from being removed from their biological families and their home countries. "While there are concerns about the nature of the adoption, the Immigration Act and relevant immigration instructions do not provide a pathway for legally declining the application." Where to get help: Need to Talk? Free call or text 1737 any time to speak to a trained counsellor, for any reason. Lifeline: 0800 543 354 or text HELP to 4357. Suicide Crisis Helpline: 0508 828 865 / 0508 TAUTOKO. This is a service for people who may be thinking about suicide, or those who are concerned about family or friends. Depression Helpline: 0800 111 757 or text 4202. Samaritans: 0800 726 666. Youthline: 0800 376 633 or text 234 or email talk@ What's Up: 0800 WHATSUP / 0800 9428 787. This is free counselling for 5 to 19-year-olds. Asian Family Services: 0800 862 342 or text 832. Languages spoken: Mandarin, Cantonese, Korean, Vietnamese, Thai, Japanese, Hindi, Gujarati, Marathi, and English. Rural Support Trust Helpline: 0800 787 254. Healthline: 0800 611 116. Rainbow Youth: (09) 376 4155. OUTLine: 0800 688 5463. If it is an emergency and you feel like you or someone else is at risk, call 111.
The Spinoff
an hour ago
- The Spinoff
AI job losses are coming – and entry-level workers could be the first to go
After years of hype and hesitation, artificial intelligence is beginning to displace real jobs, writes Catherine McGregor in today's extract from The Bulletin. The quiet start of a loud disruption For many workers, the presence of artificial intelligence in the office has so far been subtle – a bit of text from ChatGPT here, an AI-generated image there. But a profound shift in the labour market is coming, many business and AI insiders say. Anthropic, maker of the Claude AI models, has found that while AI is being used mainly for the augmentation of tasks, a transition toward automation – actually doing the job – is well underway. 'Most [workers] are unaware that this is about to happen,' Anthropic CEO Dario Amodei told Axios. 'It sounds crazy, and people just don't believe it.' His warning was echoed by Axios co-founders Jim VandeHei and Mike Allen, who said they had 'talked to scores of CEOs' about how they're thinking about AI. 'Every single one of them is working furiously to figure out when and how agents or other AI technology can displace human workers at scale,' they wrote. 'The second these technologies can operate at a human efficacy level, which could be six months to several years from now, companies will shift from humans to machines.' Tech jobs may be the canary in the coal mine If that sounds alarmist, the numbers suggest otherwise. A global survey of senior executives found that 10% of all job roles could be eliminated by AI within five years. That figure, described as 'modest' by Dr Paul Henderson in his recent Maxim Institute report, Gone for Good: AI and the Future of Work, would still cause 'a marked disruption in New Zealanders' lives'. Some sectors are already showing signs of strain. Software development, in particular, has seen entry-level jobs disappear with the rise of coding assistants and no-code platforms. The IT news site CIO reports that teams are being restructured around AI tools, favouring experienced developers who can supervise machine-generated code over junior staff who once cut their teeth writing it. As Meta's Mark Zuckerberg put it earlier this year, mid-level engineers – and presumably the junior coders aspiring to join them – may become unnecessary 'in 2025'. A grim forecast for new graduates It seems that those searching for their first office jobs are most at risk. Amodei has predicted AI could wipe out half of all entry-level white collar jobs in the next five years and in the New York Times (paywalled), Kevin Roose reports that numerous firms are 'making rapid progress toward automating entry-level work', while others are becoming 'AI-first', evaluating whether a job even needs a human before posting the vacancy. While this trend is most visible in the US, its implications are global – including for New Zealand, where many graduate roles mirror their overseas counterparts. The IMF has warned that up to 60% of jobs in advanced economies may be affected by AI. If so, the dream of a secure professional career may become a luxury afforded only to those already through the door. Education in the age of artificial answers For those still in education, the concern is not just if there'll be a job waiting – but whether they're truly learning anything at all. In The Spinoff this morning, Hera Lindsay Bird documents the creeping use of generative AI in New Zealand schools and universities. Some of the quotes from teachers and lecturers are eye-popping. 'My main beef with AI is that it made me into a grown adult asshole who had 18-year- old enemies,' one says. 'I wanted to be a teacher not a cop.' Lindsay Bird writes: 'Almost every educator I spoke with, from primary school teachers to those supervising postgraduate dissertations, raised serious concerns,' she writes, 'with some teachers estimating that up to 80% of their students relied on ChatGPT to complete assignments. 'I spoke to MA supervisors whose history students theses were riddled with fictitious sources and 'archival' Midjourney photographs, and primary and intermediate school teachers, who said students as young as 11 were using it to answer simple personal prompts, such as 'what did you do in the summer holidays?' and 'what was your favourite penguin in the text?''
