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Any more surprises in the budget?

NZ Newswire logoNZ Newswire 27/04/2017 Peter Wilson, Political Writer

Finance Minister Steven Joyce has given away one of his budget secrets and clearly signalled another.

There's going to be an unprecedented $11 billion spend-up on infrastructure and almost certainly a family support package that includes changes to tax thresholds.

Joyce revealed the infrastructure figure in a speech to the Wellington Chamber of Commerce on Thursday.

He did it because he wanted a big hit. If he had waited for budget day it would have fought for space with everything else.

And he did it because infrastructure, particularly building roads, is going to be important in the election campaign. More important than anything else, National hopes.

"This government is New Zealand's infrastructure government," he said in his speech, which sounded suspiciously like a campaign slogan.

"Our investment in roads, rail, broadband, schools, electricity transmission and hospitals has been unprecedented - and we're increasing it further."

There was just one sentence on taxation, and it was standard issue: "We remain committed to reducing the tax burden and in particular the impact of marginal tax rates on lower and middle income earners, when we have room to do so."

The get-out clause is "when we have room to do so".

But answering media questions after his speech, Joyce was more forthcoming.

"There are a range of ways you can support families including transfers, tax thresholds and so on," he said.

"But as I've said all the way through, it won't be something dramatic."

Joyce then revealed that cuts to tax rates weren't in the budget, claiming he had previously made this clear.

"We're not planning to do a reduction in rates this year. If we were to do anything it would be something around thresholds," he said.

Joyce previously mentioned thresholds during an interview with Newshub's The Nation programme at the weekend.

"If you look at the $48,000 rate it's interesting," he said.

"The median wage has been growing and is now $48,000. The average wage is now $55,000.

"So if someone hits the median wage they're on 30 cents in the dollar. If they've been paying a student loan that's another 12, so that's 42 cents in the dollar. And we rightly worry about whether young people can save to pay for a house."

Joyce said that as long as he was finance minister he would remain "absolutely committed" to doing something about that - although he again added the rider "as we can afford it".

So there could be tax relief in the budget, although it won't be called tax cuts.

Shifting the thresholds, however, has the same impact on those affected - they pay less tax.

With those two big ticket items no longer secrets, what else could there be?

Dealing with the housing shortage will surely feature in the budget but that too may be revealed before May 23.

Amy Adams, the minister recently given responsibility for delivering affordable housing, is tipped to make a major announcement, possibly next week.

The tax thresholds Joyce may tweak in the budget are:

* Up to $14,000 - 10.5 per cent

* Over $14,000 and up to $48,000 - 17.5 per cent

* Over $48,000 and up to $70,000 - 30 per cent

* Remaining income over $70,000 - 33 per cent.

(Source: IRD)

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