19 May 2011

English defends changes affecting families

10:11 pm on 19 May 2011

Finance Minister Bill English has defended Budget changes that will result in some families having less to live on, saying those affected have been the beneficiary of positive changes in past years.

Mr English delivered his third budget on Thursday, which contains cost saving measures for Kiwisaver, Working for Families and interest-free student loans.

Government contributions to Kiwisaver will be halved, and employer contributions will no longer be tax free.

Working For Families tax credits for middle- and high-income households will be reduced, but some lower income families will get more. About 7000 families will lose the Working for Families tax credit.

Mr English told Checkpoint the budget is designed to stablise the economy, which will ultimately benefit New Zealand families.

"What will really hurt middle income families is if we keep borrowing, interest rates are pushed up and the economy remains sluggish so they can't get wage increases.

"Really it's the interest rate effect - lower interest rates for longer - that will make the most difference for those families."

Mr English said the changes have not been drastic, and that the people most likely to be affected have received significant support in past years, including tax cuts.

He said the aim of the Budget was to pay down national debt more quickly and boost the country's savings, and that the changes outlined would put the Government books on a faster track to surplus.