A responsible and affordable Budget

Budget 2011 will be responsible and measured, build a platform for faster growth and more jobs, and ensure expensive programmes such as KiwiSaver, Working For Families, and interest-free student loans are affordable into the future.

These programmes now cost almost $5 billion a year. They were introduced during a debt and consumption-driven economic bubble, and it is clear that they are unaffordable.

The mix of contributions to KiwiSaver accounts will change, with less coming from borrowed government money and more coming from both individuals and employers. The $1000 kick-start for new KiwiSaver members will stay.

Increased contributions from people and businesses will happen at a time when the economy will have well and truly recovered, and both wages and employment will be increasing.

Working For Families will be better targeted at lower-income families, who have a much greater need for assistance, and a little less generous to families higher up the Working for Families scale. We will do this gradually, in a way that minimises the impact on families. The Student Loan Scheme will be adjusted but will remain interest-free.