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New Zealand government projects budget surplus

By WTOP Staff

NICK PERRY
Associated Press

WELLINGTON, New Zealand (AP) — New Zealand will become one of the first developed nations to return to a budget surplus since the 2008 financial crisis plunged the global economy into recession, the government said Thursday.

The spending plans outlined by the government are a turnaround after several years of belt-tightening it said was needed to prevent debt levels rising too high. The slowdown in growth after the financial crisis prompted many governments to borrow to keep their countries afloat.

The improvement in the government’s finances has been helped by a strengthening economy, which officials estimate is growing at a brisk rate of 4 percent. Growth has been boosted by strong demand in China for New Zealand milk and rebuilding efforts in Christchurch following a 2011 earthquake that destroyed much of the city’s downtown.

Budget figures indicate the government expects its revenue such as taxes to exceed spending by 372 million New Zealand dollars ($320 million) in the year beginning July. It projects the surplus will rise to NZ$1.3 billion the following year and to NZ$3.5 billion in 2017-18.

The government plans to spend some of the windfall by extending the maximum age at which children can get free doctor visits from 5 to 12. It also plans to increase the amount of paid maternity leave from 14 weeks to 18 weeks and to reduce a tax on car ownership.

Finance Minister Bill English said he plans to reduce the government’s debt from its current level of about 26 percent of gross domestic product to below 20 percent over the next six years.

Financial projections indicate it will take three years before overall government debt levels begin to fall. Craig Howie, a spokesman for English, said that’s because it takes time for an accounting surplus to manifest into extra cash.

English is promising to maintain a disciplined approach to spending.

“We’re on the right track. We’ve been making good progress,” English said. “And that means New Zealand can look ahead with confidence.”

The New Zealand budget is stark contrast to the austerity announced by neighboring Australia two days earlier. The Australian government is planning tax hikes, welfare cuts and layoffs as it attempts to slash a ballooning budget deficit.

Australia in the past has lured New Zealand workers with the promise of higher wages, more career opportunities and better living standards. But that trend now appears to be reversing in a reflection of the changing fortunes of the two countries.

Figures from government agency Statistics New Zealand show that in the year ending March, a net 13,000 New Zealanders moved to Australia, down from 36,000 the year before.

Some officials predict there may soon be a flow of Australians to New Zealand, which, when added to immigrants coming from other countries, could put further pressure on an already frothy New Zealand housing market.

“We haven’t taken steps to change the migration flows. We’re still trying to understand what’s going on with the big slowdown in New Zealanders leaving,” English said. “My own view is that the Australian economy is in better shape than Australians think.”

Despite the rosy budget figures, challenges remain for the New Zealand economy. Both housing prices and household debt levels are high when compared to other developed nations.

And officials project the economy’s growth rate will slow to 2.1 percent over the next two years. The Reserve Bank warns that an expected further slowdown in China’s growth may hurt New Zealand exporters.

David Cunliffe, leader of the opposition Labour Party, said the government had fudged some of its numbers to ensure it posted a surplus and had done little to help families that are struggling on stagnant wages. He said the budget did nothing to help folks wanting to buy their first home, who had watched prices skyrocket.

Treasury figures indicate the government will spend about NZ$73 billion next year, representing 30 percent of the country’s NZ$241 billion economy. About NZ$24 billion will go to social security and welfare; NZ$15 billion to health; and NZ$13 billion to education.

A recently completed program of asset sales has helped improve the books. The government has sold minority stakes in three power companies and national carrier Air New Zealand, raising a total of NZ$4.7 billion.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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