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CIP plans local pension increase

Tuesday May 13, 2014 Written by Published in Politics
Minister of Finance Mark Brown says local pensions will increase if the Cook Islands Party is re-elected. 14040219 Minister of Finance Mark Brown says local pensions will increase if the Cook Islands Party is re-elected. 14040219

Local pensions would be given another boost by a victorious Cook Islands Party, says Finance Minister Mark Brown.

Brown said the Government is preparing its 2014-15 budget, which will include an increase in pensions from $625 to $700 for eligible seniors aged 70 years and over.

"We prepare as if we’ll still be the Government,” he said. “There are a number of things that will continue to flow on from what we started over the last three years.”

Prior to the dissolution of Parliament, Brown said MFEM was assessing business plans that had been submitted by government ministries – part of setting out spending priorities for the 2014-15 financial year.

The pension increase comes before a number of expected announcements in the lead up to July’s election.

“That’s part of our plan to get their pension up to $800 ... as soon as we can afford it,” said Brown. “The way we look at it is from affordability ... increase it by an amount that can be absorbed by the budget.”

Since coming to power in 2010, Brown said the Government first increased the payments for the over-70 pensioners from $400 to $500 in the 2011-12 fiscal year, followed by an increase to $550 in 2012-13, and then up to $625 in last June’s 2013-14 budget.

“We’ve been able to put those increases in the pension by doing the tax reforms we’ve put in place,” said Brown, adding the older group was targeted due to their unique challenges.

Although pensions are now included as taxable income, the increase to $700 puts the annual amount at $8400 – below the annual tax-free income exemption of $11,000 – meaning pensioners will not have to pay any tax if they rely strictly on the Government payments.

If given a second mandate by the people, Brown said a CIP Government’s first orders of business would be tabling of the 2014-15 budget and the introduction of a previously-announced income tax amendment exempting New Zealand superannuitants from paying back taxes on pensions prior to the end of December 2012.

The amendment would also contain provisions for the reimbursement of money previously raided from the back accounts of six pensioners late last year.

If July’s election sees a turnover of power to the Democratic Party, Brown said he would be more than happy to hand over their draft budget to the government-elect.

“They could take all the ideas we have and put them into place, although I heard they will reduce the Value Added Tax (VAT), and would have to cut $8 million from the budget,” he said.

In the meantime, Brown said the current CIP-led Government is continuing its caretaker role.

“It’s pretty much now just chasing up on things that have been agreed to,” he said. “A lot of the focus is on areas that we have made commitments to.”

Brown said renewable energy, the continuation of the Te Mato Vai water project, and the water tank subsidy program were some of the issues currently being handled by the Government.

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