Wellbeing Budget 2021: Key points
A better-than-expected economic recovery after the scourges of Covid has enabled the government to propose significant investment in health and welfare, housing (particularly for Māori), infrastructure to rebuild from the impact of the pandemic and to continue to make this country safe from the virus.
This 2021 Budget will have significant positive impacts on the economy and the wellbeing of New Zealanders. The government states that it wants to focus spending on areas that will support enduring, intergenerational change that will give people the capabilities to live lives of purpose, balance and meaning.
The opening of our borders for quarantine-free travel between Australia and the Cook Islands heralds the start of an economic recovery whilst keeping Covid out of our communities.
Core to this country’s recovery, is a significant investment in infrastructure. $57.3 billion has been earmarked for roads and rail, schools and hospitals, housing and energy generation over the next five years. Included is $306 million for an urgently-needed redevelopment of Scott Base.
Main benefit levels will increase between $32 and $55 per adult per week. An immediate $20 per adult/week will kick off on 1 July, with the balance of the increase starting on 1 April 2022.
Families with children will receive a further $15 per week.
$3.8 billion is allocated to the Housing Acceleration Fund to increase housing supply. From that fund, $350m will support Māori and iwi housing projects and an allocation will include the provision of affordable rentals, papakāinga and repairs to Māori-owned homes.
For those New Zealanders who are frustrated at the continual rise (and unaffordability) of house prices, the government anticipates a significant slowing down of the housing market. Predicting a peak in June (there’s been a rise of 17.5% in the June 2021 quarter), the government sees a softening of the market to a 0.9% rise in the June 2022 quarter and then a steeper increase from 2023 onwards.
As announced earlier, the government has invested $1.5 billion in the rollout of the Covid vaccine immunisation programme. Vaccinations will continue to be free. There is a further $5.1 billion set aside in case of possible new waves of the virus.
The health sector will receive $4.7 billion that will include core initial funding for a new health system (announced in April).
Twenty district health boards will be abolished to be replaced by a new agency, Health New Zealand, with four regional offices and the establishment of a Māori Health Authority. With Māori health outcomes being significantly poorer than non-Māori (Māori die seven years earlier than non-Māori, for example), the government views this as an urgent need.
Included in this allocation is an additional $200 million for Pharmac over four years.
$300 million has been allocated to recapitalise New Zealand Green Investment Finance to continue to invest in support of climate change mitigation, with a particular focus on decarbonising public transport, waste and plastic.
SMEs have not been ignored; $44m is set aside for a two-year national programme to supply core digital business skills training.
General economic outlook
It is pleasing that New Zealand’s economy has recovered more strongly than expected from the effects of Covid, although many people and communities are still hurting. Treasury forecasts an annual average real GDP growth of 2.9% in the year ending 30 June 2021, rising to 3.2% and 4.4% in 2022 and 2023 respectively.
To read more about the Budget, please click here.
Source: New Zealand Treasury