Thirty years on from the ‘Mother of all Budgets’ the Labour-majority Government has targeted inequality, but it will be April next year before the full benefit lift is truly felt, writes political editor Jo Moir
Finance Minister Grant Robertson has delivered his fourth Budget – one he describes as the first of three this term that will “make a material difference’’ and “repair some of the damage’’ of the 1991 Budget, for those on the lowest incomes.
It’s “righting a wrong’’ and the biggest benefit increase in a generation, Robertson said.
From July 1 this year all main benefit rates will increase by $20 a week.
A second increase will kick in next April when main benefits (including Jobseeker Support, Sole Parent Support and the Supported Living Payment) will increase by between $32 and $55 per adult, in line with recommendations from the Welfare Expert Advisory Group.
This will mean main benefits are indexed to grow in line with average wages, and the amount people can earn before their benefit begins to reduce has also been increased.
In addition, families with children will also receive a further $15 per adult per week.
Students are also set to benefit with allowances and loans going up by $25 a week from April next year.
The cost of the big benefits increase will be $3.3 billion over four years.
Alongside these boosts, Robertson has outlined a Social Unemployment Insurance scheme is being jointly designed with unions and business.
It would support workers to retain about 80 percent of their income for a period after they lose their jobs.
Robertson said it would be an “appropriate legacy from Covid-19” but as to when it would be implemented is still unclear.
There will be wider public consultation later this year.
Robertson said the wellbeing outlook of New Zealanders had fed into his priorities for this year’s Budget.
The Statistics New Zealand survey showed sole parents, unemployed people and people not in the labour force due to injury, sickness or disability are more likely to report lower life satisfaction, poorer health and that they have felt lonely most or all of the time.
Māori and Pacific people report “only fair or poor health and barriers to education’’.
Prime Minister Jacinda Ardern says increasing incomes for the country’s most vulnerable “both secures our recovery by adding targeted stimulus to the economy, while also addressing one of our most pressing long-term challenges – child poverty’’.
The changes are expected to lift between 19,000 and 33,000 children out of child poverty as a result of the benefit increases announced today.
The gap between the haves and the have nots has been increasing over successive governments but Robertson had indicated ahead of the Budget that inequality and child poverty would be a significant driver of his decision-making over this term.
Robertson has had better than expected forecasts from Treasury as it starts to look towards a post-Covid world.
Economic growth is expected to rise from 2.9 percent this year to 4.4 percent in 2023 and unemployment is set to decrease to 4.2 percent by 2025.
The Crown deficit is expected to fall from 5.3 percent of GDP in 2022 to 0.6 percent by the end of the forecast period in 2025.
Projections are that a return to surplus will be seen in 2027.
Robertson says the economy has performed better than expected “thanks to the efforts of businesses, workers and the Government’s decisive and bold action through highly uncertain times’’.
The operating allowance – extra money set aside annually – for the Budget is $3.8 billion per year while capital allowances will increase to $12 billion by 2024.
“We are investing in reducing social inequalities and making a material difference to the daily lives of the more vulnerable among us,’’ Robertson said.
“We can’t meet all our long-term commitments in one Budget.’’
Housing and infrastructure
The Government’s $3.8 billion Housing Acceleration Fund was announced by Housing Minister Megan Woods in March.
Today the amount ring-fenced for Māori housing was revealed – $350 million.
An additional $380m has been set aside to boost supply and upgrade additional housing.
It includes papakāinga housing, affordable rentals, transitional housing and owner-occupied housing totalling about 1000 homes.
Associate Māori Housing Minister Peeni Henare said the constant housing challenges for Māori, in particular rates of low home ownership and homelessness, had existed for “far too long’’.
The Māori housing investment will also cover repairs for 700 Māori-owned houses. That work will be led by Te Puni Kōkiri.
Woods said the investment is expected to enable at least 2,700 houses “based on an average cost of $100,000 to $130,000 per site’’.
Health and funding the Māori Health Authority
Last month Health Minister Andrew Little announced sweeping health reforms that would see the end of District Health Boards, to be replaced by a central agency – Health NZ.
Today $486m was set aside to begin the transition to Health NZ and the reforms that will sit alongside it.
These are all set to kick-in next July, including a Māori Health Authority, which has triggered a controversial debate in Parliament in recent weeks after the Opposition deemed it “separatist’’.
Of the total transition pool, $98.1 million will be used to establish the Māori Health Authority, which will be set up under the direction of Tā (Sir) Mason Durie.
Once the authority has been established, announcements will be made about targets and how much money it will receive to provide services to Māori.
A further $17.8m has been dedicated in the Budget to supporting the iwi/Māori partnership boards, which will work alongside the regional arms of Health NZ.
And $126.8m has been announced for Hauora Māori programmes, but no new funding has been allocated to Whānau Ora.
Henare said funding for Whānau Ora had doubled under the Labour government over the past four years and funding from previous budgets was still in the bag.
Climate and education
The Government’s major climate announcements revolved around new sources of funding that have yet to be allocated and funding for a policy that has yet to be designed.
Climate Change Minister James Shaw revealed that funds raised from Emissions Trading Scheme auctions would be recycled into emissions-reducing initiatives in future Budgets.
That’s expected to add $3 billion to the fight against climate change over the next five years.
The Budget also contained a cryptic reference to a policy designed to incentivise the uptake of low-emissions vehicles.
No further details were provided, but $302 million has been set aside to fund the policy.
The Governmet’s $100 million green finance fund has also been topped up by $300 million.
In education the Government has budgeted an initial $30.9 million operating expenditure and $1 million capital to enable Secretary of Education Iona Holsted to launch the new education service agency this year, overseeing all state schools and early learning centres.
Alongside the education service agency will be a curriculum centre to implement planned curriculum changes, beginning this year with the New Zealand history curriculum.
The Government is committing $52m to set it up and $110m operating expenditure over the next four years.
And continuing from the new buildings for the two Marlborough colleges and the nearby Bohally Intermediate will be $634m capital to bring forward the construction or redevelopment of 25 schools, and to help prevent overcrowding in other schools.
The Budget says these projects are forecast to generate up to $400m worth of work, approximately 8,000 employment opportunities, and provide learners with access to quality facilities.
The Opposition responds
National Party leader Judith Collins says today’s Budget lacks the “plan and ambition this country needs to grow our economy and reduce debt.
“This Budget is confirmation of Labour’s inability to deliver. There is nothing in it for middle New Zealand.”
Collins has described Robertson’s Budget as the “Broken Compass Budget’’, saying Labour doesn’t have any direction for getting the country back on track.
“To truly ‘secure our recovery’ we need to provide businesses the confidence they need to invest, so they can employ more staff and pay good wages.
“There was little in the Budget today for New Zealanders who have seen their rents jump by $100 a week since Labour came into office.
“There was little in the Budget for New Zealanders who are seeing power prices start to increase as the impacts of the oil and gas ban take hold.
“There was little in the Budget for businesses that have been lumped with the extra costs of minimum wage hikes, an extra public holiday and compulsory unionism – on top of the sacrifices they’ve made during the pandemic,’’ Collins said.
ACT Party leader David Seymour was equally unimpressed, describing today’s announcements as the “La La Budget’’.
“The Government had an opportunity today to get New Zealand back on track following COVID-19, instead its Budget makes Fawlty Towers look like hotel with a sound management plan,” he said.
“This Budget does nothing for middle New Zealand, the battlers who work hard but are being squeezed from every direction. There’s nothing for people who work for their money.
“Grant Robertson has his hands over his ears yelling out “la la la” to ignore reality,’’ Seymour said.
On election night, Seymour said Prime Minister Jacinda Ardern told the country she would “govern for all New Zealanders’’.
“Well what about middle New Zealand?
“The Government is indexing income thresholds for receiving child care assistance but not tax thresholds.
“These are actually the best of times we have near record terms of trade, milk prices are high, and interest rates are at record lows. New Zealand has had enormous advantages in the first phase of Covid but we’re unprepared as the world opens up,’’ he said.