May 21, 2021
Yesterday’s Budget 2021 announcement by the Government aims to support the long-term wellbeing of New Zealanders and to ‘secure our recovery’.
Budget 2021 at a glance: There is to be $15.1 billion of new spending over the next four years, broken down by.
- Benefit rate to be lifted by $32-55 a week per adult, at a cost of about $1 billion a year
- Health spending up by $4.7 billion over four years including further PHARMAC funding and the establishment of a Maori Health Authority
- Infrastructure investment lifted by $57.3 billion over a forecasted five-year period
- Confirmed additional funding of $3.8 billion for the Housing Acceleration Fund
- $300 million for New Zealand Green Investment Finance to invest in supporting climate change mitigation
- $380 million investment in Maori housing solutions
- Funding totaling $1.3 billion for three Future of Rail initiatives
- Funding confirmed for the administration of the COVID-19 vaccine program of just under $1.5 billion
The economy forecast is set to grow strongly, peaking at 4.4% annual growth in year to June 2023. With the Government’s books improving, net debt as proportion of GDP staying under 50%. The Government also still has $5.1 billion left in the COVID-19 response and recovery fund to respond to further outbreaks, if they occur.
We have had a number of clients approach us for our thoughts.
Right now if you’re a hard-working ordinary New Zealander, not on a benefit, there is very little in this budget for you. The 2021 budget did not contain the investment we needed to see to future proof our economy.
While we support some of the major initiatives within the budget we feel this budget should have given more attention to the needs of business.
Additional investment in infrastructure, and training and digital skills will be welcomed, however, there is little else directly focused on supporting businesses or easing the burden of the large costs this government has imposed. For example the additional sick days, additional public holiday, minimum wage increase; to name a few.
This budget is all about spending money. We would prefer to see initiatives which focus on delivering a higher productive economy; less of give someone a fish and feed them for a day, and more of teach them to fish and feed them for a lifetime mentality.
We have reservations that this budget is lacking in specific deliverable commitments, given the failure in the historical promises made in areas such as KiwiBuild, planting trees, and “no increases in tax” this comes as no surprise.
Given this we believe the key questions to be answered are, are these initiatives enough, is it appropriately targeted and most importantly, how will it be delivered?
If you do have any questions about the budget please do get in touch.