This time last year, the Budget dealt mainly with the Government’s economic response to the COVID-19 pandemic with support for business very much to the fore. In 2021, that focus has shifted to improving the wellbeing of New Zealanders and, in particular, those on the lowest incomes.
While much of this Wellbeing Budget spend will indirectly help boost the economy, there is little that directly relates to business or middle New Zealanders, except perhaps the measures to keep the country safe from COVID-19.
The focus of the Budget is on five key objectives:
- Just transition to a low carbon economy
- Future of work: lifting productivity and innovation
- Lifting Māori and Pacific income, skills, and opportunities
- Reducing child poverty and improving child wellbeing
- Supporting physical and mental wellbeing
On the matter of recovery:
- The IMF projects global growth at 6 percent in 2021, moderating to 4.4 percent in 2022.
- The NZ Treasury forecasts annual average real GDP growth of 2.9 percent in the year ending June 2021, rising to 3.2 percent and 4.4 percent in the following years.
- Unemployment rates increased to a lower than expected 5.2 percent in the September 2020 quarter, and dropped back to 4.7 percent in the March 2021 quarter.
- The Government expects the books to be back to surplus in 2027.
Our pick of key factors affecting business are below. Should you wish to discuss how any matters raised affect your business,
please get in touch.
2021 Budget in snapshot
Transition to a low carbon economy
- Recapitalising New Zealand Green Investment Finance Ltd with $300 million for investment in climate change mitigation.
Future of work: lifting productivity and innovation
Infrastructure
- Crown infrastructure investment over the next four years lifts from $42 billion to $57.3 billion for roads and rail, schools and hospitals, housing, and energy generation.
Transport
- Three Future of Rail initiatives ($1.3 billion) support the purchase of 60 new locomotives and 1,900 new wagons, provides a top-up to the National Land Transport Fund to restore a reliable rail network, and provides working capital for KiwiRail for maintenance of core freight, tourism, property and ICT assets.
Tourism communities
- Funded from the COVID-19 Response and Recovery Fund, a $200 million Tourism Communities: Support, Recovery and Re-set Plan provides support for communities most reliant on international tourism, as well as for the tourism sector nationwide.
Business
- A $44 million partnership with the private sector to deliver a two-year nationwide programme to supply core digital business skills training to small businesses.
Housing
- A $3.8 billion Housing Acceleration Fund to increase the pace and scale of new housing by supporting the provision of infrastructure and housing and expanding the Land for Housing Programme.
- Warmer Kiwi Homes will see $120 million for more insulation and heating retrofits for lower income homeowners.
Lifting Maori and Pacific income, skills, and opportunities
- $380 million investment in Māori housing solutions for new and existing stock.
- $68 million for Initiatives to support economic development for Pacific communities, continue Tupu Aotearoa to support Pacific peoples into employment, training, and education opportunities, and provide funding for bilingual and language immersion education programmes.
Reducing child poverty and improving child wellbeing, and supporting physical and mental wellbeing
Community wellbeing
- Weekly main benefit rates will rise between $32 and $55 per adult in line with a key recommendation of the Welfare Expert Advisory Group. It is expected this increase will lead to an economic boost with the monies being spent not saved by recipients.
- $527 million for healthy school lunches programme.
- $153 million to reinstate the Training Incentive Allowance for Levels 4 to 7 on the New Zealand Qualifications Framework.
Health
- A $486 million Health and Disability System Reform Provides core initial funding to implement a new health system operating model.