Wellbeing Budget 2019 – what it means for business

It has been said that a government is the only vessel that leaks from the top and this seemed an appropriate adage in the lead up to this year’s budget announcement. After numerous leaks and accusations of hacking in the days preceding the announcement, yesterday the government delivered New Zealand’s first Wellbeing Budget. Needless to say, there was not a lot of surprises.

The Wellness Budget is tailored towards a Wellbeing Outlook rather than the purely economic and fiscal focuses of previous budgets. At present, the Wellbeing Outlook shows that New Zealanders enjoy relatively high levels of overall wellbeing but that there are challenges and disparities to address.

The focus of the budget was on the five priorities announced in the Budget Policy Statement.

  • Creating opportunities for productivity and shifting towards a sustainable and low-emissions economy
  • Supporting a thriving nation in the digital age through innovation, social and economic opportunities
  • Supporting mental wellbeing, with a special focus on under 24-year-olds
  • Reducing child poverty and family violence and improving child wellbeing
  • Lifting Māori and Pacific incomes, skills and opportunities.

While there were no new tax announcements yesterday, a few tax changes had already been in the pre-budget announcements.

 

2019 Budget in a snapshot

Spending

  • The annual operating expenditure allowance lifted from $2.4b to $3.8b as around $1.4 billion more in spending is planned – an increase to $15.2b over the next four years.
  • $10.4m in new capital expenditure making a total of $25.6b new spending over the next four years.
  • Forecast surplus expected to drop to $1.3b in 2020, down from $3.5b in 2019 and $5.5b in 2018.

 

Productivity

  • $300m fund for start-ups to draw on to bridge the venture capital gap.
  • Nearly $200m set aside to help our workforce acquire new skills to thrive in a changing job market, including apprenticeships and trade training with a focus on digital technology.

 

Sustainability

  • Over $1b to support KiwiRail’s redevelopment – buying new wagons, upgrading existing tracks, $300m is for regional rail, $35 million to investigate purchasing new Cook Strait ferries. Also, a $405m increase towards the Auckland City Rail Link to cover cost overruns.
  • $229m for a sustainable land use package to invest in projects for farmers to use land better and clean up waterways.
  • $106m innovation injection into a low‑carbon future including $27m to set up The National New Energy Development Centre in Taranaki.

 

Investing in NZ

  • $1.2b for the Ministry of Education over the next 10 years, starting with a two-year build programme of three new schools, four school expansions, and at least 150 new classrooms.
  • $1.7b to fix hospitals over the next two years and a commitment to rebuild Dunedin Hospital.
  • Bowel screening programme extended to five more DHBs.
  • Investing in better and more healthcare with $2.9b for DHBs.

 

Taxation (pre budget announcements)

  • Changes to the GST applicable on telecommunications – outbound mobile roaming services to NZ residents overseas subject to GST at 15 percent; inbound mobile roaming services provided to non-residents in NZ no longer subject to GST.
  • The racing totaliser duty (often referred to as the betting levy) phased out over three years.
  • From 1 July 2019, most international visitors entering New Zealand will be charged an International Visitor Conservation and Tourism Levy (IVL) of $35.

 

Mental Health

  • $1.9b over five years towards improving mental health services, including $455m for new services at health and doctors’ clinics to service for low to mid mental health problems, a $213m boost for ring-fenced mental health funding in DHBs, and $200m in capital investment in new mental health and addiction facilities.
  • Funding for suicide prevention services increased by $40m to help address NZ’s high suicide rates, particularly among young people.
  • $197m of additional funding over four years for Housing First to now reach 2,700 people through 1,044 new places.

 

 Child Wellbeing

  • $320m to address family and sexual violence was unveiled with campaigns aimed at stopping violence, and major changes to court processes to reduce trauma for victims.
  • The huge cost of children in state care addressed with an over $1b increase in funding to cover operating costs for Oranga Tamariki over four years, which will help build a new Transition Support Service to assist 3,000 people into independent living.
  • From 2020, decile 1-7 schools will receive a Government payment of $150 per student if they get rid of ‘voluntary’ donations. This is estimated to cost $266m over four years. The annual NCEA fees of $76.70 per pupil will be abolished.
  • $320m to index benefits to average wage increases, rather than benefits rising with inflation – expected to put about $47 more a week into beneficiaries’ pockets by 2023 – about $10-17 more than they would get under CPI.

 

Maori/Pacific

  • $80m will go to Whanau Ora over four years as part of the Government’s priority on lifting Māori opportunities and focus on health and reducing reoffending.
  • $208m to foster te reo Māori.
  • An additional 2,200 young people in the Pacific Employment Support Service.

Prepared by Moore Stephens Markhams director, Jonathan Roberts.

Published winter 2019.

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