Prime Minister Chris Hipkins today announced 20 hours of free early childhood education would be extended to include 2-year-olds. The $5 co-payment for prescription medicines will be scrapped and public transport will be free for people aged under 13 and half-price for those under 25.
Hipkins said it was “tough for families right now”, so this year’s Budget included targeted measures that would also deliver long-term results.
He said the initiatives would tackle the immediate cost-of-living challenges that households faced without exacerbating inflation pressures, as tax cuts would – a direct jab at the Opposition, which has been calling for tax cuts.
Early childhood education
Education Minister Jan Tinetti said that, based on average costs in 2023, families who were not previously receiving childcare would save an estimated $133.20 a week. It would also allow more people to return to work.
“Childcare is one of the biggest costs families face, so extending 20 hours’ free ECE to 2-year-olds will make a big difference.”
It will cost $1.2 billion over four years, coming into force from March next year.
The Government is also making $322 million available to ECE services to lift pay for teachers and move towards pay parity with kindergartens. This could see wages lift by up to $14,762, or 18.6 per cent.
The current free school lunches programme will also continue until the end of 2024, at a cost of over $320 million for the next two years. This provides lunches to about 220,000 school students, or about 25 per cent.
Free medicines
Health Minister Ayesha Verrall said removing the $5 medicines co-payment from July this year meant about 3 million people would not have to worry about the cost of collecting their medicines.
This included about 770,000 people aged over 65 and would have a meaningful impact, especially on low-income households and those who had multiple prescriptions.
“As a doctor, there were times when my patients did not collect their medication and, in fact, we know more than 135,000 adults did not collect their prescription because of cost in 2021-22.
“This is particularly the case for low-income families, Māori, Pasifika peoples and disabled New Zealanders.
“Free access to medicine will also relieve pressure on the health system. Removing the co-payment charge will help reduce the demand on hospitals and other health services.”
It will cost just under $620 million over four years.
Verrall said it was on top of a 51 per cent increase in the medicines budget since 2017, allowing Pharmac to make an extra 212 funding decisions including 75 new medicines.
Cheaper public transport
From July this year public transport – including buses, trains and ferries – will be free for children under 13, and half-price for those aged 13 to 24. This will expand cheaper fares to a further 774,000 people, on top of the 895,000 made eligible for half-price fares in last year’s Budget.
Transport Minister Michael Wood said this would provide cost savings to households while reducing congestion and helping reduce greenhouse gas emissions.
“Making free transport for children will make it much easier for kids to get to school and provide relief to household budgets.”
Free fares for under 13s could save $30 a week in households of two children, Wood said.
The Budget would also enable public transport authorities to raise the base wage rate for urban bus drivers to $30 an hour and $28 for regional drivers, among other measures.
Wood said this meant there would have been a 58 per cent increase in bus driver wages since 2017.
Lower energy costs
Energy Minister Megan Woods said just over $400 million would be spent over the next four years to fund heating and insulation retrofits in more than 100,000 homes – reducing electricity usage by 16 per cent on average.
Woods said it would help make homes warmer, healthier and cheaper to heat, while increasing energy resilience and reducing reliance on fossil fuels.
The programme would deliver 26,500 retrofits a year over the next four years, Woods said.
The Government would also fund 5m LED lightbulbs and energy-efficient hot water heaters.
Woods said after this programme had finished the Government would have funded more than 200,000 retrofits.
People living on Rēkohu/Chatham Islands are also in for some big power savings, with the Government committing to funding a wind turbine and battery project on the island.
Due to reliance on expensive sources such as diesel generators, electricity costs on the islands are four times the national average. This initiative could more than halve costs, saving households about $1445 a year.
