Prime Minister Jacinda Ardern says the Budget means New Zealand will come out of the pandemic "stronger than when we entered it". Video / Parliament TV
Prime Minister Jacinda Ardern is unrepentant about the Budget's focus on lifting benefits rather than helping workers or businesses, saying what Labour was doing was targeting need.
Yesterday's Budget was the first for Labour as a majority government and delivered $3.3 billion worth in benefit increases over the next four years, as well as more than $1 billion in funding for Māori, including a Māori housing package.
Prime Minister Jacinda Ardern speaks in the Budget debate. Photo / Mark Mitchell
However, there was precious little in it for workers or for businesses hoping for more of pick-up as Covid-19 continued to bite, and only minimal increases for the day-to-day running of schools and hospitals.
Ardern defended the decision to push the most money into benefits rather than other areas of spending: "what we have done today is about targeting need and helping provide the simple basics: food on the table, enabling people to pay the power bill and make sure their children have the basics."
Asked what ordinary workers and middle New Zealand could take out of the Budget, Ardern said the extra $15 billion in infrastructure spending would create jobs, and stimulate the economy at a time it was most needed.
"We are making investments that are good for our people, and good for the economy. So we expect the investments we make will also stimulate the economy in a range of ways – whether it's building new houses, or putting money in the pockets of low-income families and they'll be out spending that in the economy. Those are exactly the types of decisions we need to make."
However, National Party leader Judith Collins said it was "a Budget for benefits, not jobs" and would do very little for the economic growth the country needed as it emerged from Covid.
Collins also took aim at the debt levels: the Government expected to borrow an extra $100b in the five years to 2025 and Collins said that would see debt hit $184 billion—"more than $100,000 for every household."
She said New Zealanders understood the need for debt – but only if it was used wisely, and this would do nothing for middle New Zealand.
National leader Judith Collins speaks in the Budget debate in Parliament. Photo / Mark Mitchell
Collins also criticised the $500 million for the first tranche of the health reforms, questioning the need to undertake those reforms in the middle of a global pandemic.
Act leader David Seymour also said it 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".
However, the Budget did get conditional approval from the Greens and the Māori Party.
Māori Party co-leader Rawiri Waititi said it was a step in the right direction for Māori.
"The big question is who will be responsible for the delivery of these initiatives? More money is not always the answer."
Labour used the Budget to tick off a number of election pledges: including the benefit boost of up to $55 a week, which was aimed at addressing child poverty and try to ease housing affordability pressures.
There was also a $200m funding for Pharmac, and money for more cochlear implants for adults. The Budget also included more than $200m funding for the Māori Health Authority to be set up – part of the wider health reforms.
Both Ardern and Robertson have described the Budget's drive as "two birds with one stone" – putting money into addressing social problems while also helping the Covid recovery.
However, the Budget got a mixed review from business and the unions.
CTU economist Craig Renney said addressing poverty was critical – but the Budget neglected public services and funding in health, education and for Kainga Ora were not enough to keep on top of the cost pressures in those areas.
"Lowering debt now means that opportunities to invest are being missed. Returning to surplus should not come at the cost of community need."
Business NZ head Kirk Hope said trying to address child poverty and spending on Māori and Pasifika was important, but businesses had hoped the Budget would deliver more certainty and policies for growth.
"We'd appreciate a plan to fix the housing crisis and more certainty around the plan for economic recovery from Covid."
The Government also dispensed more from the Covid Fund – the Government using it to pay for a large chunk of its housing package, as well as smaller sums for the NZ Symphony Orchestra and the Royal New Zealand Ballet.
The Covid fund was also used to meet Labour's promise of reinstating the Training Incentive Allowance for single parents and disabled people who are studying or training. In the past, that allowance has been funded out of the Ministry of Social Development – but Social Development Minister Carmel Sepuloni said single parents and disabled people were among those most affected by the hit of Covid-19 to the economy.
Robertson said more of that Fund could now be used for the recovery rather than the immediate health or border response to Covid – however, only about $5 billion remains in it for any future emergencies.
Budget Day also revealed the Government was looking at an "employment insurance" scheme, a scheme that would operate similar to ACC, be funded from levies and could pay for up to 80 per cent of a person's income if they lost their job.
Ardern said that would help people who lost their jobs through no fault of their own to have time to either find a new job or alter to a lower income. Details of that were scarce, including who would be levied to pay for it.
Robertson has said he considered the Budget to be "step one" in a three-step series of Budgets over the term.
Some climate groups were disappointed with the Budget's delivery in that area – the "new" item was a $300m boost to the Green Investment fund. However, next year's Budget is likely to deliver more on climate change – this year's included a commitment to use future Emissions Trading Scheme revenue for emissions reduction measures from Budget 2022.
