Budget 2021: Benefits to get 'biggest lift in a generation' – Finance Minister

New Zealanders on benefits are set to see more money in their pockets, with the Government saying it is “righting a wrong” by giving a weekly boost of up to $55 a week, restoring “dignity and hope” to some of those on the lowest incomes.

Budget 2021 sees the “the biggest lift in a generation” to benefits, $1 billion for Māori, as well as an overall investment of $4.7 billion to health.

Main benefits will get a $20 a week top up from July, while additional payments will come in from April 2022.

Prime Minister Jacinda Ardern said Budget 2021 invests in health and wellbeing through the Covid-19 vaccine rollout and would help with job creation through infrastructure spend and that it “takes on the challenges” of housing, climate change, child wellbeing and inequality.

“What we are delivering today will help secure New Zealand’s future in every sense, whether it’s through the rebuild of our economy or the support of our people, it will leave a legacy I believe we can be proud of,” Ardern said.

Finance Minister Grant Robertson said the benefit boost was “the biggest lift in a generation”.

However, he acknowledged the Government still has “more work to do”.

“This year’s Budget is still in the shadow of Covid-19 and its focus is to secure our recovery from its impact,” Robertson said.

The Government has consistently come under fire for not implementing benefit increases, a recommendation from the Welfare Expert Advisory Group.

Robertson said the Government was delivering Budget 2021 on the 30th anniversary of the "Mother of all Budgets", and was “undoing some of the damage done all those decades ago”.

“Today, we address the most inequitable of the changes made 30 years ago,” Robertson said.

WELLINGTON, NEW ZEALAND - MAY 20: Prime Minister Jacinda Ardern and Finance Minister Grant Robertson make their way to the house during budget day 2021 at Parliament on May 20, 2021 in Wellington, New Zealand. Budget 2021 is the third budget handed down by Finance Minister Grant Robertson, with a focus on economy, housing affordability, climate change and children. $1.4b dollars has been allocated to the rollout of the COVID-19 vaccine, along with $118.6m for women's health, $67.4m to make the Government carbon-neutral by 2025 and $170m to boost the pay of early childhood teachers. (Photo by Hagen Hopkins/Getty Images)

National attacked the Government for failing to support businesses.

“Instead of supporting businesses to create jobs and lift wages Labour has focused on increasing the benefit," Andrew Bayly, National's shadow treasurer, said. 

"All New Zealanders are feeling the weight of the rising cost of living as a result of Labour’s policies, but there’s little here for those Kiwis working hard on low wages.

“Labour will increase your benefit, but it won’t help you find work."

Welfare:

  • Weekly benefit rates to increase between $32-$55 per adult by April 2022 – estimated to cost $3.3 billion over four years (dependent on the number of people receiving benefits)
  • All benefits to increase $20 in July 2021
  • Main benefits to get a further boost on April 2022 to be in line with Welfare Advisory Group recommendations.
  • Families with children will receive an extra $15 per adult per week
  • Student support living costs increases by $25 in April 2022
  • Increasing the income threshold for childcare assistance
  • Benefits rates are set to rise, with rates to increase by at least $32 to $55 a week from April next year. That is in addition to a $20 boost to all main benefits in July. 

    It comes on top of the $25 benefit lift which came in during the Covid-19 response last year.

    Prime Minister Jacinda Ardern said it was “not only the right thing to do, it’s also good for our economy”.

    “In the short term, these changes will help stimulate growth and in the longer term they’ll help break the cycle of poverty,” Ardern said.

    Social Development Minister Carmel Sepuloni said the lift to main benefit rates would mean that by April next year, 109,000 families with children would have an extra $40 per week on average, people without children (263,000) would have an extra $42 a week.

    Sepuloni said they expected it to lift 12,000 to 28,000 children out of poverty.

    She said child poverty campaigners who called for welfare reform and media personalities covered the topic helped bring the issue into the public arena and to the attention of the Finance Minister.

    “They should continue to hold us to account,” Sepuloni said.

    The Government has been under pressure to address welfare gaps, after a key recommendation of the Welfare Advisory Group was to immediately lift benefit rates.

    The Government is also increasing the income threshold for childcare assistance, so that 1000 more families are able to access low cost childcare services outside of school hours.

    Budget 2021 puts aside $13.3m over four years for the expansion, as well as $9m to the Out of School Care and Recreation Service (OSCAR).

    “OSCAR plays a vital role in supporting parents to gain and maintain employment and engage in further training and education,” Sepuloni said.

    Health:

  • $4.7 billion allocated to health
  • Pharmac gets an extra $200m for the purchase of more medicines, treatment and devices
  • $486m for new health reforms – that includes $98.1m to establish the Māori Health Authority
  • Overall - $243m operating for Māori health which includes $18m to establish iwi/Māori partnership boards, the establishment for the Māori Health Authority and for it to invest in hauora Māori services
  • $2.7b extra for District Health Boards over four years
  • $516.6m for the development and running of health infrastructure, which includes a national health information platform
  • Almost $400m for people with long-term physical, intellectual or sensory impairments.
  • $100m for air and road ambulance services.
  • An extra $50m for the Healthy Homes Initiative
  • $3.8m for Family Planning
  • Health Minister Andrew Little said Budget 2021 increased primary care funding by $46.7m a year – “so that as our population grows, GPs can contribute to provide affordable healthcare to the people who need it most”.

    It comes after this year’s announcement of sweeping reforms to New Zealand’s health system, which included scrapping the DHB model for a new centralised authority (Health NZ) and the creation of a Māori Health Authority.

    “We must keep our hospitals running as we transform the health system so people can keep getting the operations and care that they need,” Little said.

    “That’s why we’re giving District Health Boards $675 million more a year, as well as putting aside $700 million over four years for capital projects.”

    Little expected the boost to Pharmac would impact about 370,000 patients.

    Māori Housing:

  • $380 million for Māori housing
  • Of that, 1,000 new homes for Māori – including papakāinga housing, affordable rentals, transitional housing, and owner-occupied housing
  • Repairs to 700 Māori-owned homes and support services
  • $30 million for iwi and Māori groups to accelerate housing projects
  • Injecting $350m from the Housing Acceleration Fund for infrastructure for Māori housing
  • Associate Māori Housing Minister Peeni Henare said that making sure Māori had access to warm, dry homes was important for “health, social and economic reasons”.

    “Our people face constant housing challenges,” Henare said.

     “They are less likely to own their own homes and more likely to face homelessness than their fellow New Zealanders. It has been this way for far too long.”

    “We are making significant investments to build more homes across Aotearoa New Zealand,” he said.

    “We will partner and invest with iwi in Māori-led housing solutions.”

    Housing Minister Megan Woods said the ring-fencing of an additional $350m for Māori housing infrastructure would speed up the build of new homes.

    Economic recovery:

  • Treasury’s Budget update forecasts the deficit to narrow, reaching $2.3 billion in the 2024/25 period
  • Net Core Crown debt is forcecast to go up by about $100b by 2024/25 – peaking at 48 per cent of GDP in 2022/23
  • Unemployment is forecast to rise up to 5.2 per cent this June, before trending down to 4.2 per cent in 2025.
  • Operating allowance for Budget 2021 was $3.8b per year and capital allowance for Budget 2021-24 up to $12b.
  • “Despite some near-term weakness, the economy is expected to strengthen throughout the forecast period, supported by the return of international visitors and higher Government spending,” Secretary to the Treasury Caralee McLiesh wrote.

    Growth was expected to rise from 2.9 per cent in 2021 to 4.4 per cent in 2023.

     Education:

  • Training incentive allowance scaled up
    Overall – Budget 2021 give $1.4b over four years to operational funding for schools and early learning
  • Schools and early learning get $185m, in operating and $53m in capital to establish an education service agency to support schools
  • One-off funding package for maintenance and upgrades at state-integrated schools
  • The training incentive allowance, currently that only supports training at levels 1-3 of NZQF, is being expanded to allow students to go up to degree-level study.

    Social Development Minister Carmel Sepuloni spoke of her own experience on the allowance as a single parent, before it was scaled back.

    The allowance is available for sole parents, disabled people and carers who get a benefit, and is a maximum of $114.19 per week.

     

    Social unemployment insurance in the works:

  • The Government revealed today it is proposing an ACC-style unemployment insurance scheme
  • The proposal looks to provide about 80 per cent cover for a limited time after a person loses their job and linked to training opportunities
  • Finance Minister Grant Robertson said the scheme “would cushion the impact of a job loss”.

    “It would give workers the financial stability to find the right job for their skills, or to retrain for a new, fulfilling career path,” he said.

    “Covid-19 has exposed how vulnerable employment can be, and the risk to dramatic income loss from employment to unemployment.”

    “Finding a job takes time, and many workers may accept lower-paid jobs that don’t match their skillsets, because financial pressures mean they need work quickly.”

    Robertson told media it was a “work in progress”, with a target if implementation in 2023.

    Major redevelopment of Scott Base in Antarctica:

  • $306 million to replace windfarm and project operating costs of $38 million
  • Expected to need 170 jobs for peak of construction and 700 overall over six year.
  • Foreign Affairs Minister Nanaia Mahuta said the funding would ensure Scott Base “remains a place where our scientists can conduct world-leading science safely and effectively”.

    “Their research to understand how climate change affects Antarctica, and the flow-on impacts to Aotearoa New Zealand and the rest of the world, is critically important.”

    She said investment in Scott Base’s infrastructure was overdue.

    “The outdated buildings and facilities that keep the residents alive in the coldest, driest, windiest place on earth have deteriorated. Doing nothing would eventually lead to the closure of the base.”

    Pre-Budget announcements:

    - $118.6 million for  improved cervical and breast cancer screening 
    - $170 million pay boost over four years for  early childhood teachers 
    - $67.4 million over four years to  de-carbonise the public sector by 2025  

    Priorities for Budget 2021:

    - Continuing the Covid-19 response
    - Delivering priority and time-sensitive manifesto commitments
    - Supporting core public services through managing critical cost pressures
    - Continuing to deliver on existing investments