The Government will scrap the $5 fee New Zealanders pay for most prescriptions as part of changes aimed at combating the cost of living in the 2023 Budget.
It’s estimated to affect three million people and will cost the public purse more than $618 million.
The Budget, which was released to the public at 2pm, also heralded an extension of 20 hours free early childhood education to two-year-olds.
Health Minister Ayesha Verrall said the $5 prescription charge could be a barrier to people getting the medicines they needed.
“Removing the $5 charge will make it easier and cheaper for New Zealanders to access the medicines they need, having a meaningful impact for many households, particularly those who have multiple prescriptions to fill on a regular basis.”
She said free access to medicine would also relieve pressure on the health system by reducing demand on hospitals and other health services.
Public transport fares, prescription fees and early childhood care were all winners in this year's Budget. (Source: 1News)
Public transport
The Budget also provides for free public transport for under-13s and makes it half-price for under 25s, which will impact 1.6 million people and will cost more than $327 million.
The Budget sees one tax change. The trustee tax rate will be aligned with the top personal tax rate of 39% by April 2024.
It’s aimed at reducing opportunities to circumvent the top personal tax rate and has some exemptions. It will go through a select committee process.
It’s a Budget Finance Minister Grant Robertson said will strike “a balance between supporting our people now with the pressure of the cost of living” while also investing in “future jobs and economic security”.
He said it was a “practicable Budget” and did “what it says on the tin” – referencing its title, ‘Support for Today, Building for Tomorrow’.
Robertson, who today is delivering his sixth Budget, said it was aimed at reducing inflation, in part by reducing the spending of previous budgets.
He said while some might not be direct beneficiaries of packages in the Budget, they would benefit from lower inflation.
“I believe we’ve got the balance right on the fiscal side.”
Prime Minister Chris Hipkins said the Budget would address cost of living challenges but not exacerbate inflation pressures “as tax cuts would”.
“It’s a carefully calibrated package that deals with the here and now pressures,” he said.
Saving for families
Hipkins said the extension of 20 hours free early childhood education to two-year-olds would be a “major saving for families” and reduce barriers for working parents to take on more hours if they could.
He said more than 1.6 million New Zealanders would benefit from free or half-priced public transport. He estimated free fares for kids under 13 could keep up to $30 in their families’ back pocket.
The Budget also provides more than $402 million for the expansion of the Warmer Kiwi Homes programme beyond June 2024.
It will mean about 100,000 heating and insulation installations over four years, as well as 7500 hot water heat pumps and 5 million LED light bulbs It’s aimed at reducing power bills, emissions and improving health.
Inflation tipped to fall
Robertson said inflation was forecast to fall to the 1 to 3% target range by next year, and the economy was expected to grow by 3.2% this financial year.
Unemployment was projected to peak at 5.3% next year and wages were expected to grow by 5.2%, and net debt was forecast to peak at 22% of GDP in 2024, he said.
A return to surplus was expected for the 2025/2026 financial year.
Robertson said the economy was set to perform better than it did in the Global Financial Crisis and Treasury had forecast New Zealand would avoid recession.
Follow live coverage of the Budget on TVNZ1 from 2-4pm and on 1News.co.nz throughout the day.
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