NZ Wellbeing Budget 2022 Update

Finance Minister Grant Robertson announced more than $1bn for cost of living relief, including a weekly cash payment that will go out to nearly 2.1 million New Zealanders. The inflation payments of $350 over three months begin in August and are targeted at adults who earn less than $70,000 per year. The Government also decided to extend some other temporary measures aimed at combatting spiralling living costs, including a cut to gas taxes and half-price public transportation fares.

“Our economy has come through the COVID-19 shock better than almost anywhere else in the world,” said Prime Minister Jacinda Ardern in a statement. “But as the pandemic subsides, other challenges both long-term and more immediate have come to the fore.”

Cost of living package

$1bn budget to support Kiwis

A $1bn cost of living package was announced to support low- and middle-income New Zealanders as war in Ukraine and COVID-19 supply chain issues push up prices. The package contains the following:

$814m will be available for an estimated 2.1m individuals aged 18 or over who earned below $70,000 in the last income year and are not eligible to receive the Winter Energy Payment
$350 per person will be paid in three monthly instalments over August, September and October ($27 a week per individual)
$235m for a further two-month extension on fuel excise and road user charge reductions and half-price public transport fares
$73m for insulation and heating retrofits will be available for low-income homeowners
Immediate and essential dental care was increased from $300 to $1,000 per year
Further actions to reduce child poverty with child support payments to be made directly to sole-parent beneficiaries as income, instead of being retained by the Government.

Supporting Māori and Pacifica

Budget 2022 includes a $580m package of initiatives across the Health, Social and Justice sectors to support Māori health and wellbeing.

$25m for Māori Cadetships Programme.
$66m for Māori Trades and Training Fund.
$18m for Pacific STEAM futures.
$8m for Tupu Aotearoa employment and training services.
$10m for Te Ringa Hapai Whenua Infrastructure Fund.
$26m for Progressive Procurement for Māori businesses.
$40m for Māori media.
$28m for protecting appropriate use of matauranga Māori and other taonga.
$167m for Whānau Ora Commissioning Agencies.
$168m for Hauora Māori (Māori Health Authority) Commissioning of health services.
$16m to expand the Māori and Public Housing Renewable Energy Fund.

Health and Disability System Support

Health System Reform: $11.1bn

Budget 2022 features a significant boost to health sector investments and ongoing support for the restructuring of our health system, led by the establishment of Health New Zealand and Te Mana Hauora Māori. These initiatives are spread across Budget 2022 and 2023 and include:

$1.3bn for health capital investments in infrastructure, including several priority capital projects
$1.8bn in Year 1 and $1.3bn in Year 2 for ongoing annual funding for the newly established Health New Zealand
$550m for remediation of DHB deficits
$488m for primary and community care
$299m for Māori health services
$220m in operating and $100m in capital over four years for investments in data and digital infrastructure for the new health system
$191m over two years for Pharmac budgets to ensure more medicines are available to more New Zealanders
$202m for mental health and addiction services
$166.1m over four years for road ambulance services
$102m for community healthcare
$90.7m over four years for air ambulance services
$86m for GPs in high-needs areas
$76m for training of primary care specialists.

Disability System Transformation: $934m

This will include:

$735m to support disability service sustainability to meet expected high demand
$108m to establish the new Ministry for Disabled People and its operations
$100m to roll out the Enabling Good Lives approach allowing service users to budget their own services.

COVID-19 Response Support

Budget 2022 has repurposed the remaining funds in the COVID-19 Response and Recovery Fund (CRRF) that was set up by Budget 2020 and is to be closed soon.

$1.2bn has been set aside for any urgent COVID-19 related public health needs that cannot be delayed to the next Budget cycle.
$1bn, or $250m per annum, allocated to offset investments funded from the Budget 2022 operating allowance.
$1bn allocated for cost-of-living relief (as outlined in previous sections).

Housing

First Home Buyers

The house price caps will be removed for First Home Loans and will be lifted on First Home Grants.
These changes, along with other changes in eligibility criteria, will help thousands of first home buyers to access funding for around 7,000 extra First Home Grants and 2,500 extra First Home Loans each year.
While the house price cap removal applies from 19 May, caps on First Home Grants will kick in from 1 June 2022.

Public and Transitional Housing

The 2022 Budget has allocated:

$1bn for public and transitional housing
$355m for changes to the emergency housing system
$75m towards a homeless action plan
$221m for the Affordable Housing Fund.

Climate Change

Budget 2022 presented a $2.9bn funding plan from the $4.5bn Climate Emergency Response Fund (CERF). Some of the key initiatives announced are:

$653m for the decarbonising industry and implementation of supporting policies
$569m for cleaner vehicles for low income New Zealanders
$375m for mode-shift and reducing light vehicle kilometres
$339m for agriculture emissions reduction.

All initiatives funded through the CERF will be monitored and reported to ensure they are sufficiently meeting the Government’s climate change commitments. As part of this monitoring and reporting, it is expected the financial performance and impact of these initiatives will be publicly accounted for on a regular basis.

Economic Recovery & Infrastructure Plan

Of interest to business is the $100m in capital funding for a Business Growth Fund to improve SMEs’ access to finance.

The Government is also supporting the tourism sector with the establishment of an Innovation Programme for Tourism Recovery.

Industry Transformation Plans (ITPs) are to be established with the following funding:

Construction Sector Accord Transformation Plan ($37m)
Advanced Manufacturing Industry Transformation Plan ($30m)
Agritech Industry Transformation Plan ($5m)
Digital Technologies Industry Transformation Plan ($20m)
Primary Industry Transformation Plan ($40m).

Education

Budget 2022 provides $2bn in operating and $855m in capital funding for the education system. This includes investments in infrastructure and new initiatives.

The newly developed Equity Index will receive $293m of total operating and $8m of capital funding to replace the outdated decile system.

As part of the Government’s commitment to strengthen the role of te reo Māori in the NZ education system, Budget 2022 provides:

$75m in operating funding to support providers of te reo Māori, immersion and kaupapa Māori learning throughout the education system
$21m of total operating and $105m of capital funding for quality classrooms that meet the cultural needs of kura and enable ākonga Māori to thrive and meet their potential.

Budget 2022 also builds on the investment made in the past two Budgets by providing $270m of total operating and $5m of capital funding toward progressing pay parity among education and care teachers and kindergarten teachers.

Public Finance - Justice Cluster and Natural Resources Cluster

The Government is moving towards new approaches to public finance as it is piloting the establishment of two clusters of agencies in the Justice and Natural Resources sectors.

Justice Cluster

The Justice Cluster aims to deliver improved and enduring wellbeing outcomes for New Zealanders. The Cluster consists of the following five agencies:

The Ministry of Justice
New Zealand Police
The Department of Corrections
The Serious Fraud office
The Crown Law Office.

The Justice Cluster agencies will receive $2.7bn total operating and $65m capital funding for the following:

$190m to strengthen the legal aid scheme
$92m of total operating and $2m capital funding for minimising serious and organised crime in New Zealand
$165m operating and $21m capital funding for the rollout of the Tactical Response Model which will enhance the Police’s capability to respond and prevent high risk incidents
$47m for the Te Ao Marama District Court model
$34m operating and $13m capital funding for 15 March firearms commitments
$28m operating and $2m capital for supporting bereaved families in the coronial system
$141m for democratic processes.

Natural Resources Cluster

The Natural Resources Cluster is made up of:

The Ministry for the Environment
The Department of Conservation
The Ministry for Primary Industries.

The Natural Resources Cluster agencies will receive $1bn total operating and $12m capital funding to progress the eight priorities identified by the agencies:

$179m operating funding for the Department of Conservation
$32m operating, $2m capital funding for animal health and welfare regulation
$92m operating, $2m capital funding for Biodiversity Strategy
$179m for resource management reforms
$118m operating and $5m capital funding for advisory services on rural land use.

National Identity - Funding for Broadcasting, Arts and Culture

The Government is increasing the amount of funding for public media to ensure New Zealanders can access quality local content and trusted news.

Budget 2022 provides $327m over the next three years (2023 – 2026) for setting up a new independent Public Media Entity that will support and enhance Aotearoa New Zealand’s national identity.

Technologies

The Government has announced new funding of $20m to support the growth of New Zealand’s digital technologies sector. The new funding will enable the SaaS community to build, drive and expand networks and deliver short courses for digital skills development.

Conclusion

The Government’s fourth wellbeing budget delivered a raft of initiatives to support people, communities and the environment. This Budget provides significant support to small and medium enterprises and to building strong foundations for the industries that will drive job growth.

The New Zealand economy is one of the strongest in the world, with Triple-A credit ratings, record-low unemployment and lower debt than Australia, Canada, the United States and the United Kingdom. However, despite those positive results, the global inflation pressures are hurting some New Zealanders, and the world remains an uncertain and volatile place. That is why Budget 2022 provides further relief to those on lower and middle incomes, to help pay the food and energy bills until inflation is brought back under control.

Budget 2022 shows the New Zealand economy is expected to be robust in the near term. It is expected to strengthen from the second half of this year, with annual growth peaking at 4.2 per cent in June 2023.

Budget 2022 makes the most significant reform to the health sector in a generation. A nationwide health system is to be established that will provide quality care for everyone – one which will address the longstanding inequities in the system, including through the establishment of the Māori Health Authority.

An up-front investment in climate change now, provided through the Climate Emergency Response Fund, will not only deal with an environmental emergency, but will also open opportunities for innovation, better jobs and higher wages. It will mean a more secure economy as we move towards energy independence by cutting our reliance on volatile global oil markets. Earlier this week, the Government announced a new initiative to help pay for lower-income families to scrap their old gas guzzlers and replace them with cleaner hybrid or electric cars as part of a sweeping plan to reduce greenhouse gas emissions.

Budget 2022 also introduces two pilot Clusters in the Justice and Natural Resources sectors. These bring Ministers and agencies together to pursue shared goals, and they will receive multi-year funding to achieve them.

Budget 2022 aims to help build a high wage, low emissions economy that provides greater economic security, while providing support to households affected by cost of living pressures. This Budget strikes a careful balance, building on the Government’s response to COVID-19 in continuing to support New Zealanders through a tough period, but also looking forward to support New Zealanders to seize the opportunities of a more secure future.

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