New Zealand Budget 2021

Grant Robertson promised, and has delivered, a balanced budget.

We’re getting used to ‘balanced’ having a different meaning than it used to from Finance Ministers on Budget day. Balance, these days, means a wider focus than spending on hard infrastructure like “shovel-ready projects”, and a recognition that investments in people, social and natural capital are necessary, good for New Zealand and (by the way) good for business.

So has the Government delivered on these objectives? Some of the key challenges facing Government are “how transformative?” and “can we execute effectively?”.

Business has long understood that investment in public roads and bridges is important. Most are also awake to the risks to business, communities and regional and national economies if we neglect those other forms of capital, underinvest in them, and allow them to crumble. Society increasingly expects that government investment supports the most vulnerable and protects the environment in which we live.

However, the key questions remain – is it enough, appropriately targeted and, most importantly, how will it be delivered?

The Government initiative saved for Budget day is an increase in benefit levels to those recommended in last year’s Welfare Expert Advisory Group review. The Budget commits to implementing those recommendations in two stages – 1 July 2021 and 1 April 2022 so that weekly main benefit rates increase by between $32 and $55 per adult.

There will always be those who consider the increases either not enough or too much.  By targeting the Advisory Group recommendations, the Government is following an expert lead while balancing competing demands to address other gaps in the four capitals.  

One of the five priority areas announced this year is ‘Securing a Just Transition as we shift to a low-emissions economy’. Some climate initiatives feature in the Budget. A further $300m for the Green Investment Fund is one of those.

As we transition, investment in climate change education is required to ensure people are redeployed into the green economy, shifting them over time from jobs in oil and gas, to alternative sectors.

Significant spending is also required to decarbonise priority sectors (namely transport and process heat) and investing in climate-resilient infrastructure. Transport makes up over half of our country’s carbon emissions.