NZ Wellbeing Budget Update 2019

Introduction

Finance Minister Grant Robertson unveiled the Government’s first Wellbeing Budget in Parliament today. Mental health and child poverty have taken the lion’s share of funding in the Wellbeing Budget as predicted.

The Government has announced new operating spending of $3.8 billion and $10.4 billion in additional capital expenditure.

The indicators show New Zealand is in good financial shape. The economy is forecast to grow at an average 2.6% over the next five years, well ahead of forecasts for other countries. The Government is due to deliver a surplus of $3.5 billion in the current year, and it will meet its promise of keeping core Crown spending at under 30% of GDP. Government debt sits at around 20.1% of GDP.

The Wellbeing Budget focuses on the following five priority areas:

Taking Mental Health Seriously

  • Supporting mental wellbeing for all New Zealanders, with a special focus on under 24-year-olds.

Improving Child Wellbeing

  • Reducing child poverty and improving child wellbeing, including addressing family violence.

Supporting Māori and Pasifika Aspirations

  • Lifting Māori and Pacific incomes, skills and opportunities.

Building a Productive Nation

  • Supporting a thriving nation in the digital age through innovation, social and economic opportunities.

Transforming the Economy

  • Creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy.

Two tax-related Budget announcements were made on 17 May. These were proposals to align the GST rules for telecommunications services with international guidelines and betting levy changes. No further tax-related announcements were made today.

Taking Mental Health Seriously

“Today, we take mental health seriously. Every New Zealander will get the help they need, when they need it.” said Prime Minister Jacinda Ardern.

Budget 2019 confirmed the $1.9 billion package to support mental wellbeing for all New Zealander, with a special focus on under 24-year-old over four years.

The key areas of spending are:

A new frontline service which will cost $455 million

  • This new layer of services will be rolled out nationwide over five years. It will put trained mental health workers in doctors’ clinics, iwi health providers and other health services so that when people seek help it is immediately available.

Supporting young people’s mental wellbeing

  • Budget 2019 extends the nurses in school programme to a further 5,600 students by commencing the roll-out to decile 5 secondary schools and enhancing exiting services in decile 1-4 school with an investment of $19.6 million over four years.

A solution to homelessness

Budget 2019 is investing $197 million over four years into Housing First, which will fund 1,044 new places. The Wellbeing Budget will mean the internationally-acclaimed Housing First programme will be reaching 2,700 homeless people and help them into permanent homes.

A $213 million boost for ring-fenced mental health funding in DHBs.

A $200 million in capital investment in new mental health and addiction facilities.

Suicide prevention and response services get a $44 million boost over four years

Improved Child Wellbeing

For the first time, the Government has produced a child poverty report that was unveiled in its first ever Wellbeing budget. The Government has also passed legislation that holds future Governments responsible for decisions that impact children living in poverty.

Family and sexual violence

  • Specialist services as part of a $320 million package to address the family and sexual violence issues.

Children in state care

  • The budget of $1.1 billion will be spent to reduce the number of children in poverty from 180,000 to 41,000-66,000 on the before housing costs and 250,000 to 55,000-74,000 on the after housing cost measure.

Reducing financial pressure on parents

  • Removal of $76.70 NCEA fee that families pay every year for around 168,000 secondary students.
    Increasing funding to decile 1-7 state and state-integrated schools will be eligible to receive $150 per student per year if the school agrees to stop requesting donations from parents.

Indexing benefits

  • From 1 April 2020, main benefits will be indexed to average wage increases to ensure the incomes of people needing to access main benefits do not fall further behind.
  • The main benefit rates will progressively rise and are forecast to increase by $26-$46 per week by 1 April 2023 helping to reduce rates of poverty for those living on benefits.
  • The cost of the increase is forecast to be $320.2 million over four years.

Additional investments

  • 10 year school property programme: $1.2 billion investment in schools, starting with $286.8 million in 2019 for new schools and classrooms and more teachers.
  • $913.3 million to allow the Ministry of Education as well as schools and communities to better plan for growth over the next 10 years.
  • $47.6 million investment for an innovative joint initiative from the Ministry of Health, Ministry of Education and Sport New Zealand to promote healthy eating and physical activity for children.

Supporting Maori and Pasifika Aspirations

The Budget 2019 confirmed the allocation of $598 million to this initiative. The focus is on ways to give Māori and Pacific peoples more scope to lift their own wellbeing and the wellbeing of future generations.

  • $80 million will be spent over four years to expand the coverage and impact of Whānau Ora, including a focus on health and reducing re-offending.
  • The budget also aims at ensuring te reo Maori and Pacific languages survive and thrive by funding Te Taura Whiri, Pacific Language Unit, and supporting an increase in certification for te reo teachers.
  • Provide $14.5 million to the Ministry for Pacific Peoples to grow opportunities for young people that will support up to 2,220 Pacific young people who are on a benefit into employment, education or training.
  • Provide $27.4 million over four years to ensure Pacific students and their families have the skills, knowledge and equitable opportunities to pursue any education pathway.
  • Provide $40 million for Papakāinga Development and Rural Housing Repairs for Better Whānau Wellbeing.
  • Provide $56 million to Oranga Pāpori, Oranga Ōhanga mā te Whenua Māori Social and Economic Development Through Whenua Māori.

Building a Productive Nation

The Budget 2019 confirmed the allocation of $1.1 billion to this initiative as the Government wants New Zealanders to thrive in the digital age through innovation, social and economic opportunities.

  • A new $300 million fund will be established to help fill the ‘capital gap’ for New Zealand firms that expand beyond the early start-up phase that are $2 million – $15 million in size.
  • Another $106 million will be injected into innovation to help New Zealand transition to a low carbon future.
  • Nearly $200 million set aside for vocational education reforms to boost apprenticeships and trade training. This will include changes to institutional forms and systems to support the ongoing sustainability of a broad range of delivery across New Zealand.

Transforming the Economy

New Zealand government is committed to move New Zealand’s economy to a low-emissions one, as New Zealand’s natural resource is the foundation for the society’s long-term wellbeing. Budget 2019 takes an important step towards the transition and makes huge investments in rail, sustainable land and climate change.

Investing in rail ($2.1 billion)

  • $1 billion will be provided by Budget 2019 and the Provincial Growth Fund (PGF) to support the redevelopment of KiwiRail.
  • PGF is also being provided $300 million to improve reginal rails which will help unlock reginal economic growth.
  • To improve access to the city centre and reduce traffic congestion, $1.4 billion will be injected in the City Rail Link project.

Sustainable land use

  • Budget 2019 will invest $229.2 million to support farmers and growers to use land better and clean up waterways.

Climate change ($95.2 million)

  • Budget 2019 invests $8.5 million in 2019/20 in the Global Research Alliance on Agriculture Greenhouse Gases (GRA). This funding will used to support accelerated global agricultural emissions mitigation research and take actions to reduce agricultural emissions.
    Aim to support a programme of work-class climate change research for agriculture, Budget 2019 will inject $3.2 million into Agricultural Climate Change Research Platform.
  • $83.5 million will be spent on other research programmes which also aim at transfer New Zealand to a low-emissions economies.

Conclusion

In this first Wellbeing Budget, the Government’s priorities are tackling long-term challenges facing New Zealand. They say they are taking mental health seriously, addressing child poverty and domestic violence, supporting Māori and Pasifika aspirations, transforming our economy and building our productivity. Alongside these priorities, the Government says it is balancing the need for fiscal sustainability for future generations and making long term infrastructure investments, such as in our schools, hospitals, and supporting the economy.

The Government has put a $1.9 billion mental health package at the centre of its first Wellbeing Budget, to include a new frontline service. The Wellbeing Budget reveals billions of dollars in funding for mental health, families, KiwiRail and infrastructure for schools and hospitals.

The question will be how the Government pays for it all, especially given its recent admissions that the economy is slowing. Like it or not, strong economic growth, incomes, wage rises and company profits fill the tax coffers.

The business sector gets little from the Wellbeing Budget but should benefit from work generated by the big spending on infrastructure and consumer spending from family support programmes. There will be $300 million spent to support the development of medium sized start-up companies wanting to develop and commercialise products and services.

The Government does not claim perfection in this first Wellbeing Budget, and they will not fix everything in one go. This is just the start of a longer term programme of change. The Coalition Government says it is committed to the wellbeing approach, now and in the future.

Please contact our office if you wish to discuss the 2019 Wellbeing Budget further.

Phone: +64 9 366 5000
Email: Team@Williambuck.co.nz