The Government is boosting Pharmac's budget by $200 million, falling well-short of expectations, but beneficiaries are getting a major boost and social security insurance is in the works.
Newshub recently revealed the Government's drug-buying agency Pharmac would need $400 million a year to clear the backlog of drugs on its wish-list, but only $200 million is being invested over four years - far less than was hoped.
But the Government is finally living up to recommendations made two years ago by its Welfare Expert Advisory Group (WEAG) to increase benefit levels to help reduce poverty.
The Government increased the benefit by $25 a week last year. From July 1, it will increase by $20 a week, and a second increase will occur again next year, bringing it in line with WEAG's advice. Families and whanau with children will also receive a further $15 per adult per week.
It means in total, weekly main benefit rates will increase by between $32 and $55 per adult by April 2022. The Government expects that 109,000 families and whanau with children will be, on average, $175 a week better off as a result of changes to income support, since 2017.
Prime Minister Jacinda Ardern said it was about reversing cuts to benefits made in 1991 under National Party Finance Minister Ruth Richardson - a Budget nicknamed the Mother of all Budgets.
"Thirty years," Ardern said. "That's how long it has taken to get benefits back to the rates they were before the Mother of all Budgets."
The Government is also working on social security insurance to roll out in 2023, something Ardern has signaled before, saying it's "something worth exploring" so that when another crisis hits, the Government will not have to create temporary fixes like the wage subsidy.
The Government is working alongside Business NZ and the New Zealand Council of Trade Unions (CTU) to design a social unemployment insurance scheme that would support workers to retain about 80 percent of their income for a yet unspecified period, after they lose their job.
How much debt are we in?
The Government's debt pile is expected to almost double in the next few years. We're already at more than $100 billion, due to COVID-19, and it's expected to reach almost $200 billion.
"Due to the significant amount of debt the Government took on to help us get through COVID-19, net core Crown debt is forecast to increase by close to $100 billion by 2024-2025, peaking as a share of GDP at 48 percent in 2022-2023."
Finance Minister Grant Robertson said in his pre-Budget speech he wanted to be careful with Government spending to help bring down debt, but he's not interested in austerity, which basically means cutting services.
"New Zealand's strong health response means we have weathered the 1-in-100 year COVID shock better than most," Robertson said on Thursday as he unveiled the Budget.
"However, we will continue to face ongoing uncertainty for some time, and Budget 2021 takes a balanced approach to investing in areas and people where it is needed most, alongside careful fiscal management to pay down debt."
What else is in Budget 2021?
- $4.7 billion will be spent on health over four years
- $486 million will go towards transitioning District Health Boards to Health NZ
- DHBs also get $300 million to invest in new assets
- $1.4 billion over the next four years goes to schooling and early education
- $57.3 billion will be spent on infrastructure over four years
- $4.5 billion will be spent per year on transport services and infrastructure, through the National Land Transport Fund, which comes from petrol tax and road user charges
- $300 million will support redevelopment of Scott Base in Antarctica to ensure it remains operational
- $44 million goes to boosting digital training, advice and support for businesses to take advantage of opportunities in e-commerce
- $131.9 million over four years will be invested in a range of initiatives to help communities prevent family violence and sexual violence
- $131.8 million will go towards implementing reforms of the Resource Management Act
What happened to the $50 billion COVID-19 fund?
There is $5.2 billion being kept as a contingency from last year's $50 billion COVID-19 Recovery Fund, to respond to further outbreaks, should they occur, while $4.6 billion has been allocated for Budget 2021.
The fund has recently been used to pay for the $3.8 billion Housing Acceleration Fund for housing infrastructure, $1.5 billion to pay for the COVID-19 vaccine roll-out, and $333 million to support ongoing management of managed isolation and quarantine (MIQ).
A closer look at health
Health gets $4.7 billion over four years, including the $200 million Pharmac bump and $486 million to begin DHBs' transition to Health NZ, and $242.8 million for Māori health initiatives, including setting up the new Māori Health Authority.
DHBs alone get $2.7 billion in additional support, contributing to a 45 percent increase to health funding since the Government took office in 2017.
The number of adults getting cochlear implants for hearing loss will almost double, with 320 more people getting them by 2025, through $28 million in funding over four years.
But the Government is axing free annual GP visits and eye checks for Supergold Card holders, as officials say it is of limited benefit and the $197 million it would have cost over four years can be better spent.
What about education?
Schooling and education get $634.1 million over four years, $170 million of which will go towards certified teachers in education and care centres getting pay parity with kindergarten teachers, which has already been announced.
The Government is putting $761 million towards education capital spending, including $634.1 million for school property, while $470 million is allocated for for tertiary education, including $279 million to support the vocational education reforms.
An increase of $25 per week for student support, including allowances and living costs, will come into effect from April 2022.
The infrastructure behemoth
A whopping $57.3 billion will be spent over the next four years on infrastructure.
The Government had $42 billion of infrastructure investment in progress over the next four years in roads, rail, schools and hospitals, and this has been significantly topped up.
Māori housing gets $380 million to deliver about 1000 new homes, after Māori got nothing in the major housing policy announcement in March.
The Government is also ringfencing $350 million to enable housing for Māori from the $3.8 billion Housing Acceleration Fund, which was part of that March announcement. This investment is expected to enable at least 2700 houses, based on an average cost of $100,000-$130,000 per site.
Rail gets $1.3 billion, including $810 million for KiwiRail, after rail got a billion-dollar top up in both previous Budgets.
What else are Kiwis getting?
The Government is reinstating the Training Incentive Allowance, which supports sole parents, carers and disabled people on eligible benefits with upfront and ongoing costs of study, such as fees, books, transport and childcare costs.
It's expected to support about 16,000 people to retrain, gain higher skills and transition into new careers over the next four years, at a cost of $127 million, from the COVID-19 Recovery Fund.
The amount paid is on top of the participant's current benefit. They may also get a student loan for fees and costs, but not a student allowance. The amount paid is based on study costs to a maximum of $114.19 per week of study, up to $4567.60 per year.
In addition, from April 2022, income thresholds for Childcare Assistance will be adjusted every year in line with average wage growth, at a cost of $13.3 million over four years.
The Government is also spending $9 million to expand the Out of School care and Recreation Service (OSCAR) initiative, to provide for an additional 3300 places.
The Warmer Kiwi Homes programme is being extended to ensure more low-income homeowners get insulation and heating. From May 20, grants will cover 80 percent of the cost of ceiling and underfloor insulation and/or an efficient heater, for low-income homeowners.
It's expected an extra 47,700 homeowners will benefit.
Addressing climate change
This month the Climate Change Commission will share with the Government its recommendations on fulfilling New Zealand's commitments on the climate challenge. The Government has set aside $19.7 million for policies in line with the advice.
The Government had already announced $67.4 million to support the transition to a carbon neutral public sector by 2025 and $41.8 million for the leasing of low-emissions vehicles across the public sector.
An additional $300 million boost will accelerate investment in low-carbon technology, by topping up the New Zealand Green Investment Fund, which is running out of capital.
The Government will also recycle future Emissions Trading Scheme (ETS) revenue to achieve more emissions reductions, from next year. It's expected to provide more than $3 billion of investment over the next five years.
The Low Emission Vehicles Contestable Fund (LEVCF) will become the Low Emission Transport Fund (LETF) to reflect a change in eligibility for projects in areas like aviation, maritime and for off-road vehicles. Other projects such as biofuel and hydrogen will also now be eligible for funding.
Total funding for the programme will reach up to $25 million per year by 2023-2024, with the Government increasing its contribution to up to $12.5 million through Budget 2021, compared to the current $6.5 million.
To help reduce costs for farmers and growers to achieve lower on-farm emissions, $37 million goes towards farm planning, $24 million towards agricultural greenhouse gas mitigation research and development, and $900,000 to collect statistics on agricultural production.
The Government is also investing $28 million to roll-out a National Pest Management Plan to protect kauri from dieback, while $8.9 million will go towards advanced screening technology to strengthen biosecurity, and $22.5 million for the National Animal Identification and Tracing Scheme.
Māori and Pacific
On top of the $380 million for Māori homes, $242.8 million for Māori health initiatives and $150 million to support Māori education, $42 million will go towards building a sustainable Māori media sector, as well as $15 million for Māori tourism, and $14.8 million for Māori language.
A $108 million package for Pacific people includes boosts for support programmes, including $20.8 million for Pacific bilingual and immersion education in the schooling system.
How does it compare to previous Budgets?
The Government announced a $50 billion COVID-19 Recovery Fund in Budget 2020. It included an extension to the wage subsidy, free trades trading and apprenticeships, and a $3 billion infrastructure boost.
Budget 2020 also included a billion-dollar boost for the Defence Force, part of which would fund new Hercules aircraft since the old ones kept breaking down. Rail also got a billion-dollar top-up.
The Government's commitment to borrow $5 billion to build a further 8000 new public and transitional houses was also included in Budget 2020.
A $12 billion COVID-19 recovery package had already been unveiled a few months prior to cope with COVID-19. The package included the wage subsidy scheme and the $25 benefit increase.
The major focus of Budget 2019 was health with $2.9 billion given to DHBs and almost $2 billion for mental health. More than a billion dollars was given to KiwiRail, while schools and hospitals also each got more than a billion dollars for infrastructure.
