New Zealand has pushed back a return to surplus to grapple with health reforms and help Kiwis struggling with inflation.
On Thursday, Finance Minister Grant Robertson unveiled the 2022/23 budget with a headline $NZ19 billion deficit.
New funding went to major health and climate change initiatives to face long-term challenges, though Jacinda Ardern’s government also kept its eye on more immediate concerns.
Inflation has hit 6.9 per cent in New Zealand, the highest level since 1990, making relief a political and practical necessity.
Mr Robertson found space for a $NZ350 cost of living payment for 2.1 million Kiwis, a surprise feature of a high-spending budget.
“As we move through these next few months, further targeted support is needed,” he said.
More than $NZ1 billion has been set aside for the cost of living package, which includes the new payment and the extension of cuts to the fuel levy and public transport fares for another two months.
Those measures were concessions that inflation is hitting Kiwis hard, but Mr Robertson also boasted of GDP growth exceeding pre-pandemic projections.
Unemployment is at a record 3.0 per cent, and forecast to stay below five percent for the next five years.
Treasury also believe that inflation will ease from here on in, though stay above three per cent until 2025.
Mr Robertson delighted in comparing New Zealand’s debt – scheduled to peak at 19.9 per cent of GDP in 2024 – as “well below the likes of Australia and other countries we compare ourselves to”.
“New Zealand has come through the 1-in-100 year shock from COVID-19 better than almost anywhere else,” he said.
As telegraphed, the biggest new spends are in health and climate change.
A $NZ11.1 billion package over four years will wipe the debt of regional health boards as it centralises the health system, reversing Helen Clark-era reforms.
“That means funding for wages, more staff, allowing people to do the jobs and focus on patients rather than on their finances,” he said.
Public medicines agency Pharmac has also received a $NZ71 million boost, with $NZ166 million more for the ambulance service, $NZ91 million for helicopter ambulances, and $NZ100 more for mental health.
Ms Ardern, who has called alleviating child poverty her mission in government, says up to 14,000 Kiwi kids will come above the poverty line through welfare reform.
3The budget comes after Monday’s $NZ2.9 billion emissions reduction plan, which includes a cash-for-clunkers scheme, funding for decarbonisation and forestation projects.
The new health spending alone means the Ardern government will not be able to campaign on next year’s election back in the black.
A surplus is next forecast in 2024/25, a year later than Treasury’s previous forecast.
Mr Robertson said the spending imperative was compelling.
“These are the investments that will secure our future,” Mr Robertson said.
Ms Ardern missed the budget in parliament as she is isolating with COVID-19, but delivered on her tradition by gifting Mr Robertson a tie, which she broadcast on Instagram live.
