Budget 2021

Mr Speaker

Over the last few weeks the leader of the opposition has had a habit of calling almost every document she happens upon a secret agenda. 

A commissioned piece of work. A publicly available document on a website.  And more recently, her own caucus minutes. 

I thought I’d get in front of any such claim with this Budget.

Here is our agenda. 

Good decent jobs.

In fact 221,000 people are projected to gain employment over the next four years.

Unemployment is forecast to fall to 4.2 percent, lower than National ever got it after the GFC.

Our agenda is an economy that’s growing. 

Our strong recovery is expected to continue with annual average real GDP growth of 4.4 percent in 2023, putting us back at pre-COVID levels.

And importantly, our agenda is focused on leaving no one behind.  

The changes we have made as a government mean more than 100,000 families will be $175 per week better off, and child poverty will reduce.

That is our agenda Mr Speaker, and I’m proud of it.

Yesterday I went back to the budget speech that our Minister of Finance, Grant Robertson, gave in 2018. It was his first budget.

The title he gave that budget was “Foundations for the Future.” And in it he said:

“Budget 2018 lays the foundations for New Zealanders to have better lives in the decades to come…we want an economy, an environment and a society which are sustainable, productive and inclusive….

This means caring for our environment as a core value, not as an after-thought. It means ….we have to work smarter, build our skills and resilience, explore new innovations and adapt to change…

Our economy must be more inclusive, too. This means a society where everyone has an equal chance to fulfil their potential, to contribute, and to live meaningful, connected, healthy and fulfilling lives.

Ultimately we want New Zealand to be a place where everyone has a fair go.”

Mr Speaker, much has changed in the four years since Grant Robertson gave that speech.

You haven’t.

The leader of the opposition has - a few times.

And the world most certainly has.

And yet for all of that, the driving force, the motivation and the focus of our Minister of Finance has remained.

I want to pay tribute to Grant Robertson. 

He has one of the hardest jobs in this place.

But never, ever have I questioned what drives him to do it.

He is here for people.

He is here because he believes it’s them that our economy should serve. And he’s here to make the changes that mean the next generation will be better off in every respect than the last.

Thank you Grant.

Mr Speaker, it was no accident that the budget when we first came into office used the title “foundation”.

That was an acknowledgement that each budget we presented would prepare for the next one, and the one that followed would build on the ground that had been laid. 

We have never viewed our budgets in isolation, because we are not here to just govern, we are here to make progress.

And so in 2017, we began.

We cancelled the tax changes the National Party had planned.

We created the most substantive redesign of support for low and middle income families in New Zealand seen in decades.

We introduced the now much-loved Winter Energy Payment.

We created an entirely new payment, called Best Start.

We increased the family tax credit, and extended paid parental leave.

It was a $5.5 billion package, and it represented change for our families and New Zealand’s children.

But as we introduced child poverty legislation, and started working on our targets to halve child poverty in 10 years.

But we absolutely knew more was required. 

So we kept going.

In Budget 2019, we made what the Children’s Commissioner described as a change that would make one of the biggest long term differences to child poverty. We indexed benefits to wages.

And then Mr Speaker, COVID hit.

Some governments might see that as a cause for austerity or cuts, but we saw it as a time to further invest in our people.

We lifted main benefit rates by $25 a week and made changes to the in-work tax credit.

This was the first general increase to main benefit rates in decades.

But Mr Speaker, as the reports we released on child poverty indicators and child wellbeing have shown, we have more to do.

We currently have nine measures of child poverty. They are a mixture of relative income measures, and measures of material hardship – simply put they tell us how our families are doing compared to others, and they tell us whether or not our kids are getting the basics.

In the last two years we have seen improvement on all nine of these measures.

And we have already exceeded our three-year target on one of our measures, with 43,300 fewer children in poverty since 2017/18 once you factor in housing costs.

But there is much still to do.

More than 200,000 children are still living in poverty.

That isn’t just a number.

It means for instance that 20 percent of children live in households where food runs out sometimes or often.

This rises to 30 percent in Māori households and 46 percent in Pacific homes.

Now Mr Speaker, some might ask the question – can we afford to take the next step in addressing child poverty in this country when we are in the middle of recovering from COVID-19?

My answer would be simple.

We cannot afford not to.

So today, we lift weekly main benefit rates by between $32 and $55 per adult in line with the recommendations made by the Welfare Expert Advisory Group.

Due to the urgency, we are beginning the increase on 1 July, and completing them in April 2022. 

This is a major next step in our plan to address child poverty and inequality in New Zealand.

And the reason for all of this work, over four years Mr Speaker, is simple.

We must address the need we have in this country.

This is about the basics: the ability of someone to put food on the table; to pay the power bill; to put shoes on your child’s feet.

We are targeting what we are doing here today towards the things New Zealanders would consider both basic and right. 

And we are doing it at a time when we need to maintain extra stimulus in the economy.

We know that lifting the incomes of those who have the smallest amount of discretionary income has a stimulatory effect. It will go to food, services; the things our kids need to thrive.  It will go into local economies.

But Mr Speaker, there will be some who may question whether the substantial changes we make today have gone too far - including I note the opposition.

To them, I would just answer with numbers.

$315. With the changes we have announced today, that is how much a job seeker will receive as their main benefit per week from April next year. 

No one can argue that we lack an incentive to work in New Zealand.

What our system was lacking was not incentives, nor drive from those who need it. What it was lacking was dignity.

And I say to the opposition:

30 years. That’s how long it has taken to get benefits back to the rates they were before the mother of all budgets. Yes we have made progress for those with children, but for those who are single, or couples who don’t have dependents, it has taken us 30 long years.

And I say to the opposition:

20% - that is by how much Treasury predicts the number accessing a job seeker benefit and emergency benefits will fall over the forecast period.

And finally, I would say - 33,000. That’s the number of children estimated to be lifted out of poverty by the changes we are making today. 

Mr Speaker, there are a number of other changes that we know will make a difference to children and their families in this budget.

Movement in childcare assistance so more low and middle income families can access support, the reinstatement of the training incentive allowance, and ongoing investments in health and education.

We know job opportunities are critical too.

And this is where once again our challenges are our opportunity.

We have a massive infrastructure deficit in this country.

When we took office we saw it everywhere, be it public transport, new classrooms or hospitals, or the lack of state housing.

We have been investing in every budget since to right this wrong. And that continues today.

Budget 2021 sees a 50 percent increase in the Government’s multi-year capital allowance to maintain momentum around job creation and build critical infrastructure.

This is not just a core of the Government’s economic recovery plan. It’s part of the recovery for our people – it grows jobs, good jobs, up and down the country.

And here Mr Speaker, I want to dwell on one of the particular infrastructure challenge we inherited.

Housing is inextricably linked to both inequality, poverty and well-being.

That is why we are pulling all the levers we have.

We are building more public houses than any government in decades, with 18,300 houses fully funded out to 2024, and 7,600 already delivered.

More building consents have been issued than at any time in New Zealand’s history.

We have closed tax loop holes, banned foreign buyers, extended the bright line test, introduced progressive home ownership and expanded support for first home buyers.

Meanwhile one third of the 107,000 New Zealanders who’ve taken up our offer of free trades training are in the construction sector.

These are the people who’ll be on the tools and building our homes in years to come. They are the people who’ll be wiring those homes, like the electrical engineer I met recently who’d just started her training after losing her job as a travel agent due to COVID.

We have created a pipeline of workers for the many projects we have ahead of us.

We increased the accommodation supplement, the housing first scheme, and brought in new programmes to help people maintain their tenancies.

We’ve brought in healthy home standards, supported insulation and home repair schemes. We got rid of letting fees and limited rent increases to once per year.

We set up a 3.8 billion Housing acceleration fund to build the infrastructure we need to support new developments, and today we’re ensuring that $350 million goes towards, for instance, greater partnerships with iwi to build houses on Maōri land.

And Mr Speaker, so long as there are families and whanau in need,  we will keep doing all we can to turn around this persistent housing crisis.

Mr Speaker, the third long term challenge that this budget addresses is climate change.

We have seen the investment of $67 million this budget to make sure our public sector is carbon neutral, but our greatest challenges lie in transport and agriculture.

We are working with industry in each area, and this budget sees $37 million go into integrated farm planning systems and $24 million into greenhouse gas mitigation research and development.

And importantly, we know the road ahead for us will be long and hard.

This month the Climate Change Commission will share with us its recommendations on fulfilling our commitments on the climate challenge, and we are laying the ground for that with a quadrupling of funding for the green investment fund, and a commitment to recycle further ETS revenue specifically into emissions reduction initiatives.

And finally, amongst the long term challenges we face sits our newest and most present - COVID 19.

The pandemic has highlighted once again the importance of strong health services.

There is no question that we have exceptional people who work in our health system, but they know that it’s a system that doesn’t work for every New Zealander.

Our health system is failing Māori. In this budget, we start the largest health reforms we have seen in this country in decades, as we establish Health NZ and the Māori Health Authority. 

This budget also sees a $200 million investment in Pharmac funding, bringing our total spend on health to 4.7 billion – a 45 percent increase in health spending since we took office in 2017.

But Mr Speaker, we are here, talking about all these initiatives, all these possibilities, all of the investments we are in a position to make to secure our recovery, because of the foundations we have already laid.

We can secure our recovery today, because in 2018 Grant Robertson and this government worked hard to put us in a solid financial position, in case we found ourselves and our people in need.

We can secure our recovery today because that same balanced approach means that we won’t cut vital services; in fact we’ll invest in our people, all while keeping a lid on debt.

We can secure our recovery today because the wage subsidy, the Flexi-wage expansion, free vocational training and education, and significant investment in infrastructure has created jobs and helped people into work.

That is why we have an unemployment rate that is half of what was estimated, and why, on so many measures, we are doing better than so many countries we would compare ourselves too – including Australia

Mr Speaker - in response to COVID-19, New Zealanders banded together.

They adopted a strategy that has been the difference between our potential success or failure, and the loss of life that would have come with failure.

That means, ultimately, we are now securing our recovery because of them.

And so we owe it to them, to continue to keep Aotearoa New Zealand safe from COVID-19, to accelerate the recovery and rebuild, and lay the foundations for the future, including addressing key issues, such as climate change, housing affordability and child poverty.

We owe it to them to leave a legacy for all the right reasons.

I remember the Mother of all Budgets. I was going on just 11 years old when it was introduced.

On too many occasions in New Zealand’s history, the changes that leave an indelible mark on the next generation do so for the wrong reasons.

We worked so hard to stop COVID leaving a scar on our people, and now we have a chance to leave this place, our place, better.

And Mr Speaker, today, we do just that.