Budget 2021

Budget Policy Statement

How the Wellbeing Objectives are Intended to Support Long-Term Wellbeing in New Zealand

The Public Finance Act requires the Government to explain in the Budget Policy Statement how the wellbeing objectives set out in the Foreword are intended to support long-term wellbeing in New Zealand. Our wellbeing objectives at Budget 2021 are:

  1. Just Transition - Supporting the transition to a climate-resilient, sustainable and low-emissions economy while building back from COVID-19
  2. Future of Work - Enabling all New Zealanders and New Zealand businesses to benefit from new technologies and lift productivity and wages through innovation, and support into employment those most affected by COVID-19, including women and young people
  3. Māori and Pacific - Lifting Māori and Pacific incomes, skills and opportunities, and combatting the impacts of COVID-19
  4. Child Wellbeing - Reducing child poverty and improving child wellbeing
  5. Physical and Mental Wellbeing - Supporting improved health outcomes for all New Zealanders and keeping COVID-19 out of our communities.

These wellbeing objectives continue to focus on areas the Labour-led Government identified through extensive wellbeing analysis during 2019 and 2020. This work took a collaborative and evidence-based approach, using the Treasury's Living Standards Framework and incorporating advice from sector experts and the Government's Chief Science Advisors to identify the broad areas where the Government and experts see the greatest opportunities to make a difference to New Zealanders' wellbeing. These areas require sustained investment across multiple Budgets.

1  Just Transition - Supporting New Zealanders in the transition to a climate-resilient, sustainable and low-emissions economy while building back from COVID-19

Our wellbeing objective to achieve a just transition means that we will actively support a move away from fossil fuels towards a low-carbon economy in a way that will support workers, businesses and communities to make changes to how they live and work, protecting the long-term wellbeing of New Zealanders. As we rebuild from the impact of COVID-19, we have an opportunity to build back better with our long-term aims in mind. This includes practical measures like building energy-efficient housing stock to contribute to our emissions reduction targets while ensuring lower house running costs for families.

Achieving a just transition will protect and enhance our natural capital while increasing financial capital through new economic opportunities. A just transition will enhance social capital by ensuring the transition is fair and does not undermine social cohesion, and it will ensure that the pace of change protects and grows human capital.

2  Future of Work - Enabling all New Zealanders and New Zealand businesses to benefit from new technologies and lift productivity through innovation, and support into employment those most affected by COVID-19, including women and young people

Innovation is the process of translating an idea or invention into a good or service, or new process, that people value. It enables us to create new jobs and industries. It helps to improve productivity, lift wages and meet society's needs in new ways that are less harmful to the natural environment, enhancing the stock of natural capital for future generations.

Enabling all New Zealanders to benefit from the changing nature of the future of work requires expanding the provision of technology infrastructure, which can enrich social as well as work life. Adapting to the future of work will increase our human capital. Training will need to become increasingly accessible, and reflect the changing requirements for people and the economy as a whole, including the need to be more adaptable.

Improving technological infrastructure will provide a platform that enables our firms and farms to trade and grow in an ever more interconnected world. This will support the growth of our physical and financial capital, lifting incomes now, and leaving a legacy for future generations by protecting natural capital and supporting the Just Transition wellbeing objective.

3  Māori and Pacific - Lifting Māori and Pacific incomes, skills and opportunities and combatting the impacts of COVID-19

Education, health and housing outcomes in New Zealand vary significantly by socio-economic background and ethnicity. As measured by the General Social Survey, the average material standard of living for Pacific people is around a half lower, and for Māori a third lower, than for the general population. Māori and Pacific people are typically more severely affected with wage scarring by recessions, and are more likely to have poorer health outcomes.

Our wellbeing objective to lift Māori and Pacific incomes, skills and opportunities is critical to New Zealand's long-term success. Lifting human capital is particularly important for expanding the opportunities for individuals and families and lifting financial wellbeing, as these communities are already rich in cultural and social capital.

The ability for many Māori and Pacific people to achieve their aspirations is impeded when the education, health, housing and social welfare systems do not address multifaceted, intergenerational disadvantages. There must be a focus on how these systems interact. For example, Māori and Pacific people have lower rates of home ownership and are more likely to live in cold and damp homes. This affects health, education and economic outcomes, meaning less opportunity, and means New Zealand is missing out on the important contributions that many Māori and Pacific people could be making to our economy, society and culture.

4  Child Wellbeing - Reducing child poverty and improving child wellbeing

The experiences we have as children lay the foundation for healthy development and positive wellbeing throughout our lives. Good material standards of living enable parents and caregivers to provide children with a good start in life, which has been shown to contribute to lasting wellbeing outcomes in areas like health, housing and education.

Investing in a good start in life for our children is one of the most important ways we can ensure the wellbeing of New Zealanders over the long term. It will strengthen our social and human capital, leading to better economic and financial capital outcomes. One of the keys to this is improving the housing conditions our children grow up in - improving child wellbeing requires better access to warm, dry and safe housing. This makes reducing child poverty and improving child wellbeing one of our enduring wellbeing objectives.

5  Physical and Mental Wellbeing - Supporting improved health outcomes for all New Zealanders and keeping COVID-19 out of our communities

Good physical and mental health, and timely access to care and support when they are needed are fundamental to New Zealanders' long-term wellbeing. There is ample evidence that those who suffer from poor physical and mental health find it difficult to build their own skills so that they can achieve in the workforce and engage in society. This undermines both our human and social capital, with run-on effects on financial capital. Having a healthier population makes individuals more resilient and reduces health costs.

Improved physical and mental health outcomes require sustained investment across a range of government services and other areas, including housing. Affordability of housing, the state of our housing stock, and security of tenure and cost can all influence a person's physical and mental health.

The additional uncertainty and stresses that COVID-19 has presented for people, in different aspects of their life, reinforces the importance of ongoing awareness of and support for mental health.

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