Budget 2021

Budget Policy Statement

Human Capital: Our People and Skills

Human capital includes our skills, knowledge, and physical and mental health, which directly link to areas like employment, income, housing, and social connections.

The Government's response to COVID-19 has focussed on protecting New Zealanders' lives and livelihoods. Our response has been underpinned by a wellbeing approach - that the strongest economic response has a strong public health response. Analysis of wellbeing and economic data through the pandemic highlights the relative success of New Zealand's approach to dealing with the effects of COVID-19 on New Zealanders and the economy. From a human capital perspective, this included measures to protect jobs and incomes, increase training opportunities and support New Zealanders' physical and mental health, as described on page 7.

Reported levels of life satisfaction remained high throughout 2020, and average levels were broadly equal across genders, age groups, ethnicities and regions. Overall, average life satisfaction was higher in the June and September 2020 quarter HLFS wellbeing supplements than in the 2018 General Social Survey.[1]

Researchers at Victoria University of Wellington[2] found no overall changes in the wellbeing of families, levels of conflict or support among couples, or levels of parental satisfaction during the COVID-19 crisis. Some groups did experience adverse effects, though, particularly working parents, and families in economic hardship.

The responses to the HLFS wellbeing supplements show that some groups of New Zealanders reported lower levels of wellbeing across various dimensions, relative to the general population (Table 1).

Table 1 - Average scores for overall life satisfaction for selected demographics in the September 2020 quarter
Note: based on a scale where 0 is completely dissatisfied and 10 is completely satisfied.

Category Population group Average score for overall life satisfaction (out of 10)
Total Total NZ 7.8
Sex Male 7.8
  Female 7.9
Age 18-24 7.7
  25-34 7.8
  35-44 7.8
  45-54 7.7
  55-64 7.8
  65-74 8.2
  75+ 8.1
Ethnicity European 7.8
  Māori 7.8
  Pacific 7.9
  Asian 7.7
Employment status Employed 7.9
  Unemployed 7.0
  Not in labour force due to injury, sickness or disability 6.2
Parent status Sole parent 7.2
  Mother in two-parent family 8.0
  Father in two-parent family 7.9

Those already disadvantaged in the labour market are most at risk from further disadvantage due to COVID-19. This includes young people, and Māori and Pacific workers. Women have also been more adversely affected in the employment market than men, owing to stronger pre-COVID employment in service industries such as tourism. Between the March and September 2020 quarters, the number of women classed as unemployed rose by 19,000, or 32%, to 78,000, compared to the number of men classed as unemployed, which rose by 11,000 or 18% to 73,000. These numbers fell by 5,000 each in the December 2020 quarter as the unemployment rate fell to 4.9% in December from 5.3% in September.[3]

Unemployed people reported lower levels of overall life satisfaction, lower mental wellbeing and higher levels of loneliness than the general population. Groups like sole parents also reported lower levels of overall wellbeing and family wellbeing than the general population.


The Government has invested heavily in supporting education, skills and training as the economy recovers from COVID-19, to ensure students stay connected to their education and training institutions while unemployed people or those looking to retrain can access tertiary education.

At a secondary school level, enrolment records from the Ministry of Education indicate a substantial fall in the number of students who had left school by the start of October 2020 compared to the same time in 2019. The number of secondary students leaving a school and not subsequently enrolling in another one by early October 2020 was 22,154 - a 19% decrease compared to early October 2019 (27,228).

Among Māori and Pacific students in Auckland, the number of school leavers as of early October 2020 was 2,591, a fall of 34% compared to the 3,909 students who had left school in early October 2019.

For post-secondary education, significant investments were made to ensure as many students as possible could start or continue studying. The $519.8 million Apprenticeship Support Programme was created to support existing apprentices and encourage more people to enter into an apprenticeship as the economy recovers from the effects of COVID-19.


COVID-19 represented a clear and acute threat to New Zealanders' physical wellbeing. The Government's elimination strategy mitigated this threat - but some New Zealanders are experiencing ongoing physical and mental health impacts from the pandemic.

The HLFS wellbeing supplements show the proportion of respondents who reported a ‘fair/poor' general health status remained relatively steady during the June and September 2020 quarters (12.6% and 13.5%, respectively, for the general population). However, segments of the population reported differing results, with Māori and Pacific people more likely to report their general health status as only “fair/poor”, and Asian people less likely.

Mental wellbeing measures also show some divergence across different population groups. For example, sole parents were almost three times more likely than the general population to report that they felt lonely most or all of the time, while 18 to 24-year-olds and 25 to 34-year-olds expressed higher mean levels of anxiety than older age groups.

The Government has made significant investments in response to COVID-19 focussed on protecting jobs and incomes, providing education and training opportunities, and supporting New Zealanders' physical and mental health, including:

  • Wage Subsidy schemes, which paid out $14 billion between March and October 2020 to enable firms to pay and stay connected to their workers during Alert Levels 4 and 3
  • the COVID-19 Income Relief Payment, which enabled workers to transition between jobs, or onto further income support if they lost their job owing to COVID-19
  • support for employers to take on and retain apprentices to ensure a skilled workforce is available to support the economic recovery, including targeted support for Māori apprentices. Active apprenticeships in October 2020 were 20% higher overall than in October 2019, according to data from the Ministry of Education
  • funding for a variety of career and employment services to support jobseekers
  • certainty for businesses and workers about support that will be available in the event of a resurgence of COVID-19. This includes the Wage Subsidy Scheme at Alert Levels 4 and 3 and a new Resurgence Support Payment at Alert Level 2 and above, supporting firms with a one-off cash payment to offset the cashflow impacts when alert levels escalate. These measures will be supported by other schemes, including leave support for people needing to stay at home while awaiting a COVID-19 test result
  • a one-off permanent increase of $25 per week to all main benefits from 1 April 2020
  • a temporary doubling in 2020 of the Winter Energy Payment to beneficiaries and superannuitants
  • $88 million for electronic devices, internet connections, and other distance learning support to enable students to learn from home, with priority for low-decile schools
  • targeted support for Māori and Pacific students and their families to stay engaged in schooling
  • an increase of 1,000 places in Trades Academies from 2021 onwards to give more young people the opportunity to engage in high-quality, work-relevant vocational learning while enrolled at school
  • a $215 million expansion (up to 200,000 more students) of the Free and Healthy School Lunch Programme
  • targeted changes to National Certificate of Educational Achievement (NCEA) credit requirements to support students whose learning was affected during the COVID-19 response
  • considerable investment in the health system, both to fight the virus and to lift delivery levels to address increases in waiting list and wait times as a result of Alert Level 4 restrictions
  • boosting of family violence support services, and
  • a focus on mental health services, including targeted support for young people and for rural communities. This includes expanded acute mental health and addiction services in the Lakes District, South Canterbury, Southern and Wairarapa District Health Board areas, and builds on an existing expansion of mental health services to primary and secondary schools.


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