Budget 2021 prioritises investment to target key issues of child wellbeing, housing and climate change
Budget 2021 prioritises investments to address this Government's overarching policy goals of:
- Continuing to keep New Zealanders safe from COVID-19
- Accelerating the recovery and rebuild from the impacts of COVID-19, and
- Laying the foundations for the future, including addressing key issues, such as climate change, housing affordability and child poverty.
The package of investments in Budget 2021 will support the long-term wellbeing of New Zealanders by making significant progress towards our goals in the areas of child wellbeing, housing and climate change. It also progresses a number of key Labour Party manifesto commitments, and areas covered by the Cooperation Agreement between the Labour Party and Green Party of Aotearoa New Zealand and addresses critical cost pressures across the public sector (see Budget 2021 Investments on page 15 for further details). Not everything in the Speech from the Throne and the Labour Party manifesto is funded in this Budget. The Government will continue to prioritise these investments across Budgets 2022 and 2023.
The Government will continue to use the fiscal management approach of fixed nominal baselines combined with Budget allowances to control expenditure. Staying within allowances will require active management of cost pressures.
The Government established the $50 billion COVID-19 Response and Recovery Fund (CRRF) at Budget 2020. This fund is managed separately from the Budget allowances. Programmes and projects that are part of the CRRF are being progressively rolled out to support essential services through COVID-19 and support the recovery. At Budget 2021 there are a number of new initiatives funded from CRRF that build on our response to and recovery from COVID-19, totalling $2.6 billion of operating and $2.0 billion capital.
The majority of this investment relates to the Housing Acceleration Fund (HAF), which will support housing development as the economic recovery continues. The Government is committed to ensuring that the economic recovery is both balanced and sustainable. The HAF will provide the build-ready land and connecting infrastructure that is needed to expand the supply of housing, so that the recent house price increases that have accompanied the economic recovery do not close off opportunities for first home buyers.
The Government moved quickly to get support from the CRRF to New Zealanders and businesses during COVID-19. New Zealand's successful health response and early reopening of the economy has meant that not every COVID-19 response measure has been required. Through the Budget 2021 process, underspends and low priority funding of $926 million, comprising $813 million operating and $113 million capital, have been identified and returned to the CRRF. The investments at Budget 2021 and the reprioritisations mean the balance remaining in the CRRF is $5.1 billion, which leaves us sufficient funding to respond to any future COVID-19 outbreaks or changes to the global situation (see the Budget Update for further details).