From the Minister of Finance
Wellbeing Budget 2021 - Securing Our Recovery marks the next step in the Government's plan to support New Zealand as we navigate our recovery from the COVID-19 pandemic.
The extraordinary efforts of all New Zealanders to support one another through 2020 have given us a head start on our recovery. The Government's strong public health response has proved to be the best economic response as well. Against all predictions we have seen thousands of jobs created, unemployment return to close to pre-COVID-19 levels and goods export prices and volumes hold their own. Our success has been recognised, with international credit ratings agency S&P Global Ratings increasing our local currency rating to AAA, and other agencies maintaining our position at similar levels.
But now is the time to secure our recovery. We are still at a difficult period in the recovery from COVID-19. The world faces third and fourth waves of the virus, and every economic forecast talks of ‘uncertainty' and ‘volatility'. There is hope on the horizon in the form of the global rollout of the vaccine but we are some way off a return to normality, and in turn that has an impact on sectors such as tourism that are significant in our economy.
Budget 2021 strikes a careful balance between continuing to support and stimulate the economy during this period, while looking towards the need to keep a lid on the necessary debt we have taken on during COVID-19 to protect lives and livelihoods. The Budget will make progress on the three core goals of the Government: to keep New Zealanders safe from COVID-19, accelerate our economic recovery, and tackle the foundational challenges of housing affordability, climate change and child wellbeing.
The Budget shows the economy is expected to strengthen from the second half of this year, with GDP peaking at 4.4 percent in June 2023. Unemployment is forecast to rise slightly in the near term before declining to 4.2 percent at the end of the forecast period.
This year's Budget is also the 30th anniversary of the so-called ‘Mother of All Budgets' that saw benefits slashed and other social programmes cut in the nadir of the free-market approach to government in New Zealand. This Budget sets out to repair some of the damage done to the social fabric of New Zealand all those years ago, by boosting main benefits by up to $55 per week, the biggest increase in decades. Not only will this give a sense of dignity and hope to those who receive that boost in income, it will also act to reduce inequality and provide ongoing stimulus to the economy.
It is critical, as we emerge from the impacts of COVID-19, that we do not make the mistakes of the past where some New Zealanders benefit from the recovery and others are left behind. We are investing where it is needed the most. There is also a strong focus on investing in infrastructure programmes, including housing, the transition to a low-emissions economy, and in the reform of our health system to give all New Zealanders access to quality services and care.
Ours will be an investment-focused recovery that supports all New Zealanders and ensures our finances remain sustainable. It is also the way in which the Government will continue to tackle the long-standing challenges that we were elected to address. It is important to recognise that this can't all be done in one Budget. Wellbeing Budget 2021 - Securing our Recovery is the first of a package of three this term to advance our priorities and return our books to a sustainable fiscal position. New Zealanders have weathered the storm of COVID-19, today we take the next steps in our recovery together.
HON GRANT ROBERTSON
Minister of Finance