Budget 2022 is being written in the continuing shadow of the COVID-19 pandemic. Around the world as countries seek to open up, a fourth wave of the virus is taking hold and the Omicron variant has emerged. In New Zealand we are managing our transition to a new framework to minimise the effects of COVID-19 and protect our population as vaccination rates increase and we seek to reduce restrictions.
The Government's strategy has proven to be a successful approach to managing the pandemic. We have had one of the lowest mortality rates in the world. At the same time the economy has been resilient with strong growth and low unemployment, although particular sectors and regions have been impacted by restrictions.
Since the pandemic began the Government has provided an unprecedented level of economic support to keep New Zealanders connected to their jobs. Both the Wage Subsidy Scheme and the Resurgence Support Payment have provided critical support to employers and workers. As both border measures and domestic restrictions evolve, economic support measures will become targeted to those most in need and tailored to their circumstances.
Budget 2022 will continue to make progress towards the goals the Government set at the start of the current Parliamentary term. These are:
- Continuing to keep New Zealand safe from COVID-19
- Accelerating the recovery and rebuild from the impacts of COVID-19
- Laying the foundations for the future, including addressing key issues such as our climate change response, housing affordability and child poverty.
Within these overarching goals, and as part of our wellbeing approach, the Government has identified two policy areas that will be a particular focus for Budget 2022: embedding the health reforms; and making progress towards our emissions reduction goals.
COVID-19 has highlighted how vital a joined-up and prepared health system is for protecting New Zealanders. Under the reforms announced earlier this year, district health boards will be replaced with one national organisation (Health New Zealand), a new Māori Health Authority will be established and a dedicated Public Health Agency will be created.
Through Budget 2022 the Government will make significant further investments in establishing these new entities on a sustainable footing and beginning the delivery of the health system shifts envisaged through reform.
To make progress in addressing climate change from a Government perspective, a new approach to the Budget process is required as we make significant investments across multiple budgets. To drive this, the Government is establishing a Climate Emergency Response Fund (CERF) which will be allocated towards initiatives that help us meet our climate change objectives.
For Budget 2022, the CERF will focus on initiatives and programmes aimed at delivering the emissions reductions outlined in the Government's first Emissions Reduction Plan.
The fiscal strategy continues our balanced approach by managing debt prudently and reducing the deficits caused by COVID-19, while growing the economy sustainably and investing in important public services like health and education. Net core Crown debt and the OBEGAL (operating balance before gains and losses) are both stronger than has been previously forecast in total across the four years to 2024/25, reflective of a stronger economy and a balanced approach to investment by the Government.
The ongoing uncertainty around COVID-19 and volatility in the global economy mean the current short-term intentions and long-term objectives remain fit for purpose, so they have therefore not changed since the 2021 Fiscal Strategy Report.
The Government is committed to setting new fiscal targets at Budget 2022 with the expectation that the global economic outlook and conditions will stabilise.
HON GRANT ROBERTSON
Minister of Finance
15 December 2021