Accelerating our economic recovery
Providing economic security in good times and bad
The Government's robust and decisive economic response has meant the New Zealand economy has weathered the shock of the COVID-19 pandemic while maintaining a strong outlook. However, global uncertainty will continue for some time, as demonstrated by the emergence of the Omicron variant and the volatile situation in Ukraine.
This ongoing uncertainty highlights the need to invest in a high-wage, low-emissions economy that is resilient in the face of current and future shocks. Building a more secure economy requires a supportive and flexible business environment that promotes innovation, builds on our existing and emerging sectoral strengths, and lays strong foundations for future growth and opportunities.
While we cannot predict all the future challenges that we will face, we do know that climate change will affect all aspects of our economy. This highlights the importance of transitioning to a low-emissions economy. We are making significant investments to support this transition from the Climate Emergency Response Fund package agreed through Budget 2022 (see more detail on this package on page 37).
We are also delivering on our commitment to position the economy for the future through the establishment of Industry Transformation Plans (ITPs). ITPs bring together all relevant parties in an industry to agree on a long-term vision, and identify the actions that can be taken by the industry, government and others to realise that vision. We have focused on areas where we can build on our strengths, while identifying opportunities to increase productivity and resilience to change and disruption.
Budget 2022 provides funding to make progress across the ITP programme, including funding for:
- Construction Sector Accord Transformation Plan ($37 million total operating). COVID-19 has highlighted the need to ensure that our construction sector is resilient and can continue to deliver critical infrastructure in good times and bad. The ITP is aimed at increasing the productivity, capability and resilience of our construction sector, while maintaining a culture that fosters innovation and values our construction workforce.
- Advanced Manufacturing Industry Transformation Plan ($30 million total operating). The manufacturing sector is a major employer in New Zealand and an area with significant potential for growth. The Advanced Manufacturing ITP is focused on identifying our existing and emerging points of comparative advantage, and maximising our global brand and international connections.
- Agritech Industry Transformation Plan ($5 million total operating). With international demand for agritech growing, there is a real opportunity for New Zealand to leverage our existing strengths to become a world leader in this space. The Agritech ITP focuses on building the skills and practices required to transform our agritech sector into a sustainable and competitive export industry.
- Digital Technologies Industry Transformation Plan ($20 million total operating). The Digital Technologies ITP is aimed at ensuring that New Zealand is equipped to take our place in an ever-evolving digital landscape. This funding will support further development of software as a service (SaaS) ecosystems and increase the visibility of our tech sector in overseas markets.
- Primary Industry Transformation Plans ($40 million total operating). Budget 2022 provides funding for three ITPs that are in varying stages of development in the food and fibre sector - the Food and Beverage ITP ($8 million), the Fisheries ITP ($5 million), and the Forestry and Wood Processing ITP ($27 million). These plans will ensure that our primary industries are resilient, future-focused and provide high-value job opportunities for New Zealanders.
We are also supporting innovation in the tourism sector with the establishment of the Innovation Programme for Tourism Recovery. This programme will support businesses to rebuild on a sustainable basis, working towards a future tourism sector that has greater security by being more productive, low-emissions, and creates high-skill, high-wage employment opportunities.
Small businesses are the lifeblood of our economy, and have been at the centre of our economic response to COVID-19. One of the greatest challenges for small- and medium-sized enterprises (SMEs) is accessing the finance they need to thrive. We introduced the Small Business Cashflow Scheme in May 2020 to help small businesses to access finance in the wake of COVID-19. Through Budget 2022, we are setting aside $100 million of capital funding to contribute to a Business Growth Fund being developed alongside New Zealand's major banks. The Business Growth Fund would enable SME owners to retain majority control of their businesses, while allowing them to grow, create new jobs and increase their contributions to our wider economic and regional development.
We know that when our regions do well, all of New Zealand benefits. The ongoing delivery of the Provincial Growth Fund and Infrastructure Reference Group projects continue to support employment and economic development in the regions. To support the people, businesses and industries based in our regions further, we established the $200 million Regional Strategic Partnership Fund through Budget 2021, with an initial investment made up of reprioritised funding administered by Kānoa - Regional Economic Development & Investment Unit. Budget 2022 provides the remaining funding required to support the Fund's investments in local projects and approaches tailored to a region's particular needs and advantages.
We are also fulfilling a manifesto commitment by investing $60 million total operating funding to improve broadband infrastructure in the worst-served regions, enabling stronger connections and productivity.