The government is increasing benefits, overhauling the health system, and funding green technologies in its latest Wellbeing Budget.
Money is also put aside for the Antarctic Scott Base redevelopment, and a Māori housing initiative.
The SMC asked experts to comment on aspects of the budget:
- Research (including Scott Base)
- Health (incl. mental health and community support workers)
- Biosecurity (incl. new mail scanning tech)
- Housing (incl. Māori housing)
- Economic overview (incl. Māori affairs, politics, and wealth tax research)
Associate Professor Nicola Gaston, Department of Physics, University of Auckland, comments:
“The 2021 budget is not the investment we needed to see, future proofing our economy for a world in which carbon costs. There is, admittedly, a $300M investment in low carbon technology through the Green Investment Fund – and this will pay dividends – but it is still minor, in the scheme of things. Structural changes – such as the inclusion of biofuels and hydrogen in the Low Emissions Transport Fund – are definitely as important as new money, in addressing climate change. But none of the investments signalled in this budget are transformational.
“Are there signs of hope for the scientific community? Well, I do think that we should be just as concerned about the outcomes of research, in terms of implementing expert advice, as we are about the inputs – for all that we can’t do without the latter! The fact that the Government has matched the recommendations of the welfare expert advisory group and has raised benefits is therefore great, in that evidence should drive policy, where there is need. Similarly, increasing student allowances and loans has real positive impact on many of our colleagues, and we should celebrate this.
“Having said that, I think we do need to remind this Government that investment in science, investment in research, investment in education are critical to building capacity and resilience. That there are no major new initiatives that would reshape the scientific and investment landscape for the growth of deep tech is disappointing, but more or less what I expected. What I am saddened by, reading through the tabulated numbers, is much less dramatic: the Endeavour Fund, cut on the order of 10%; the Health Research Fund, similarly cut; the Marsden Fund, cut in real dollars after inflation. These are not nice to haves, these are the bread and butter of our research sector, and anything other than an increase in line with inflation is rather a slap in the face.”
Conflict of interest statement: I’m co-director of the MacDiarmid Institute for Advanced Materials and Nanotechnology, a New Zealand Centre of Research Excellence that is government funded.
Professor Troy Baisden, President of the New Zealand Association of Scientists, comments:
“Budget 2021 was disappointing for New Zealand’s scientists, first and foremost because there’s no new funding visible, and slight declines in many areas. There’s not even a release about Research, Science and Innovation in the last month from the Beehive.
“It is generally understood that scientists stood up and saved the nation from worst impacts of COVID-19. In contrast, in nations like the United States where this didn’t occur, but vaccine development and financial recovery packages drive budgets, science is slated for big increases. We should ask why our sectors, particularly Universities haven’t successfully argued for increases to their major research funds: Marsden, Performance Based Research Fund, and Centres of Research Excellence.
“Most disappointing of all is the ongoing concern about careers and stability for our young and emerging scientists. A one-off scheme was funded this year for fellowships, receiving in excess of 200 credible applications for 30 positions. We’ll likely lament this in years to come, as we continue to struggle to respond as fast as competitor nations to the need for investment and action on emerging needs such as climate change, water and health.”
“What’s a scientist to do? A good place to look is the more action oriented appropriations for climate change and emissions research.
“Looking at detailed data that comes out with each budget, appropriations with “climate change” or “greenhouse” in the title are set to reach $60m this year, and those with “climate change” in the scope are headed to $144m. Unusually, both have grown ahead of last year’s Budgeted amount.
“Keeping climate change work on track may provide a role for scientists developing innovation and technology, but largely outside typical science institutions. A fraction of the total is tagged as research, with $27m for agriculture and forestry, our main sources of emissions and sinks. That’s down from $36m being spent this year, an amount equal to nearly half the Marsden fund.
“Looking ahead a few years, the Climate Change Minister has announced another $20m to support policy, $300m to accelerate investment in low carbon technology, and an estimate of $3b over five years recycling revenue from the Emissions Trading Scheme into action. The question, after many years without a national scheme to support careers after PhDs, is whether we have or can build the workforce needed?”
Conflict of interest statement: Currently funded by MBIE Endeavour and Centres of Research Excellence.
Professor Richard Blaikie, Deputy Vice-Chancellor (Research and Enterprise), University of Otago, comments:
“This is a disappointing Budget for research with stagnant funding for most core research, science and innovation funds. With public-sector research and researchers contributing so much to our world-leading pandemic response our ability to retain talent and continue to contribute strongly remains constrained.
“Research has saved lives and saved billions for the New Zealand economy during our time of greatest need, and has the potential to offer much to the decade of recovery and rebuild that lies ahead. This potential remains constrained by this flat-lined Budget, which is hugely disappointing for our dedicated research community and will lead to lost opportunities for our nation.”
Conflict of interest statement: No direct conflicts of interest. My role as Deputy Vice-Chancellor (Research and Enterprise) at the University of Otago mans that I am responsible for policy and oversight for research at the University of Otago. I have my own research group in the area of sub-wavelength optics, which has been supported by MBIE and Marsden Fund grants.
Associate Professor Nancy Bertler, Antarctic Research Centre, Victoria University of Wellington; Antarctic Science Platform Director, Antarctica New Zealand, comments:
“The budget approval for the Scott Base redevelopment is a hugely important and a welcome signal by the government on the importance of science to serve New Zealand.
“Antarctic research has never been more important. The redevelopment of Scott Base will ensure continued support for critical and urgent research that helps New Zealand and the world to prepare for the challenges of climate change and mitigate the worst of its consequences. Changes in the Antarctic and Southern Ocean are major influences on the impacts of sea level rise, the amount of carbon dioxide in our atmosphere, threats to ecosystems, the frequency and severity of droughts, floods, and fires around the world. While Antarctica might seem far away, it is a key driver that will impact every aspect of our livelihood and wellbeing, our communities, industry, and infrastructure whether you live in Wellington, Beijing, New York, or Geneva.
“Since 1957, Scott Base and its iterations have served New Zealand well in supporting world class, high priority and cutting-edge science and positioned us as international leaders in research of climate evolution, sea level rise and environmental protection and ecosystem conservation. The new base will ensure New Zealand will continue to support and lead critical, cutting-edge science, now and into the future. This is a very proud moment for the Antarctic community!
Conflict of interest statement: the Antarctic Science Platform is hosted by Antarctica New Zealand, N.Bertler is jointly appointed by Victoria University of Wellington and GNS Science and seconded to Antarctica New Zealand.
Associate Professor Rob McKay, Director, Te Puna Pātiotio | Antarctic Research Centre, Te Herenga Waka | Victoria University of Wellington, comments:
“We are very excited by the announcement of a new Scott Base, and it is a recognition of the value and importance of Antarctic research to New Zealand. This new investment will allow for a step change in how New Zealand researchers are able to operate in the challenging Antarctic environment. The base will provide state-of-the-art facilities capable of supporting technically and logistically complex projects of the scale that is required in order to understand how Antarctica’s ice sheets will response to future climate change. This new base will help maintain New Zealand’s reputation as global leaders in Antarctic research, in particular allowing us to take scientific leadership roles in understanding global issues related to Antarctica, such as future sea level rise resulting from ice sheet melting.
“Throughout the design process, Antarctica NZ have consulted closely with the needs of the scientific community, with a clear vision to future proof the base for the next generation of science we hope to be able to conduct on the continent. We have also worked with the design team to provide models projecting the impacts of future sea level rise scenarios, and help guide the location of the base build to insure that it will be resilient to these scenarios.”
No conflict of interest declared.
Associate Professor Tim Tenbensel, School of Population Health, Faculty of Medical and Health Sciences, University of Auckland, comments:
“The 2021 budget continues a trend established in the past two years to recover the lost ground in healthcare spending that occurred during the 2010s. From 2009 to 2017, there were no increases in per capita spending on health by government. Yet in health systems worldwide there are a number of pressures that mean health costs rise faster than inflation, such as an aging population with more health care needs, and new technologies that increase expectations of what can be done. To stand still, the health sector generally requires increases of at least 2-3% (per capita) each year.
“Since the 2018-19 budget, the tourniquet has been loosened considerably. Health is a big winner in the 2021-22 budget. Overall spending for 2021-22 is $24.4 billion, about $1.2 billion or 5% higher than 2020-21. Due to COVID-19, the population won’t be increasing that quickly, so the per capita increase in spending will be relatively high. So where is that extra money going?
“The biggest chunk goes to easing the deficits of our District Health Boards (mostly caused by the funding tourniquet of the 2010s). They (or Health NZ which replaces them) get an extra $675m per year, plus an extra $175m per year for capital investment. Most of these boosts will go to hospital services. The government is also allocating an extra $47m per year to manage increased demand in primary care. An extra $40-60m per year goes to PHARMAC (again, about a 4-5% increase year on year).
“The funding allocated implementing the health system reforms is nearly $500m over four years, so that averages out at around $120m each year. About $25m this year, and $50m in subsequent years will go to the newly formed Māori Health Authority. This will amount to about 2% of the total health budget – and this will be allocated to primary and community health services, particularly Māori providers. There are significant boosts in specific priority areas, including cancer screening and health IT infrastructure.
“So this is very much a big catch up budget in health, and the pace of the catch-up has accelerated. This is welcome, and overdue, and will relieve some but not all of the pressure that has built since 2010.
“However, the biggest surprise buried in the budget documents is that $3 billion more was spent in Vote Health in 2020-21 than had been budgeted last year. That’s 15% extra! Was this the effect of COVID-19, or did it reflect a change in the way Vote Health is calculated? Answering that question will require a bit more digging.”
No conflict of interest.
Dr Christopher Gale, Senior Lecturer, Department of Psychological Medicine, University of Otago, comments:
“The biggest change for people with serious mental illness in the budget is the increase in the basic benefit. I’m unsure on how this will work out as at present many people on benefits need to have supplementary benefits to deal with the increased rentals in New Zealand.
“Most of the increased funding in health is to the DHBs and primary care, and is not earmarked for any particular area. There has been no increase in money earmarked for specialist mental health area. There is funding in moving to a national health records system and two national health boards, one for Māori and one for the remainder of New Zealanders.
“There is an extension of Mana Ake — stronger together — from primary schools in the Canterbury area to wider parts of New Zealand. In the last budget there was a budget for primary care based mental health care, aimed at those with mental illnesses of moderate severity. This was underspent last year.
“We have a problem in training and retaining sufficient skilled workers: the main cost in mental health is people. The Association of Salaried Medical Specialists (ASMS) has recently reported that the morale of senior doctors is very poor, and the most recent indication of a pay freeze is demotivating senior doctors remaining in New Zealand. At the senior medical and nursing level, Australian states and other areas compete with New Zealand for staff.
“My concern is that the rhetoric of caring and provision will be undermined by the reality of poor implementation, driven by a significant lack of skilled people.”
No conflicts of interest. Chris is not a member of the ASMS.
Associate Professor Katherine Ravenswood, Associate Professor in Employment Relations, Faculty of Business, Economics & Law, AUT University, comments:
“Workers in community support have struggled, despite the 2017 Pay Equity Settlement, to gain recognition for the skills and work that are part of this job. In an additional settlement specific to this sector, it was agreed that government funding for community support would at last pay support workers for the time they spend travelling between clients. However, this payment was at the minimum wage and not at the hourly wages specified under the Support Workers (Pay Equity) Settlements Act 2017. Imagine your pay slip being differentiated by each client visit, and then the pay travelled – on the job – between clients. As if your skills and experience somehow disappear while you travel between your clients. Additionally, these workers who often work split shifts, have not had paid breaks.
“This budget makes a long overdue, but big step forward for these workers – providing a modicum of the respect that they have always deserved through funding their travel time between clients at their usual pay rate and through funding paid breaks. This will be welcome to support workers who put their all into supporting people in our communities.
“The Budget mentions the overly complicated health system. This fragmentation is particularly complex in community support, where providers (and their support workers) contract to multiple DHBs, ACC and other public sector agencies. There are several budget initiatives and mentions that may well prove to be catalysts for a shift towards a much needed national funding model for quality care: hints that ‘commissioning’ of social services will better respond to community wellbeing needs; funding for the operationalisation of the health and disability system reforms; and the establishment of an Aged Care Commissioner. The devil will, of course, be in the detail.”
No conflict of interest declared.
Professor Roger Strasser, Professor of Rural Health, Te Huataki Waiora School of Health, University of Waikato, comments:
Rural Blind Spot:
“In his address to the recent National Rural Conference, Health Minister Andrew Little observed that “nearly a fifth of New Zealanders – 19.4% [of the population] to be exact – live in rural places” and that “rural people have worse health outcomes”. There is no mention of “rural” in the Budget Economic and Fiscal Update or the Budget-at-a-Glance documents, and the Health Vote mentions rural only in the “Supporting Information” that outline spending on existing programmes attached to the document.
“This budget lacks any clear focus on addressing the poorer health status and relatively limited access to healthcare for people living in rural and remote communities of New Zealand. Although funds are allocated to establish Health New Zealand and the Māori Health Authority, there is no indication that any of those funds will be directed to where the need is in underserved rural, remote, Māori and Pasifika communities.”
Fit-For-Purpose Health Workforce:
“The Health and Disability System Reform announcements by Health Minister Andrew Little speak of “local tailoring of primary and community care” to “improve care quality and equity, while ensuring the services [are received] close to home [to] reflect the needs of [the] community”. There is no allocation in this budget of resources to develop and implement education and training programmes to produce a fit-for-purpose health workforce to deliver high-quality health care close to home, particularly when home is a Māori, Pasifika, rural or remote community.
“The current education and training programmes are not delivering a health workforce with the skills and commitment to deliver the right care, at the right time in the right place, especially for underserved and under resourced communities. This is the case particularly in medicine with an overreliance on overseas trained doctors and only 20% of New Zealand medical graduates training to become general practitioners of which almost none choose to serve people living in Māori, Pasifika, rural and remote communities. New Zealand needs a new and different approach to the education and training, recruitment and retention of doctors and other health professionals. That approach must have a specific focus on ensuring that healthcare providers are ready, able and willing to care for people living in Māori, Pasifika, rural and remote communities.”
No conflict of interest declared.
Professor Janet Stephenson, Research Professor, Centre for Sustainability, University of Otago, comments:
“When I look at the budget, my frame of reference is “Will this help Aotearoa New Zealand to get to a secure low-carbon future in the face of climate change, and to achieve this in a way that ensures justice and equity?” By ‘secure’ I mean achieving net carbon zero by 2050 alongside becoming more resilient to the impacts of climate change.
“There are a number of budget items that will help. For example, the increased funding for Green Investment Finance; more secure (and annually increasing) funding for Warmer Kiwi Homes; more support for EECA’s work with business; significant funding into rail; implementation of a sustainable biofuels mandate; and incentivising the uptake of low emissions vehicles.
“But none of this signals a strong reset of New Zealand’s economy towards a low-carbon future. For the most part, these are continuations of existing projects, or initiatives that have long been flagged but not yet implemented, such as incentivising low-emission vehicle uptake. Investment in state highways and road upgrades has been significantly increased, with no indication of additional support to the climate-critical areas of public and active transport, urban form or reducing freight emissions (apart from the rail investment).
“Even the $24m allocated to research on reducing agricultural greenhouse gases is a continuation of similar levels of funding put into this area over at least the past 12 years. Ironically, there is no equivalent dedicated research funding into the equally (if not more) challenging topic: how our economy and society will operate without fossil fuels. Shifting away from coal, oil and gas in a mere 30 years is enormously complex. It needs a massive research effort to deliver the new technologies, behavioural changes, equitable solutions and system-wide innovations required across all sectors.
“Compared to the scale and rapidity of changes required, the budget is underwhelming. The funding for supporting communities facing transition is comparatively tiny at less than $4m per year. There is no funding to assist councils who are facing climate change impacts and need to prepare for enhanced risks to property and infrastructure. We urgently need targeted funding for research and innovation for Aotearoa New Zealand’s energy transition. It is laudable that some funds have been set aside for developing a strategy for our climate change transition and for policy responses to the forthcoming advice from the Climate Change Commission, but I fail to see any bold and farsighted initiatives that will reset Aotearoa New Zealand to a low-carbon trajectory.”
No conflict of interest.
Professor Iain White, Professor of Environmental Planning, University of Waikato, comments:
“This is an interesting budget due to the context rather than content. There is no coalition partner. The pandemic appears under control. There is a public and political mandate to spend. Internationally, low interest rates are changing political attitude to debt – even centre-right governments like in Australia or the UK are spending big, as money is so cheap. In some ways this budget represents an insight into the real Labour government.
I was particularly interested to look for announcements relating to climate change. In this regard, its feels a little disappointing and low key. For example, there is an acceleration of investment in future low carbon technology, which is not necessarily the answer to our current emissions profile now, and a Carbon Neutral Government Programme, which is both a very politically safe and fairly inconsequential climate change issue for a government to focus on. The Emissions Trading Scheme is a good idea and will be much more influential than it sounds, just not yet.
“For climate change and infrastructure, it feels like a Budget that is both more of a holding pattern and an acknowledgement that a lot of influential policy work is going on outside the eye-catching Budget headlines. Right now we are waiting for some of the underpinning work with regard to the findings of the Climate Change Commission, Three Waters Reform, Local Government Reform, or for the new policies that replace the RMA to be designed and launched. All of which will be very influential and change investment logics. I can see why there is an argument to focus elsewhere as this all lines up, but there is no doubting the scale and urgency of the challenge to build a net-zero carbon Aotearoa New Zealand by 2050. Maybe we can start in earnest next year?”
No conflict of interest.
Professor David Noone, Buckley-Glavish Professor of Climate Physics, Department of Physics, University of Auckland, comments:
“The pillars of the budget are described as “Laying the foundations for the future, including addressing key issues such as climate change, housing affordability and child poverty”.
“It was noted that the Climate Change Commission will soon provide final advice to the Government – the draft report has clear priorities on emissions targets, targets linked to food production and agriculture, our marine environment, and the related opportunities for industry innovation. The Finance Minister’s speech noted that some of the significant investments will be deferred until 2022 and 2023 budgets. This feels a little like kicking the can down the road at a time where there was an opportunity for international leadership, that matches areas of innovation in this area that are beginning elsewhere. Investment in decarbonizing the government function – it’s good to lead by example, but would have been useful to see how that leadership can be practically expanded to other sectors.
“Nonetheless the Minister noted the budget has some important initial steps, which is welcome, but possibly does not respond will to the wider desires of the electorate, or positions us to rise to meet the possible international leadership in innovation in this area. His speech did correctly recognize the need for sustained investment to change capacities relative to intergenerational support.
“Reinvestment of emissions trading seems sensible as one way to help provide sustainability of future investments. It could be a substantial future investment plan.
“Investment in Scott Base in Antarctica is a welcome science investment, as well an important geopolitical state ahead to renegotiation of the Antarctic treating. Several countries, including China, have been investing in Antarctic activities as part of this. Maintaining our Southern Hemisphere interests to the South, including fisheries of the Southern Ocean are important.
The budget allows for establishing an Enduring Environmental Monitoring and Reporting System. This type of government supported data collection can be done in an open and transparent way, which is not completely the present model for transparency in environmental monitoring – where environmental data is maintained and owned by commercial entities, including some of our CRIs.
“The Warmer Homes initiative can incentivise individuals and industries to reduce total energy use while also meeting well-being outcomes.
“Investment in water infrastructure, and safe supply, is a welcome signal the government are anticipating the pressures on water systems that comes from climate and environmental change.
There are also incentives for lower carbon transportation: including trucks, rail particularly, and incentives for vehicles. The budget includes funding to support over 40,000 farmers, helping to meet greenhouse gas and clean water requirements from on-farm practices.”
No conflict of interest declared.
Distinguished Professor Philip Hulme, Distinguished Professor of Plant Biosecurity, Bio-Protection Research Centre, Lincoln University, comments:
“New Zealand has been working with Australian counterparts for over 3 years to bring 3D scanning into the mix of tools used to stop risk items crossing national borders. The Rapiscan Real Time Tomography RTT 110 produces instant, rotatable three-dimensional X-ray images and can process up to 2500 packages an hour.
“The arrival of 3D scanning in New Zealand follows successful deployment of the technology in Melbourne and Sydney. Both countries have worked to develop algorithms than can detect risk items such as plant material and meat in passenger luggage and mail. The 3D scanner should allow greater throughput of mail at the Auckland mail centre but given the volumes of mail entering the country will only likely be able to screen a fraction of the total mail entering New Zealand and the existing 2D scanners as well as detector dogs will likely still be needed. Over time, as image libraries are built up from scans of material in both Australia and New Zealand, the performance of the 3D scanners will improve. This is a great example of the two countries working constructively together to address shared threats to their environment and economies through emerging technologies.”
No conflict of interest declared.
Dr Bev James, Building Better Homes Towns and Cities: Affordable Housing for Generations; and principal of Public Policy & Research, comments:
“The Budget announcement should be considered in the context of recent housing announcements, including the re-setting of tax policy in relation to the rental market, changes in rules regarding rent increases, the Healthy Housing Standards, the infrastructure fund, and the progressive homeownership programme. The boost for Māori housing is very much needed. The budget focus is on:
- Increasing housing supply for Māori.
- Improving house condition, performance and safety through housing repairs.
- Enabling residential development through infrastructure development (ring fenced part of the Housing Acceleration Fund).
“Those areas are supported by research in Affordable Housing for Generations, and the Building Better Homes Towns and Cities National Science Challenge. That research has highlighted Māori housing stress.
“However, the research also shows, that for all housing, increasing housing supply is necessary but insufficient in itself to deal with housing stress. Research shows that new builds need to be targeted to affordable rental and purchase opportunities for low and modest income households. Therefore, price points of new builds need to be affordable to families and whānau.
“A large body of research shows that there is significant exposure to poorly performing housing, and links poor housing to negative impacts on health and wellbeing.
“The acceleration of new builds is clearly important. Our research shows that housing stress affects not just low-income households, but also modest income households, including in some regions, households with incomes above the regional household income median. All housing new builds should be price pointed to ensure that there is housing affordable to those on different income levels within a region, not just to increase aggregate housing supply. The progressive homeownership programme and investment into public housing recognises that. Research shows that affordable housing is critical to ensuring that people are securely housed, and their housing enables them to make a home.
“Our research suggests that further work will be needed on:
- Housing, particularly in the rental market, for seniors. Our research shows increasing numbers of people will reach retirement as renters or with mortgage debt. Evidence suggests attention will need to be given to the prevention of homeownership loss. Our research suggests senior homelessness is already an issue.
- It is important that new builds provide fit-for-purpose housing over a lifetime. Previous research shows that accessible and universal-design housing support independence, living standards and reduces housing-related costs.”
Conflict of interest statement: Bev is the chair of a housing trust.
Professor John Tookey, Professor of Construction, AUT University, comments:
“Now the budget has been announced. After much downplaying of the likely generosity of government, where there any surprises of note? Honestly, not so much. In fairness to government, the current deficit created by the response to COVID has minimised their room for financial manoeuvre. Low levels of expectation were generated and we were not disappointed as a result.
“The announcement of modest additional funds for Housing Acceleration initiatives are to be welcomed. What that actually delivers on the ground is to be seen. Kāinga Ora is most certainly the big winner here, however additional spend with them will not directly affect the capacity of the marketplace to scale up. Indirectly there is something of an opportunity if strategic long term contracts are signed for housing that in turn drive investment in construction companies.
“Ideally capacity growth initiatives around trade skills training and addressing other educational shortfalls are essential but haven’t been particularly flagged in the budget. Practically there is an immense need for encouraging and facilitating inward investment in construction – particularly around trades. It is unclear whether we will see new apprenticeships and scholarships funded, but probably not. This was something of an opportunity missed to invest in long term solutions rather than in medium term remedies.
“The commitment to infrastructural spend in order to support development is most certainly a good thing. However, the ‘devil in the detail’ at this stage is really going to be the issue here. What individual schemes will be funded in which locations? Given the nature of demand in Auckland compared to competing claims elsewhere are likely to lead for fraught horsetrading. First home grant provision included in the budget is an excellent initiative for first home buyers as a means to address affordability. However without successively increased annual provision it is likely to have a relatively limited effect that declines in impact over time.
“Additional ringfenced provision for Māori housing is again a fine initiative, however the investment involved given the quantum of the problem being addressed are at best ‘modest’.
“Overall this is a measured budget intended to give a little without overpromising outcomes. Nothing included is a game changer – amounting to a quantum shift in capability or outcome that will get ahead of the housing supply problem. If budgets had a colour, this one would be beige.”
Conflict of interest statement: I have no political or commercial conflicts of interest with any commentary made with respect to the New Zealand construction industry or housing market in particular.
Professor Martin Berka, Head of School of Economics and Finance, Massey University, comments:
“There is really no major surprise here in terms of the overall strategy. While it is true that this is a Covid-recovery budget, it is also notable that the proposed changes to benefits are not specific to Covid-related unemployment, but are intended as permanent increases in benefits rate. The increases indeed very large in percentage terms, and speak clearly to Labour’s priorities in predominantly helping the poor.
“The top priorities by total funding impact (by Vote) – see pages 53-54 of the Budget – are Health, and Social development, which jointly account for nearly 50% of total new operating expenditure. There is a lot tagged away for contingencies (nearly 2bn), which is the 3rd largest allocation as a whole. Schools; Business, Science and Innovation; Housing; and Transport are next (but in comparison all of these together account for just around 20% of the newly allocated spend).
“In terms of strategy, I am disappointed that Climate change policy aspirations remain merely a “topic for further research”, rather than “our nuclear-free moment”. Yes, there is some minor allocated funding towards various “measurement/monitoring systems”, but impactful policy lacks completely, as far as I can surmise in an hour of reading densely written pages. I am similarly saddened by the lack of adequate investment to the infrastructure. There are positives, but I think the budget lacks the balance to really look forward for all of New Zealanders. Let’s be clear: we are borrowing a lot, and it should go towards initiatives that address the needs of New Zealand in 20-50 years from now, as well as those for today. I just don’t see much of medium- to long-term future-looking funding happening in this budget. Then again, it has been announced as a recovery budget, and it certainly does that.
“The main benefit increase is certainly good news for the unemployed. Is it the best use of taxpayer’s money? Hard to tell up-front. It is certainly valuable to have unemployed have a more dignified life while looking for work, but there is a balancing act regarding incentives (to look for work). But then, NZ has a generous social safety net, and I am not sure this is where our ills lie. We are also recovering the best amongst many OECD countries from the year of Covid. So how much generous does the safety net need to be to help us get over Covid is not clear to me. What is clear is that this is an easy political win with the constituents, and I would have preferred larger allocations given towards enabling new opportunities that actually can carry NZ out from the pandemic, such as those in infrastructure, science, climate policy, and other initiatives.
“The Health investment, which is behemoth of this budget, is probably overdue and because of its size and my lack of time I cannot speculate as whether it’s “too much”, “too little”, “about a right amount but allocated towards odd aims”, or “perfect”. Health will certainly win, and it’s again an easy political score.
“Probably the most revealing part is that this is “true Labour”. There is nobody holding them back. This is what they stand for. Watch and learn, New Zealand.”
No conflict of interest declared.
Alison Pavlovich, Lecturer in Taxation, Massey University, comments:
“A budget has two sides – expenditure and income….and this budget is all about expenditure.
“The objective of Budget 2021 is to address post-Covid recovery and rising inequality. Tax, as the government’s main source of income, is a key tool for reducing inequality through redistribution of wealth. So, could the government be doing more to reduce inequality using tax levers?
“Since the global financial crisis, there has been a lot of discussion on increasing taxes on capital to redistribute more wealth into the public purse for the benefit of everyone. Typically, governments grant favourable tax treatment for income from capital in a bid to compete for ‘scarce’ mobile financial capital – further exacerbating inequalities. New Zealand is no different with preferential tax treatment for investors and a lack of a comprehensive capital gains tax altogether. It is notable, however, that the budget has made additional funding available for research into the tax paid by high net worth individuals – perhaps signalling this information could be used for tax policy planning in the future.
“If our government is serious about inequality and the fiscal challenges we currently face, there is scope within the tax system for some transformation. In recent weeks, the OECD has recommended to its member nations that better use of inheritance taxes should be a key tool for post-Covid economic recovery. This could provide a new source of revenue and have an impact upon reducing intergenerational inequalities. Let’s hope this suggestion is put on the government’s agenda.”
No conflict of interest.
Dr Lara Greaves, Lecturer in NZ Politics, University of Auckland, comments:
“The 2021 budget has been exciting as this is our first single party majority government under MMP. The budget is the first chance Labour has had to show their agenda without having to take other parties’ views into account. That being said, Labour have been careful to bill this as the “recovery and wellbeing budget” with posters on social media framing it as “securing our recovery”.
“From a Māori political scientist’s perspective, Labour currently holds 6 of the 7 Māori electorates and there is considerable Māori representation in cabinet (25%). The challenge for the party and their Māori caucus is to show that they are being responsive to Māori needs, especially in light of a very vocal Māori Party.
“The pre-announced funding for cervical cancer self-screening and improvements to breast cancer screening is an important equity issue for wāhine Māori. The Māori housing initiative is interesting and it will be important to see how this is delivered on the ground. It will be really important if the independent Māori health authority is to be successful that the development and co-design is well funded. Ultimately, it will be interesting to see how all of this will be delivered.
“From a general political scientist’s perspective, it’s interesting the extent to which our media framing and commentary affects the voting public’s views on the budget.
“Very few New Zealanders will stop to read the budget or be able to see the connection between government spending and their day-to-day lives. That being said, the increase in money in beneficiaries’ pockets – which while never enough – makes a huge difference to people’s lives.
“In addition, many would argue that there is not a viable alternative government to Labour at the moment. It is important for National to show they have a measured, sensible response to Labour’s budget in the coming days, as they need to seem more like a reliable government-in-waiting if they have any chance in 2023.”
No conflicts of interest.