Budget 2021: The winners and losers in a welfare-focused Budget

ELLA BATES-HERMANS/STUFF
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ANALYSIS: Welfare beneficiaries are the clear winner in Budget 2021. But while students, Māori housing, and the health system are on top, there will be plenty left wanting more.

The climate was not a major focus. Businesses were not thrown a bone. Major reforms to the justice sector appear on the back burner. And SuperGold Card holders who were promised free eye-checks have had them taken away.

Broadly, there are hopeful forecasts for workers and the economy. Unemployment was expected to fall to 4.2 per cent by 2024. The rise in house values was expected to slow, which might be considered good or bad depending on which side of the home-ownership fence you are on.

There are plenty more. Here is a full list of the winners and losers.

Finance Minister Grant Robertson at a media opportunity at Parliament to show off the 2021 Budget on Wednesday.
Hagen Hopkins/Getty Images
Finance Minister Grant Robertson at a media opportunity at Parliament to show off the 2021 Budget on Wednesday.

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WINNERS

Welfare beneficiaries

The biggest beneficiary of the Budget are those receiving welfare payments. The Government has promised to boost benefit levels by between $32 and $55 per adult, per week.

For a sole parent, there will be a $36 rise. For a couple with children on Jobseeker payments, there will be a $55 rise. For a single person seeking work, there will be a $48 rise.

The cost of the total package will come in at $3.3 billion. The Government expected it would lift up to 33,000 children out of poverty, depending on the poverty threshold measure used.

"This is the biggest lift in benefits in more than a generation," Finance Minister Grant Robertson said.

Also benefiting welfare recipients was the reinstatement of the Training Incentive Allowance for tertiary-level study. The scheme, which provides a beneficiary money for study costs up to $4500 a year, will cost about $150m over four years.

Some 120,000 students who also receive support from the Government will also be better off, as student allowances and loans for living costs will increase by $25 per week.

Budget 2021: The Government insists it was righting a wrong.
Stuff
Budget 2021: The Government insists it was righting a wrong.

Workers and the economy

Despite dire predictions of high unemployment, the outlook provided by Treasury at this Budget was better than expected.

The unemployment rate was expected to reach 5.2 per cent in 2021, before gradually decreasing to 4.2 per cent in 2024.

Robertson said the economy was expected to perform better than expected. From the second half of 2021, the economy was expected to grow to a peak of 4.4 per cent in June 2023.

The Government has also announced it will develop a social unemployment insurance scheme for workers, an initiative Robertson had indicated that he was interested in but had not announced.

The scheme, being developed in conjunction with Business NZ and the Council of Trade Unions, would create an ACC-style safety net that would provide workers who lose their job about 80 per cent of their income for a so-far undefined period. Critics have argued this would create a "two-tier" benefit system.

No money was allocated to this effort.

Health

The Government in April announced it would embark on a major shake up of the health system, abolishing all District Health Boards and replacing them with a central agency and a Māori Health Authority alongside it.

There was $486m allocated over four years for these reforms. The health boards would receive $2.7b in the coming four years for cost and population pressures.

In total, more than $5b will be spent on the health system in the coming four years.

Pharmac

The Government has made good on its election promise of boosting funding for the country's drug buyer, Pharmac, by $200m. The money will be spread out over the coming four years.

Māori housing

Labour's Māori caucus had in recent weeks acknowledged there were "robust" discussions between themselves and Housing Minister Megan Woods over the Government's $3.8b "housing acceleration fund" announced in March. There was concern there wasn't much in it for Māori.

Budget 2021 had carved out some of that fund specifically for Māori. Of the acceleration fund, $350m will be ring-fenced for infrastructure projects that will support Māori and iwi housing providers.

Another $380m will go to building about 1000 papakāinga, affordable rentals, transitional homes, as well as repairing 700 Māori-owned homes for whānau who need it most.

Scott Base, in Antarctica, with a steaming Mt Erebus in the background.
Colin Monteath/Supplied
Scott Base, in Antarctica, with a steaming Mt Erebus in the background.

Scott Base

A much-needed redevelopment of Scott Base, New Zealand's longstanding home in Antarctica, has been granted $306m for the coming four years. The facilities at Scott Base have seriously deteriorated in recent years, with leaky buildings and aged infrastructure becoming an increasing cost.

The overhaul of Scott Base was expected to create 700 jobs over six years, and prevent the closure of the base.

This was the only new spending for foreign affairs. Also, there was barely a drop for the Defence Force – $5m for maintain defence property.

LOSERS

Future taxpayers

The outlook was better than expected, but there's no doubt future taxpayers will be paying for the Covid-19 pandemic for a long time. The Government's debt was set to increase until 2024, with debt as a percentage of the country's growth domestic product reaching a peak of 48 per cent in 2023.

Homeowners

Homeowners have been buoyed by escalating house values in recent years, and Treasury has estimated a rise in prices of 17.3 per cent in 2021. However, the price growth was forecast to crash to 0.9 per cent in 2022, due to the Government's announced changes to the bright-line test and interest deductibility on rental properties.

While this could be deemed a win for those eager to get into the housing market, for homeowners it would more likely be a loss. Treasury said it would slow economic recovery, as households would feel less wealthy.

Businesses

There was little in Budget initiatives for business owners, both small and large, in this Budget. The only celebratory mention of business-related spend was a $44m initiative that will provide digital training for 50,000 to 60,000 businesses.

Climate

Climate change might be the most pressing existential concern of the era, yet the Government has forgone major spending or initiatives in this Budget.

Climate Minister James Shaw has secured $300m for low-carbon technology, more than $120m for de-carbonising efforts in the public sector, and $19.7m to respond to the Climate Change Commission's report.

However, from now on, any money made by the ETS in the future will have to be directed into reducing emissions.

Justice

Justice reforms were an issue pursued by the prior Labour-coalition Government, but appear to have fallen by the wayside since. This was confirmed in the Budget, with little new spending for the sector.

Put aside for the coming five years was $270m, the vast majority of which was being pumped into growing legal aid costs.

Spies

There was little in new spending for the country's spies. The national security apparatus, including the Security Intelligence Service (SIS) and the Government Communication Security Bureau, will be undertaking substantial reform in the coming years, after the Royal Commission into the Christchurch mosque terror attacks.

The Government has committed to creating a new National Security agency, but there did not appeared to be any money for this in the Budget.

The SIS received $800,000 in the Budget to improve its ability to share information with partner agencies, a key inquiry recommendation. That said, the SIS did receive more than $20mfunding boost in Budget 2020.

SuperGold cardholders

The Government has done away with a hangover from the prior Labour-coalition Government, an NZ First policy that would have given SuperGold cardholders a free medical consultation, including an eye check.

Stuff understands that former Deputy Prime Minister Winston Peters refused to support the Covid-focused Budget 2020 unless the eye-checks were provided - despite health officials and GPs not supporting the idea.

The Government has done away with the policy all together, saving nearly $260m in projected funding over the coming five fiscal years.