Yesterdays budget focused largely on helping the country to recover from the economic impact of the Covid-19 lockdown with estimates the Governments spending will help save 140,000 jobs over the next 2 years and create more than 370,000 new jobs.  Prime Minister Jacinda Ardern acknowledged the enormity of the impact of Covid-19 on both New Zealanders and the New Zealand economy. 

"We have never sugar-coated what the future will look like, but nor will we pretend there is nothing that we can do about it. Governments have choices, just as we did when we faced Covid-19. And those choices are between sit back and hope, or sit up and act.  We have chosen to Act." – Prime Minister Jacinda Ardern

The highlights of yesterday's budget include:

  • An 8 week extension to the Wage Subsidy scheme
  • Support for SMEs to encourage e-commerce
  • Increased spending on housing and infrastructure
  • $400m to fund a domestic tourism campaign and support the tourism industry
  • Trades and Apprenticeship training funding boost along with a Green Jobs initiative
  • Free School lunches for 200,000 kiwi kids and help for tertiary students

 

Extension of the Wage Subsidy Scheme

$3.2 billion further has been allocated to the Covid-19 wage subsidy, bringing the total programme cost to some $14 billion.  To be eligible for the second wave of subsidies from 10 June 2020, the business needs to have experienced a 50% drop in revenue in the 30 days prior, compared to the same time last year.  Applications will be open for 12 weeks, will cover an 8 week period and, like the first wave of subsidies, will be paid in a lump sum of $585.80 per week per full-time employee. 

E-commerce Fund

A fund for small business is being set up to help them improve their e-commerce service offerings as well as grants to encourage e-commerce adoption.  Further support will also be given for business advice, the e-invoicing project, Business Connect and the Better For Business programme. 

Housing and Infrastructure

8,000 new state houses are expected to be built or purchased over the next four to five years with $5 billion further borrowings being made available to Kainga Ora to purchase the bulk of the houses. 

A further $570 million is earmarked for rent support for those on low incomes and will be managed through Kainga Ora and other community housing providers.

$56 million towards insulating some 9,000 homes through the Warmer Kiwi Homes initiative and the 67% subsidy for retrofitting insulation would be increased to 90% making it more affordable for low income households to be able to insulate their homes. 

$1.1 billion will be invested in improving transport across New Zealand.  This will include the replacement ageing of trains and ferries, including the Interislander ferries and their ports. 

$3 billion is to be spent on "Shovel Ready" infrastructure projects.  These are projects that are far enough through the planning and engineering stages that start on the projects could begin in a very short time with sufficient funding.  Approximately 2000 application have been made for this fund and Ministers are now deciding which projects are to go ahead. 

Domestic Tourism

A $400 million  Tourism Recovery Fund is to be established for the purposes of promoting New Zealand to domestic and Australian tourists as well as advisory assistance to tourism businesses to either help them stay in business, hibernate, or find other options. 

Trades Training and Green Jobs

A $1 billion package will be rolled out in the regions to create some 11,000 jobs focused on the environment such as biosecurity, pest control and DOC's "job for nature" fund.  This funding "will not only help restore our natural landscapes, native bush, waterways and coast, it will give thousands of people access to well-paid work so they can continue to provide for their families" -James Shaw, the Minister for Climate Change.

Additionally, $1.6 billion is to go into a trades and apprenticeship training package extending the "fees-free" vocational training to those out of work, not just school leavers.  This includes $334 million for further tertiary education, $320 million for free trades training and $412 million to assist employers to keep on their current apprentices. 

Free School Lunches and help for tertiary students

The Government is focused on making New Zealand one of the best places in the world to be a child and part of that is providing free school lunches to some 200,000 children.  $220 million has been pledged to this program which is also expected to create an additional 2,000 jobs. 

Tertiary students will have access to a $20 million fund for hardship grants to help them continue their studies over the coming year. 

Other Highlights

  • $203 million boost to funding for family violence services
  • $1 billion to go to the New Zealand Defence Force, $898 million of which is to go towards the purchase of new Hercules aircraft.
  • $414.2 million for the Early Learning Sector, including funding subsidies, pay increases for educators, additional support for home-based educators and investment in playcentre sustainability
  • $3.9 billion to ensure all DHBs continue to meet the needs of their populations
  • $193.5 million to support farmers through the eradication of Mycoplasma Bovis
  • $47.8 million to replace ageing communications capabilities for Police, Fire and Ambulance to support healthier, safer and more connected communities