Budget 2019: Fresh from the parliamentary budget lockup, Spinoff business editor Maria Slade summarises the funding announcements from Labour’s first Wellbeing Budget.
Mental health services, KiwiRail, beneficiaries and startup companies are some of the big winners on a government budget day that has otherwise been dominated by accusations of leaking and calls for ministers’ heads.
The Labour government has unveiled its much-heralded Wellbeing Budget, with a $1.9 billion package for mental health, $1.1b to help vulnerable children, funding so decile 1-7 schools don’t have to ask for donations, and $1b to redevelop rail transport.
It has also announced it will spend $535m indexing main benefits to wage increases, lifting abatement periods allowing beneficiaries to work more hours, and implementing other measures in line with the Welfare Expert Advisory Group’s recommendations.
The budget has been overshadowed by ‘leakgate’, the supposed hacking of Treasury’s systems that saw details revealed by the opposition two days early. But today was finance minister Grant Robertson’s day, and he was not to be distracted.
Backed by a cadre of ministers including deputy prime minister Winston Peters and Greens co-leader James Shaw, he refused to answer questions on the scandal during the traditional budget lockup press conference.
“This lockup is about the content of the budget. I made a statement earlier today and I think pretty much all the media outlets will have interviews with me as the day goes on,” was the best journalists could get out of him.
The government has announced new operating spending of $3.8 billion and $10.4 billion in additional capital expenditure.
The indicators show New Zealand is in good financial shape, Robertson says. The economy is forecast to grow at an average 2.6% over the next five years, well ahead of forecasts for other countries. The government is due to deliver a surplus of $3.5 billion in the current year, and it will meet its promise of keeping core Crown spending at under 30% of GDP. Government debt sits at around 20.1% of GDP.
But Robertson stressed again that the aim of the new Wellbeing Budget approach is to shift the focus away from the numbers and onto the outcomes for New Zealanders.
“We are not just relying on Gross Domestic Product (GDP) but also how we are improving the wellbeing of our people, protecting the environment and strengthening of our communities,” he says.
The government has divided these wellbeing initiatives into five headings:
Improving child wellbeing
One of the government’s key aims is improving the lives of young New Zealanders and it has announced $1.1 billion to protect the country’s most vulnerable children.
This budget is the first time it has had to deliver on the Child Poverty Report that showed 250,000 Kiwi children live in poverty. Labour has set a target of halving child poverty within 10 years.
Features of its child poverty package are a new intensive intervention service to work with families and keep children safe at home, more money for non-governmental organisations providing these services, and more money for Oranga Tamariki including an extra 350 frontline staff.
All decile 1-7 schools will be eligible for $150 per student so that they don’t have to ask parents for school donations, helping the families of nearly half a million children. “Budget 2019 takes a major step towards making school education free again,” education minister Chris Hipkins says.
The government is also tackling childhood obesity with a $47m programme to promote healthy eating and exercise in schools.
Also included in the package are the previously announced $320m to tackle domestic and sexual violence, a $153m new service helping young people transition from state care into adulthood, and the removal of NCEA fees.
In addition, it is setting aside $1.2 billion for a 10-year school property investment plan.
Taking mental health seriously
Following the recommendations of the mental health and addiction inquiry released this week, the government has announced a total $1.9 billion package for mental health, which it says is a record.
This includes rolling out a new universal frontline mental health service with mild to moderate mental health and addiction needs over the next five years. It aims to help 325,000 people by 2023/24.
The package also includes:
- $200m extra for new and existing mental health and addiction services
- Expanding the nurses in schools programme to decile 5 secondary schools
- $128m for the Department of Corrections to spend on services in this area
c$40m for suicide prevention over four years
- A pre-announced $197m to tackle homelessness through Housing First
- Funding for the Te Ara Oranga programme in Northland to help up to 500 people who are addicted to methamphetamine.
Supporting Māori and Pasifika aspirations
Improving outcomes for Māori and Pasifika is another key focus of the Wellbeing Budget, and Whanau Ora has received a $80m boost over four years which will see the programme expand. Efforts to revitalise te reo Māori get another $30m including $14m of additional support for Māori broadcasting agency Te Māngai Pāho.
The budget also provides $12m for a programme to reduce the rate of rheumatic fever, $11m to boost Pacific businesses and $20m over for years for a new Pacific Language Unit.
Transforming the economy
KiwiRail gets a $1 billion boost to support a redevelopment including $375 million for new wagons and locomotives, $331 million for tracks and other infrastructure, and $35m to replace the inter-island ferries which are nearing the end of their lives. The funding takes $300m from the Provincial Growth Fund.
It’s the first step to rebuilding rail as the backbone of a sustainable 21st century transport network, with a long-term national rail plan to be developed this year, the government says.
“After 155 years of rail in New Zealand, the historic misstep of privatisation and the managed decline of the past decade, securing these assets for the future is especially gratifying,” deputy prime minister Winston Peters says.
As predicted by The Spinoff, a new $300m fund will aim to plug New Zealand’s long acknowledged funding gap, which sees new businesses falter or look to overseas once they reach the stage of needing to expand.
The fund will help keep more startups in New Zealand for longer and support the proportion of New Zealand ownership, economic development minister David Parker says.
“New startups are well served, but mid-sized ones, between about $2 million and $15 million in size, are not well supported.
“The world is in the middle of a technological revolution and we need to chase down as many of these commercial opportunities as possible. We want to increase the amount of technology that gets commercialised and to lift the level of innovation in New Zealand,” Parker says.
The $300m fund will be formed by taking $240m of contributions earmarked for the New Zealand Super Fund between 2018 and 2022, and $60m from the existing New Zealand Venture Investment Fund.
The government also announced $10.4b of capital spending over the next four years.
As well as the $1.2m announced for schools and $1b for KiwiRail, the other big ticket in this category is $1.7 billion to fix hospitals and full funding for the Dunedin hospital build.
Other spending includes:
- $405m for Auckland’s City Rail Link
- $855m for the Provincial Growth Fund
- $283m for transitional housing
All of The Spinoff’s coverage of Budget 2019 is made possible thanks to the support of Grant Thornton. Learn more about our partnerships here.