Wellbeing Budget 2020: Rebuilding Together
The COVID-19 Response and Recovery Fund, established through this Budget, will be used to support New Zealanders through each stage of the impact of the virus. It is designed to not only support the immediate response but also provide support, as necessary, over the longer term to rebuild our economy and society.
We have already committed $13.9 billion of the Fund to previously announced initiatives, including funding for the Wage Subsidy Scheme, the essential workers leave scheme, SME support measures, the Business Finance Guarantee Scheme, and additional packages to support the health response, and resources for those in need.
Today we are announcing a further $15.9 billion in funding focused on key areas that will kick-start the economic recovery, create decent, sustainable jobs, ensure the security of our most vulnerable, and lay the groundwork for us to rebuild a better nation together.
In the eight weeks leading up to Budget 2020, the New Zealand Government made several key legislative and policy announcements in response to the COVID-19 pandemic. These earlier measures focused on business support and ranged widely to include a wage subsidy scheme, significant tax relief, an interest-free loan scheme, and temporary relaxation of some statutory obligations in relation to insolvency and compliance.
Budget 2020 formally establishes the $50 million COVID-19 Response and Recovery Fund. Noting that $13.9 million has already been committed, Minister Robertson has announced a further $15.9 million in funding, which includes:
- a targeted extension of the Wage Subsidy Scheme (ie an eight-week extension to the already established 12-week period) for those who have suffered a 50% reduction in turnover in the 30 days prior to application as compared to 2019
- a loan scheme for R&D programmes (being a $150 million short-term temporary loan scheme to incentivise businesses to continue R&D programmes that may be at risk due to COVID-19)
- further business support by way of a $216 million boost to New Zealand Trade and Enterprise to assist exporting firms, and
- $10 million earmarked for small businesses to improve their e-commerce capability.
Ministerial statement — Health
Investment in the health sector has never been more critical. To ensure the sector is able to respond to the pandemic while maintaining the sustainable delivery of existing services, Budget 2020 invests significantly in areas that we know will make a difference to the wellbeing of New Zealanders.
Budget 2020 allocates $5.6 billion in services and $755 million in capital investment. The Budget also provides a $160 million increase to PHARMAC’s budget.
Funding of $832.5 million is allocated for services to people with long-term physical, intellectual and/or sensory impairment. Maternity services are also singled out, with $177 million to address cost and volume pressures.
Acknowledging the COVID-19 crisis once again, the Government has earmarked $37 million to sustain laboratory testing capacity and provide additional support for ambulance, aged care, disability and hospice services. The Minister also notes that the Government expects “to provide further support to our health sector in the coming months”.
Ministerial statement — Primary Industries
New Zealand’s primary industries play a critical role in growing our economy. As we move further into the post-Covid-19 economic recovery, our primary sector is more important than ever. The core package invests nearly $500 million in initiatives that will ensure our primary industries are supported and sustainable now, and into the future.
Funding in the package will support our primary industries with their existing operations and preventing or mitigating the impacts of biosecurity threats and enabling implementation of climate change and ETS reforms.
The Government has also pledged $193.5 million to continuing the Mycoplasma Bovis Eradication Programme. The funding supports operational activities (including surveillance, tracking, movement controls and culling infected animals) and contributes to farmers’ compensation costs.
Earlier in the year (March 2020) the Government also signalled its intention to introduce tax relief measures for farmers affected by the Mycoplasma bovis outbreak. Farmers who have culled their breeding livestock (including growing replacements) because of Mycoplasma bovis would be allowed to spread the additional income derived as a result of the cull of that stock over the following six years, provided those farmers have:
- used, and continue to use, the national standard cost scheme or the self-assessed cost scheme for their breeding stock, and
- substantially replaced that culled livestock within 12 months.
The proposal will be contained in a tax Bill to be introduced later in 2020. When passed into law, the legislation will have retrospective effect from the 2018 income year.
The Government has also earmarked $43.4 million operating total and $36.2 million total capital for rebuilding forestry Emissions Trading Scheme (ETS) infrastructure. This initiative provides funding to enable the implementation of “new business processes” and implements the reforms set out in the Climate Change Response (Emissions Trading Reform) Bill.
Ministerial statement — Transport
Transport Budget 2020 builds on investment made through the New Zealand Upgrade Programme and includes more than $1 billion to improve transport across the country. This investment will enhance the resilience and reliability of national rail and ferry networks and, over time, contribute to efforts to reduce our carbon footprint through decreasing emissions.
Budget 2020 builds on the $6.8 billion investment made through the New Zealand Upgrade Programme and includes $197.1 million operating total and $1.1 billion total capital to improve transport across the country.
Included in this allocation is:
- $399.5 million to replace the ageing inter-island ferries, and
- $421.7 million to replace ageing railway locomotives and upgrade mechanical maintenance facilities.
Ministerial statement — Justice Sector
A key initiative in this package is the Next Generation Critical Communications programme which will invest in bringing state of the art communications capabilities to Police, Fire, and Ambulance, supporting healthier, safer, and more connected communities. This will see our emergency services finally able to communicate with the public and with one another all over New Zealand in a safe and reliable manner.
The package also provides funding to enable continued access to justice services, such as funding for legal aid, community law centres, and the Canterbury Earthquakes Insurance Tribunal. Additionally, it provides funding for the newly established Criminal Cases Review Commission.
Department of Justice court buildings around New Zealand receive a $163.5 million capital upgrade to meet health and safety requirements. The “Next Generation Critical Communications” programme that services New Zealand’s emergency services receives $47.8 million in funding to invest and upgrade its network.
Ministerial statement — Education
This Budget invests nearly $1 billion to support the core provision of education services. This will provide substantial support to students across all levels of education, while also targeting investment in areas that we know will benefit students who need it the most.
The Education package makes a significant investment in our early childhood sector. The sector has been placed under particular strain in recent years, and this has been exacerbated by COVID-19. The Budget includes cost adjustments for ECE subsidies and a pay boost for early childhood teachers. The government will make further announcements on support [for] this sector in the near future.
The education sector also receives $186 million as part of the COVID-19 Response and Recovery Fund, specifically for supporting distance learning for students during lockdown.
Further allocations include:
- capital injections for school properties ($119.5 million)
- learning support for students with high health needs and English for Speakers of Other Languages teaching staff ($79.7 million)
- funding for Early Childhood Education (ECE) subsidies, schools operations grants, trades academies and tertiary education subsidies ($375.1 million)
- a 3.5% pay rise for Qualified Early Learning Education (ECE) teachers and ongoing funding for Kohanga Reo and home-based educators ($291.6 million).