Infrastructure and social investment dominate New Zealand’s 2021-22 budget

New Zealand Finance Minister Grant Robertson has delivered an expansionary budget that invests heavily in infrastructure and social initiatives, according to one of the world’s largest professional accounting bodies, CPA Australia.

Rick Jones, CPA Australia New Zealand Country Head, said: “This is an appropriately expansionary budget, which seeks to bed in a better-than-expected recovery, while retaining flexibility should the pandemic worsen or another global economic shock emerge.

“The budget strikes a good balance by focussing on cementing the recovery, creating jobs and addressing the underinvestment in critical infrastructure.”

CPA Australia welcomed continuing support for small businesses’ digital transformation, with $44 million for digital training, advice and support services. However, Jones noted: “It is questionable whether the size of the investment is sufficient to push Kiwi small businesses off the bottom rungs of the small business digitalisation ladder.”

During the 12 years that the CPA Australia small business survey has run, New Zealand has consistently lagged its Asia Pacific neighbours for investment in innovation and participation in the digital economy.

Jones also observed that the budget includes little in the way of additional spending and initiatives to support the business sector.

The budget is underpinned by a long-term programme of investment in critical parts of the economy, particularly around three-waters infrastructure, rail, schools and hospitals.

“Coupled with complimentary and overdue major reform of the Resource Management Act, not to mention the multi-billion dollar wage support of businesses last year, this provides a framework for continuing recovery,” Jones said.

The budget forecasts that net core Crown debt will peak at 48 per cent of GDP in 2023 before reducing to 43.6 per cent of GDP at the end of the forecast period. The next surplus is not expected until 2027.

“New Zealand’s levels of debt are sustainable in this low interest rate environment and compare favourably with many other advanced economies,” said Jones.

Key budget highlights are:

• Tackling child poverty - lifting weekly benefits up to $55 per week
• Tackling climate change - $300 million to accelerate investment in low-carbon technology
• Infrastructure spend:
  • $1.3 billion for rail
  • $761 million of capital for education
  • $700 million for District Health Boards
• Housing:
  • $3.8 billion Housing Acceleration Fund
  • $380 million to deliver 1000 new homes for Maori
• $279.5 million investment in vocational education

“The big investment around the lifting of weekly benefits recognises the correlation between economic prosperity and social prosperity”, said Jones.

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