A Budget for the People
As New Zealand looks to successfully navigate the new reality in the wake of COVID-19, many of our business, economic, societal and environmental frameworks continue to require a broad rethink. Budget 2021, announced today by Hon Grant Robertson, Deputy Prime Minister and Minister of Finance, sheds light on policy updates in these areas in a bid to help further stimulate our recovery.
View each of the sections above for key details on each area addressed in Budget 2021:
Despite facing a once in a lifetime health and economic shock, New Zealanders have proven to be extremely resilient. While the effects have not been the same for everyone, the New Zealand economy appears to be doing well.
Key economic numbers from Budget 2021 are:
- Unemployment is forecast to fall back to 4.2 percent.
- GDP growth will rise from 2.9 percent this year to 4.4 percent in 2023.
- Exports are forecast to grow, on average, by 5.8 percent over the next four years.
- Business investment is forecast to grow at nearly 6 percent a year.
- Wage growth, at nearly 3 percent a year will outpace inflation, meaning more money in Kiwis’ back pockets.
- The operating balance and residual cash are forecast to be in surplus at the end of the forecast period, while the OBEGAL is projected to be in surplus from 2026/27.
- At no point now is net debt forecast to go above 50 percent of GDP. While the headline numbers show a peak of 48 percent, looking through the impact of the Reserve Bank’s Funding for Lending programme, net debt is forecast to be 41.4 percent in 2025.
Budget 2021 Focus
Budget 2021 focuses on three main foundational changes which will continue to be a focus in all of the Government’s budgets in this term:
- Making housing affordable
- Climate change
- Child well being
While economically, we have competing needs as a country, Budget 2021 focuses on people and poverty, tied in with economic growth and stimulus. At face value, Budget 2021 appears to deliver reasonably well in these areas. But, as always, delivery of promises is easier said than done.
For example, there are some major skilled staff shortages in a number of industries, not to mention product supply and pricing issues, that have the potential to impact on New Zealand’s economic growth over the next several years.
We are likely to have significant staff shortages, and significant housing issues and training Kiwis won’t cut it. The proposed reforms just don’t happen overnight, and no matter how well-intentioned, things will still be tough for many families and businesses.
It’s quite clear that Budget 2021 is delivering to some of the lowest income New Zealanders by boosting main benefit rates by up to $55 per week. This is intended to continue the Government’s quest to reduce inequality, and to further support and stimulate New Zealand’s economy as we recover from COVID-19.
For more – join our RETHINK webinar series
We’re delighted to be hosting Hon Grant Robertson for the upcoming webinar in our BDO RETHINK series as we discuss the government's post-budget policy priorities impacting our economy and your business; 9:00am- 10:00am Wednesday, 14 July 2021. Learn more and register here.