Touted as a once in a generation Budget, yesterday the Government announced a $50 billion COVID-19 Response and Recovery Fund, $20 billion of which remains uncommitted and will be allocated in the months to come. This fund builds on top of the initial $12.1 billion package, and the $12 billion New Zealand Upgrade Programme announced in January.

The fund’s focus, Minister of Finance Grant Robinson says was to enable New Zealanders, together, to respond, recover and rebuild. This is in the face of dire forecasting for the next 12 to 24 months.

• The IMF expects a decline in global economic activity not seen in peacetime since the Great Depression of the 1930s, with annual global growth expected to fall to -3.0 percent in 2020.
• New Zealand’s real GDP growth rate is forecast to decline from 2.8 percent in the year ending June 2019 to -4.6 percent in the year ending June 2020, driven by a quarterly decline in GDP of over 20 percent in the June 2020 quarter.
• Annual average GDP growth is forecast to return to positive from the year ending September 2021 onwards.
• Unemployment is forecast to increase significantly, rising to 8.3 percent in the year ending June 2020, before peaking at 9.8 percent in September 2020 and then recovering thereafter.

Moore Markhams acknowledges that the months ahead will be probably the most challenging for the New Zealand business community that we have ever encountered. We encourage you to speak up if you need help. We are here to support you.
 

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2020 Budget in snapshot

$4 billion Business Support Package including

• A targeted $3.2 billion extension of the Wage Subsidy Scheme - available for a further eight-week period for those who have suffered a 50 percent reduction in turnover over the 30 days prior to application compared to last year.
• A $150 million short-term temporary loan scheme to incentivise businesses to continue R&D programmes. The loans will provide one-off finance and be administered by Callaghan Innovation.
• $216 million boost to New Zealand Trade and Enterprise to expand the scope and intensity of support provided to exporting firms.
• $10 million to support small businesses to improve their ecommerce service offerings, and incentives/grants to encourage ecommerce adoption.

Environment Jobs Package

• $1 billion Environmental Jobs Package to create thousands of jobs that support habitat protection, pest control and biodiversity, including a $433 million investment in regional environmental projects.
• $315 million package of pest eradication and pest control work, including advancing Predator Free New Zealand.
• $200 million Jobs for Nature Fund to support job creation within the DOC estate.

Education, Training and Jobs

• $1.6 billion in a Trades and Apprentices Package including financial support for businesses to retain their apprentices, fund apprenticeships and training in targeted critical industries, and funding increased enrolments in tertiary education and training.
• A specific $50 million fund for Maori Apprentices and Trades Training.

Sector recovery

• Tourism Sector Recovery Plan. $400 million to fund the first stages of an action plan agreed with the industry.
• Māori COVID-19 Recovery Package. $485 million to support Whānau through the recovery period. This includes a $137 million boost to Whānau Ora.
• Pacific Recovery Package. $195 million for a range of initiatives including a major focus on programmes to lift skills and support employment.

Community Wellbeing

• Increases in the Foster Care Allowance, Orphan’s Benefit and Unsupported Child’s Benefit.
• Expanding the Free and Healthy School Lunch programme with $217 million to 200,000 students from Term 4.
• $32 million to increase support for foodbanks, food rescue and other community food services to leverage surplus donated food.
• $36 million fund to support community groups with focus on Maori, Pacific, refugee, and migrant communities.

Core Services Package

Health

• $5.6 billion in services and $755 million in capital investment. Including $3.9 billion for DHBs and $160 million increase to PHARMAC - a record $1.045 billion for 2020/21, 20 percent increase since 2017/18. $832.5 million for Disability Support Services.

• $500 million to deal with COVID-19, including $37 million to sustain laboratory testing capacity and additional support for ambulance, aged care, disability, and hospice services.

Social sector

• $203 million Family Violence Services Package.

Education

• $1 billion for core provision of education services, including cost adjustments for ECE subsidies and pay boost for early childhood teachers.
• $115.1 million School Property Investment Package to expand, maintain, and enhance schools.

Primary industries

• Nearly $500 million in initiatives to support and encourage sustainability.

Transport

• More than $1 billion to improve transport across the country.
• $400 million capital investment to help replace the InterIslander ferries.

Housing

• 8,000 additional public or transitional housing places over the next four to five years, financed by $5 billion of building through the Kāinga Ora borrowing programme and investment in Community and Transitional Housing providers.
• $670 million of support and services to tenants.

Infrastructure

• An initial $3 billion contingency for additional infrastructure investment with final decisions on which projects to come.