Wellbeing Budget 2020: Rebuilding Together
Budget 2020 formally establishes the $50 million Covid-19 Response and Recovery Fund. Nothing 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
The extension is available for a further eight-week period (ie further to the 12 week period of the existing scheme) for those who have suffered a 50% reduction in turnover in the 30 days prior to application as compared to 2019.
- Loan scheme for R&D programmes
A $150 million short-term temporary loan scheme will be launched to incentivise business to continue R&D programmes that may be at risk due to Covid-19. The loans will provide one-off finance.
- Further business support
A $216 million boost to New Zealand trade and Enterprise to assist further exporting firms, and $10 million earmarked for small businesses to improve their e-commerce capability.
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 as 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”.
- Primary Industries
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.
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 action 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
- Justice Sector
Department of Justice court building 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.
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)
- Environment Jobs Package
Budget 2020 provides $1.1 billion to create 11,000 environment jobs in the regions. This initiative not only supports people made unemployed because of the Covid-19 pandemic but also enhances the environment for generations to come. The new roles include regional environmental projects, biosecurity, weed and pest control and additional DOC jobs.
- Free trades training to support Kiwis into work
A record $1.6 billion investment has been made in a Trades and Apprentices Package to provide opportunities for New Zealanders of all ages to receive trades training. This includes financial support for businesses to retain their apprentices, free apprenticeships and training in targeted critical industries, and funding for increased enrolments in tertiary education and training.
- Tourism Sector Recovery Plan
An initial investment of $400 million to a targeted Tourism Recovery Fund, alongside the extension of the Wage Subsidy Scheme and a domestic tourism campaign, aims to assist the tourism industry and recover and restart while border restrictions remain for the foreseeable future.
This funding will support the first stages of an action plan agreed with the industry and includes a programme to support businesses plan for the future, a fund to ensure key tourism assets survive, a domestic tourism marketing campaign and a public/private taskforce to shape the future of the industry.
- Other support announcements
- A $485 million package is earmarked to aid Māori recovery from Covid-19 and includes a range of measures to support Whānau through the recovery period. This is in addition to other significant investment in Budget 2020 for Maori initiatives.
- A $195 million Pacific recovery package of initiatives to support Pacific communities affected by Covid-19, focusing on programmes to lift skills and support employment.
- $79 million boost to social service providers.
- $36 million in grants for community groups.
- $22 million for family violence services.
- $20 million to ease impacts of Covid-19 on rural and fishing communities.
- $20 million tertiary student hardship fund for 2020.
- $15 million boost to Fruit in Schools and digital sales platforms for food producers.
- What about Tax?
Perhaps somewhat surprisingly, and likely much to the frustration of the business community, any mention of tax relief or concessions is noticeably absent in Budget 2020.
There has already been a number of tax measures announced in response to Covid-19, including the tax loss carry back scheme, reinstatement of commercial building deprecation and increase to low-value asset threshold. Some further policy developments have been signalled for later in the year. In one new announcement-somewhat light on detail-businesses will be able to claim a tax deduction for unsuccessful or abandoned assets.
- More to come
The budget papers make it clear that the announcements of 14th May 2020 are not the final word. Treasury observes that the swiftly evolving impact of Covid-19 has meant that the documents released on 14th May 2020 do not capture all of the Government decisions with fiscal implications that have been made up until that date.
Decisions that have not been captured in the budget papers are scheduled to be incorporated in the 2020 Pre-Election Economic Fiscal Update.
The Update is due to be published between 10th and 21st of August 2020.