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Budget Speech Budget speech Hon Grant Robertson Minister of Finance 30 May 2019 EMBARGO: Contents not for communication in any form before 2:00pm on Thursday 30 May 2019 Budget Speech Mr Speaker, I move that the Appropriation (2019/20 Estimates) Bill be now read a second time. It is my great pleasure to present the second Budget of this Coalition Government and the first Wellbeing Budget for New Zealand. From the day we took office, this Government has committed to putting the wellbeing of current and future generations of New Zealanders at the heart of everything we do. Budget 2019 shows we are delivering on that commitment. It shows a Government that is not satisfied with the status quo. In the election that led to the formation of this Government New Zealanders were asking a core question: If we have declared success because we have a relatively high rate of GDP growth, why are the things that we value going backwards like child wellbeing, a warm, dry home for all, mental health services or rivers and lakes that we can swim in? And the answer to that question was that the things that New Zealanders valued were not being sufficiently valued by the Government. And because they were not being valued they were not being measured, and because they were not being measured, they were not being done. So, today in this first Wellbeing Budget, we are measuring and focussing on what New Zealanders value – the health of our people and our environment, the strengths of our communities and the prosperity of our nation. Success is making New Zealand both a great place to make a living, and a great place to make a life. Mr Speaker, I am proud to be part of a Government that is doing things differently. Because not only has this Budget measured our success differently, we have embedded wellbeing at every stage of the creation of this Budget – from setting priorities, to analysing proposals to making the inevitable trade-offs that come with the privilege of being in government. For me, wellbeing is when people are able to lead fulfilling lives which have purpose and meaning to them. A government does not determine a person’s wellbeing, but we can certainly play a part. Ensuring New Zealanders have the capabilities to do this requires tackling the long-term challenges we face as a country. I want to sincerely thank all members of this Government for their support for this new way of doing things. New Zealand First and the Green Party have embraced this new approach. The Coalition Agreement, the Confidence and Supply Agreement and the Speech from the Throne remain the foundation documents of our Government and in this Budget we take further steps to deliver on them, building on the Foundations for the Future Budget in 2018. 1 2019 . BUDGET SPEECH . Mr Speaker, Before moving to discuss the details of the Budget, it is important to acknowledge that it was put together in the shadow of the March 15 terror attacks. That day changed the lives of the families of the 51 who died, those who were hurt or injured, and the wider community, particularly the Muslim community. As a country we must continue, as the Prime Minister said in the days after, to walk alongside them in their grief. In addition, we need to take the lessons from this tragedy to build a better, kinder, more inclusive country. Over the last two months and in this Budget we have made provision for a number of direct responses to the terror attacks. We have increased funding for mental health support services in Christchurch, put in place funding for additional financial support for families, and increased funding for support to our wider ethnic communities. This Budget also sets aside $150 million for the gun buy-back scheme based on initial advice from officials. Any additional funding that is required for the scheme will be sought as needed. Following on from the Royal Commission into the attacks we will consider what funding or support is required to ensure our security and intelligence services provide New Zealanders with the information and confidence they need. In the meantime this Budget allocates an additional $50 million to support the New Zealand Intelligence Community to continue its work. Mr Speaker, This is usually the point in a Minister of Finance’s Budget speech where they discuss the economic and fiscal outlook. But in applying a wellbeing approach to this Budget, we have not only examined the performance of our economy and finances, but also the welfare of our people, the health of our environment and the strength of our communities. So, the Budget presents a wellbeing outlook. My ambition is that from now on, at every Budget, New Zealanders will be able to clearly see the direction their country is travelling in and how the Government of the day plans to influence that direction with the investments it makes. Wellbeing Outlook Mr Speaker, Evidence from the Treasury’s Living Standards Framework which is made of four elements of wellbeing suggests New Zealanders currently have relatively high levels of wellbeing, but there are significant gaps. The state of our financial and physical capital is broadly strong. New Zealand has relatively high material living standards and the economy is forecast to grow at 2.6 per cent on average over the next five years. While this is a lower growth rate than we have seen in recent years, it is still well ahead of forecasts for other advanced economies, including the US, UK and Canada. 2 The labour market is strong, with unemployment at 4.2 per cent and set to remain at around 4 per cent across the forecast period. Wage growth is strong and is expected to average 3.4 per cent over the next five years, ahead of inflation. The Government’s books are in good shape. The Treasury forecasts the Government's fiscal position to remain strong, with surpluses across the forecast period and net debt reducing to below 20 per cent of GDP in 2021/22, consistent with our Budget Responsibility Rules. Analysis of our human capital suggests that on average, New Zealanders are healthy and well-educated. Life expectancy continues to gradually increase and is above the OECD median. Our adult skill level is in the top performing OECD countries, and our expected educational attainment is above the OECD median. Although the condition of our natural capital is generally worsening, the proportion of New Zealanders with access to suitable drinking water has gradually improved in recent years. In comparison to other OECD countries, the quality of our air is good in most places and at most times of year. Evidence of our social capital suggests that New Zealanders are well connected. We generally have a strong sense of belonging and are in the top performing OECD countries for indicators like freedom from corruption, trust in others and trust in government institutions. Despite these areas where New Zealand is relatively successful, our analysis has shone a powerful light on where the Government needs to intervene and invest to improve the overall wellbeing of New Zealand. These areas of need include New Zealand’s poor mental health outcomes, significant numbers of children living in poverty, the country’s high levels of greenhouse gas emissions, unequal growth and low productivity, and significant disparities across indicators of wellbeing between Māori and Pacific peoples and other ethnic groups. Child Poverty Report Budget 2019 marks New Zealand’s first ever Budget Day report on child poverty. Our goal, as articulated by the Prime Minister, is for New Zealand to be the best place in the world to be a child. We have passed legislation in this House to make sure that Governments now – and in the future – are held to account for decisions that have impacts on children living in poverty. The Child Poverty Reduction Act will help to ensure an enduring focus on reducing child poverty, political accountability against published targets, and transparent reporting on the progress we are making. The Child Poverty Report indicates that as at 2017/18 around 180,000 New Zealand children lived in poverty, on a before housing costs measure, and around 250,000 on an after housing cost measure. The Government has already set ambitious 10-year targets to halve child poverty and three-year targets to significantly reduce the rates. 3 2019 . BUDGET SPEECH . This Budget builds on the Families Package from last year that came into effect after the baseline data for this report. It also increases incomes and gives our education system the resources to help make New Zealand one of the best countries in which to be a child. The Child Poverty Report indicates that, due to our policies, by 2020/21 we will reduce the number of children in poverty on the before housing cost measure by between 41,000 and 66,000 children, and between 50,000 and 74,000 children on the after housing cost measure. I encourage members to read the full report in the Budget documentation. Wellbeing Approach Mr Speaker, In producing this Budget we have drawn on the 61 indicators within the Treasury’s Living Standards Framework dashboard that cover everything from incomes and home ownership rates to subjective wellbeing and our sense of connection to our communities. We have looked at international and national evidence, including the views of the Government’s Science Advisors, Ministries and Departments, as well as other inputs such as the Child Wellbeing Strategy. No other New Zealand Government has used this level of evidence and statistical analysis as the foundation for a Budget.
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