Budget date (May 19) is announced – Robertson heralds fiscal focus on health reforms and climate change

The big news for Point of Order’s fiscal policy buffs is that Budget 2022 will be delivered on Thursday 19 May.

But Finance Minister Grant Robertson was disclosing nothing surprising when he said the  Budget will include a focus on the Government’s health reforms and investing to meet our climate change goals.

“New Zealand went into COVID-19 with a number of long-standing issues that needed to be addressed, regardless of the global pandemic. It would be irresponsible to acknowledge that our health system needs improvement, based on the lessons from COVID, but then not doing anything about it.

“Just as it would be equally reckless to just say ‘let’s forget about climate change for a year or two’. These are investments that we need to make as a country. We can’t afford not to make them,” Grant Robertson said.

The other announcements from The Beehive over the past 24 hours tell us – 

• Increased income limits for Hardship Support through the Ministry of Social Development have been extended until 30 June;
• Proposals to regulate the residential property management sector “to make things fairer for renters and landlords” have been released for consultation;
• Legislation to protect the rights of “rainbow communities” and support open and respectful discussion about sexual orientation, gender identity, and gender expression has passed its third reading in Parliament. This aims to prohibit “conversion” practices to prevent the harm they cause, provide an avenue for redress, and uphold the human rights of all New Zealanders to live free from discrimination and harm.

In his announcement, Grant Robertson harked back to the release of the Budget Policy Statement in December, This showed Budget 2022 includes a one-off increase to the operating allowance to invest in major programmes, including the Government’s health reforms.

These reforms are dismantling the country’s district health boards and will establish two new health agencies, Health New Zealand and the Māori Health Authority.

As the name implies, one of these is race-focussed, charged with looking after the health only of Maori, but it has been given enough clout to veto decisions by the other  authority, which is charged with looking after the health of everybody.

Robertson went on to claim the Government will continue its “careful and pragmatic approach” to putting this Budget together.

This means it will not be able to fund all the projects that are proposed

“… and we will have to prioritise within our objectives. We will strike a balance between the important projects that need to be done and the ongoing need for fiscal sustainability.”

But isn’t that the way things usually – if not always – have been done?

Point of Order’s check back with the Treasury’s Half-year Economic and Fiscal Update – by the way – winkled out a table of Total Crown Expenses by functional classification.

This shows core Crown expenses were forecast to be $128 billion in 2021/22, declining to $120.2 billion in 2022/23.

Covid-19 and the massive effort to deal with it is the explanation:

Core Crown expenses are initially forecast to increase to $128.0 billion in the 2021/22 year, from $107.8 billion at 30 June 2021. This is primarily owing to COVID-19 related expenditure to support the New Zealand economy through the outbreak of the Delta variant. As this  expenditure eases, core Crown expenses are lower in the 2022/23 year, then increasing over the remaining years by $4.5 billion on average. This year-on-year lift is primarily attributable to future Budget allowances available across the forecast period, as well as an increase in  benefit expenses and core Crown finance costs

The biggest core spending item by far is “Social security and welfare”, expected to account for $43.3 billion in 2021/22, declining to $40 billion in the next fiscal year. 

“Health”  is the next biggest item in dollar terms, forecast to gobble up $27.8 billion in 2021/22 rising to  … no, declining to $23.9 billion next year.

It should be noted that funding for the Government’s Health and Disability System Reform was provided in Budget 2021 for the establishment of Health New Zealand and the Māori Health Authority.

Further decisions were required on the ongoing funding to support reform, including policy and funding changes.

The HYEFU, discussing potential risks to its forecasts, says:

Health System Sustainability (Cost Pressure or Variance – Expenses)

There is a significant risk that District Health Boards’ (DHBs) deficits for the 2021/22 financial year will be higher than what is in the fiscal forecasts. In addition, the health system is likely to face significant volume and cost pressures to maintain the delivery of existing services, which may increase as a result of the COVID-19 response.

The fiscal forecasts also assume that future health expenditure growth will be met from future Budget allowances, but the cost of operating the health system under Health New Zealand, including additional investment in such areas as digital services and primary health care and any efficiency savings in the longer term, has yet to be fully assessed.

The Government has signalled an increase in the level of funding available for the Budget  2022 operating allowance to manage the costs of the investment in a reformed health system. As there is a degree of uncertainty on the funding required for a reformed health system, there remains a risk that the overall investments through Budget 2022 will exceed the signalled Budget 2022 operating allowance, which would adversely impact the operating balance and net core Crown debt. 

The announcement today from Social Development and Employment Minister Carmel Sepuloni is that hardship assistance through Work and Income is being made available for longer.

The increased income limits mean single people 18 years and over, earning under $800 a week, or couples earning under $1600 a week may be eligible for assistance.

The extra support will help cover food and essential items for people in need, and supports the Government’s COVID-19 response by providing people with more options for support if they need to self isolate, Sepuoni said.

The Government increased the income threshold in December for a four-month period.  Today’s announcement extends these income limits for a further four months.

Sepuloni referred to this as “an investment of up to $9 million”.

Associate Housing Minister Poto Williams, announcing the proposals to regulate the residential property management sector, said they include a new licensing regime requiring residential property managers to comply with a Code of Conduct.

Williams noted the government has made several changes to tenancy laws in recent years and was committed through the Labour Party’s 2020 manifesto to further improve the rental sector by regulating residential property managers.

The measures supporting renters include:

• Introducing the Healthy Homes Standards which improves cover heating, insulation and ventilation.
• Strengthening the Residential Tenancies Amendment Act which means landlords are not able to end a tenancy without good reason.
• Prohibiting rental bids
• Making it so that rent increases can only be made once every 12 months.
• Improving renters privacy if they have been successful in the Tenancy Tribunal
• Making it so that if a tenant requests to make a “minor change” to their rental property, it is unreasonable and unlawful for a landlord to withhold consent for any change.

The press statement contained no similar list of measures supporting property ownbers.  Presumably these are to be found in the discussion document, available on the Te Tūāpapa Kura – Ministry of Housing and Urban Development https://consult.hud.govt.nz/policy-and-legislation-design/property-managers-review

Consultation will run until April 19 and it’s expected that the draft Bill is introduced to Parliament in 2023.

Latest from the Beehive

Government Further Extends Hardship Assistance for Low Income Workers

Increased income limits for Hardship Support through the Ministry of Social Development have been extended until 30 June.

Budget 2022 date announced

Budget 2022 will be delivered on Thursday 19 May, Finance Minister Grant Robertson announced today.

Government acts to protects renters and landlords

The Government has unveiled its proposals to regulate the residential property management sector in order to make things fairer for renters and landlords.

Bill to protect against conversion practices passes third reading

Legislation to protect the rights of our rainbow communities and support open and respectful discussion about sexual orientation, gender identity, and gender expression has passed its third reading in Parliament.