Budget 2021: Finance minister defends New Zealand's 'strong balance sheet'

The finance minister says there is enough for "middle" New Zealand in the Budget and that the government has not left working people behind.

There is some criticism that with significant welfare increases, the working population might proportionally slide backwards.

Finance Minister Grant Robertson told Morning Report the Budget that has a significant benefit boost was good for middle New Zealand.

"We made the decision in 2019 to index benefits to average wages so there will be continuing increases in main benefits rates each year and they are not factored into the numbers we listed yesterday.

"The cost of living has increased but ... this is the most significant lift in a generation.

"We know there's more to do on major issues like housing affordability, child wellbeing, climate change ... you've got to see the budgets across the three years together. No-one is denying that there isn't more to do."

Despite economists saying there was more money that could be spent, Robertson said: "We live in a very uncertain and volatile time, we're not through Covid yet.

"The $5 billion buffer that we've got, I think we'll be okay."

He said the February Covid-19 outbreak in Auckland cost taxpayers just under $500,000,000; but, if there was another pandemic, the government would need to borrow more.

According to Treasury, net debt between 50 and 60 percent during a crisis was okay, he said.

"We have a very strong balance sheet," and New Zealand was able to take on more debt in the future, he said.

Social insurance scheme

The working proposal was an ACC style scheme, he explained.

"It would have time limits attached to it. It would be linked to taking up training opportunities. One of the things we are looking at is whether health conditions and disability can be included within in as well.

"This is part of a broader insurance scheme effectively around incomes."

He said the government would also review the Working for Families programme.

"This Budget is good for middle New Zealand."

Housing

As for pulling the handbrake on housing price growth, Treasury has forecast a drop from 17 percent growth down to 0.9 percent.

"We've had many discussions about the unsustainability of the housing market; we made the policy changes around interest deductibility in the bright-line test because we did want to see that rate of growth come down," Robertson said.

"The Reserve Bank has made their changes with the LVR. We could not sustain 17 percent and it was a very necessary fall in that rate of growth. Exactly where it lands we will see, but I do think we've done the right policy mix to get it under control."

Child poverty a priority - Sepuloni

Beneficiaries will receive increases of between $32 and $55 per person by 2022.

Social Development Minister Carmel Sepuloni told Morning Report addressing child poverty was a "priority" for Labour.

However, this benefit increase still leaves up to 190,000 children in poverty.

"I mean it lifts the 33,000 children out of poverty and we would acknowledge there is more to do."

Explaining how the government was helping the working poor, she said: "We continue to do [work to] lift the minimum wage, even the abatement threshold changes where people may be on benefit are able to take up some part-time work, well now they can actually earn a little bit more without losing their entire benefit."

As for people in social housing, Sepuloni said they would be "better off" with the accommodation supplement.

"These benefit increases mean that people will be on average $40 better off once it is fully implemented in April next year."

National calls for more jobs to help economy

The National Party said the Budget was turning its back on businesses.

National shadow treasurer Andrew Bayly told Morning Report businesses needed better support and missed out big time.

He said $110m was being borrowed every day, and it was important to focus on growing the economy as the younger generation would cop the debt.

"[What] we're very keen to see is a pathway back to growing this economy. Unfortunately, the budget didn't focus on that."

He said a growing economy would mean the creation of new jobs. "It's ultimately going to help people who are on welfare getting off and being able to get access to good high-paying jobs."

He said eventually, the government would get more revenue to invest in schools, hospitals, roads and rail - "everything that Kiwis want".

There needed to be more support around "business generation because that is what will help those beneficiaries; we've got 220,000 people on Jobseeker benefit," he said.