Securing our recovery with Budget 2021

Next week, our Government will set out the next steps in our COVID recovery with Budget 2021. We’re taking a balanced approach that will create jobs, grow the economy, and keep a lid on debt, while tackling long-term issues like child wellbeing, housing, and climate change.

The last time we announced a Budget, the future looked uncertain. Predictions about the impact of COVID-19 were fairly bleak. But – by going hard and early, and by investing in the Kiwis and businesses that needed it most – we protected people from the virus and we made sure our economy had the best possible starting point from which to bounce back. Now, with better than expected GDP and employment numbers, and a top international credit rating, things are looking up.

New Zealand’s stronger than expected economic recovery is cause for hope, but the world is still grappling with COVID-19. Countries are facing third and fourth waves of the virus, and every economic forecast talks of “uncertainty” and “volatility”. Now is the time to secure our recovery. We need to maintain our progress, continue to manage our finances carefully, and ensure our recovery works for all New Zealanders.

This will form a recovery Budget that not only drives sustainable economic growth, but is grounded in our mission to support the wellbeing of all New Zealanders.

The pandemic is still the biggest challenge we face, but we’re well-positioned to meet that challenge and emerge stronger. As we’ve said from the outset, a strong health response is the best economic response. With our vaccination rollout ramping up, we’ll be less likely to need to change alert levels, giving New Zealanders and businesses more certainty. Our goal is to have everyone over 16, who wants to be, vaccinated before the end of the year. This will open up more opportunities to connect with the world and continue to grow the economy.

As part of securing our recovery, Budget 2021 will also support vulnerable sectors still feeling the effects of the pandemic. We have already rolled out a targeted boost for tourism that will help the industry reset and get ready for when the borders reopen. We’ve had success in boosting skills and training as part of the COVID-19 response, with more than 100,000 people taking up free trades training. We’ll look to build on this, and support the hard work of businesses and workers, to grow sustainable initiatives and add quality jobs.

As a small economy vulnerable to external shocks, it’s sensible that we will aim to reduce our debt once the economic recovery gathers pace. However, any attempt to speed up debt-reduction runs the risk of undermining our recovery – at the expense of those who need our support the most. A turn to austerity measures would make the rebuild process slower and less equitable. Our approach is about getting the balance right.

The Budget will focus on our major goals for this term of Government – keeping New Zealander’s safe from COVID, accelerating the recovery, and tackling the country’s long-term challenges.

To do this, we’ll be making sure new spending is directed toward the greatest need. As we respond to the pandemic, we have an excellent opportunity to make sure our economy gives every New Zealander a fair go. Initiatives like lifting the pay of our lowest paid public sector workers, the increased minimum wage, new sick leave legislation, and amended fair pay agreements are designed to address inequality. With Budget 2021, we’ll build on the progress we’ve already made to ensure those on low incomes don’t fall further behind, while also locking in a strong economic recovery.

It is our longstanding commitment to wellbeing that has put us in a strong position compared to many other countries. Budget 2021 will build on that strong position, ensuring stability and security, recovery and resilience – for all of us. I look forward to sharing it with you next week.