New Zealand’s Finance Minister, Grant Robertson, has unveiled a budget that aims to address the needs of middle New Zealand by reducing the cost of living pressures while investing in infrastructure, health, and education. The budget, which marks Robertson’s fifth as finance minister, was positioned as an inflation-driven document that favours Labour’s base rather than new measures or significant spending initiatives.
The budget announces several significant policies, including an extension of Labour’s ‘20 hours free childcare’ to cover two-year-olds, removing the $5 prescription charge that affected 135,000 New Zealanders last year, and introducing a $1.7bn package aimed at helping those struggling with rising food prices and inflation. As part of this package, children under the age of 13 will be able to travel for free on public transport, while prescription medicines will be free for the vast majority of people, regardless of age.
Moreover, the budget commits the government to spend $71bn over the next five years on infrastructure programs, including $6bn for a National Resilience Plan aimed at making the country more resilient against climate change. This spending is Robertson’s “legacy stuff,” but the challenge now lies in finding the workforce to build the public works, such as roads, rail, and schools. Additionally, the budget targets health spending, with the government committing $2.6bn over two years on responding to inflation and funding for Whanau Ora, Maori medium schools, and Te Reo revitalisation.
The budget also includes funding to reduce the cost of living for those struggling with high food prices, inflation, and higher mortgage costs. While this policy is beneficial for the lower-middle-class population with children under two, some on low incomes without children have not benefited from the new initiatives. Moreover, housing prices remain a significant problem, with over 29,000 people on the waiting list for public housing.
Although the New Zealand treasury officials expect the economy to avoid a recession, the budget surplus will be delayed one year until 2026. Despite this, the country’s wealth remains strong, and the New Zealand dollar held steady at 0.6250 against the US dollar on 20 May, despite bouncing back from an intra-day low.
In conclusion, New Zealand’s 2022 budget aims to provide relief to middle-income earners struggling with high living costs, infrastructure, health, education, and essential services. Robertson’s budget focused on providing sustainable solutions to the nation’s problems, and with the general election approaching scheduled for October 2023. The ruling left-leaning Labour party hopes to attract more support from middle New Zealand. While the investment in infrastructure is promising, the government still needs to address the lack of public housing and rising housing prices, which are significant challenges that must be tackled.
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