The Wellbeing Budget 2023

Here are the highlights. But first, a redlight.

No news yet on what kind of direct funding assistance the Government plans for growers and farmers adversely affected by Cyclone Gabrielle.

Although the HB hort sector is asking for roughly $800million, which growers say is less than half the actual cost of recovery, the Government so far has focused on support for silt removal, future flood protection, rebuilding damaged schools, and fixing rail, roads and bridges, which they treat as restoring the physical connectivity (and therefore farming operations) and resilience of rural communities. 

The Budget allocates $609 million in operating spend and $195 million in capital spend for these purposes, on top of $889 million already provided.

Essential help to be sure. But not what’s needed specifically to avert an economic setback to our region that will involve very significant job loss and associated social disruption.

Labour MP Anna Lorck comments, “Serious work is underway with the horticulture sector and, as the Minister of Cyclone Recovery has said, we have committed to working in partnership with growers and will be talking more with them over the coming weeks to identify what support the Government can provide.”

But, if it ain’t in the budget?

Overview

By way of overview, and for the inflation wary, this “no-frills” Budget’s net new operating spending of $4.8 billion per annum is lower than the $5.9 billion in Budget 2022. A budget surplus is forecast for 2025/26. And net debt as a percentage of GDP expected to peak in the coming financial year at 22%.

Says Finance Minister Grant Robertson, “Managing within this operating allowance is possible because of a reprioritisation and savings process that has led to $4 billion in savings across the forecast period. This has allowed us to target resources where they are needed most at this time.

“For Budget 2023, we have focused on targeted cost of living support that will not unnecessarily exacerbate inflation pressures, and will take pressures off Kiwis in their everyday lives. We have a particular focus on supporting parents through reducing costs for early childhood education, scrapping prescription charges and targeted support to reduce household energy bills and public transport costs.”

The Budget projects $71 billion of infrastructure spending over the next five years, plus another $6 billion for a new National Resilience Plan “focused initially on rebuilding from Cyclone Gabrielle and then on closing the infrastructure deficit which has built up in this country over decades”. Immediate priority for these funds will be given to reinstating road, rail, and local infrastructure as well as telecommunications and electricity transmission investments.

Labour MP Anna Lorck touts this approach, saying: “This comes on top the billion dollar Budget 2023 cyclone recovery package, for flood protection, mental health, and local roads announced earlier which will see a significant amount of this investment also coming into Hawke’s Bay. For Hawke’s Bay we must ensure we have the critical lifelines that we lost in the cyclone – that cut off our rural communities and cities and towns – the bridges, roads, rail, electricity, communications infrastructure that our region must build back for resilience and safety. 

“For HB’s economy … the significant Government investment coming into our region will help keep growing good jobs and back local businesses, construction, our civil infrastructure companies and sub-contractors with the rollout of the ongoing  work ahead.”

Of special interest to our local councils, the Budget states:

“The Government is committed to a regionally-led recovery where local voices are central to Government decisions. The establishment of the Cyclone Gabrielle Recovery Taskforce – chaired by Sir Brian Roche and including representatives from business, local government, iwi and unions – and Ministerial leads for each affected region are central to this effort. Budget 2023 commits a further $20 million to support the structures underpinning this locally-led response.”

Climate Change

I’m a keen advocate of facing up to climate change and the changes to our economy, spatial planning and lifestyles that is already necessitating.

Here are the key relevant points in this Budget.

• Spending $1.9b from the $3.6b Climate Emergency Response Fund, which can only be spent on emissions reductions and adaptation measures;
• $402.6 million to expand the duration and scope of the Warmer Kiwi Homes programme;
• $370 million for rail infrastructure resilience;
• $167.4 million in building resilience to future climate events;
• $120 million to expand EV charging infrastructure;
• $100m fund to help councils invest in future flood resilience (announced in HB last weekend);
• $50 million for distributed renewable energy projects in isolated communities;
• $39.2 million in improving the mapping of New Zealand’s coastline and identifying coastal areas at significant risk of climate-related hazards and natural disasters;
• $38 million on design of Emissions Trading Scheme and centralised exchange for New Zealand Unit trading;
• $32.5 million to accelerate the adoption of green hydrogen; and,
• $30 million over three years for clean heavy vehicle grants.

Health Care Delivery

Here in Hawke’s Bay, our health care delivery capability is under major stress, as it is throughout NZ. This Budget allocates $1.3b to relieve cost pressures in the health system and reforms, and more than $1b to increase pay rates and boost staff numbers.

The Government says this funding enables: 

• an additional 500 new nurses;

• by 30 June 2024, no patients (excluding those waiting for orthopaedic surgery) to be waiting longer than 12 months for treatment, from the date a decision to treat is made;

• $118 million allocated to reduce waiting lists by freeing up inpatient hospital beds;
  
• $20 million in spending to improve health equity for Māori and Pacific peoples;
  
• $2.8m will support provision of primary, community and residential care services to the population affected by the North Island weather events. The provision of an increased level of support to the affected population will decrease the acuity and frequency of these patients presenting at hospitals. It also provides additional funding for air ambulance services and to improve the accessibility of virtual primary healthcare services.
  
  Finally, these allocationso have special relevance given the relatively low income profile of Hawke’s Bay:

• $323.4m to continue free lunches in schools, estimated to save families with two school-age kids $60 a week;
  
• $618.6m to scrap $5 co-payments for prescriptions;
  
• $402.6m for expanding Warmer Kiwi Homes, aiming to reduce household energy costs by subsidising 100,000 heating and insulation installs, 7500 hot water heat pumps and 5 million LED light bulbs;
  
• $327m for free public transport for under-13s, and half-price for under-25s. 

More BayBuzz analysis to come in the days ahead.

Here’s the Government’s official “Budget at a Glance”.