Professor Grant Duncan, TEU member and Associate Professor at the Massey University Albany campus in Auckland takes a look at Budget 2020in light of last year’s focus on wellbeing.
Last year, the world’s first Wellbeing Budget promised to ‘tackle long-term challenges’ and improve the living standards and wellbeing of all New Zealanders.
Budget 2020 was not the ‘Second Wellbeing Budget’, as job losses and lower incomes generally don’t bring happiness. With the Ministry of Social Development preparing for as many 300 000 extra people applying for a benefit in the coming months, and unemployment projected to peak at close to 10% in September - the same month in which people go to the polls to pass judgement on the Parties of Government - Budget 2020 was instead the ‘First Aid Budget’.
Budget 2020, with its massive spending in response to COVID-19, presages us paying off debts for many years to come. While Grant Robertson didn’t raise the top marginal income tax rate this year, an election year, he may do so next year, if he’s not in opposition.
Raising the top marginal income tax rate looks like only way to speed up the debt repayments after the worst is over. If Aotearoa experiences another event like this pandemic in the next 5 years, New Zealand will have much greater difficulty in managing its way through as a result.
As a ‘First Aid Budget’, the Government has looked firmly toward recovery, but we must also look toward prevention and mitigation. Budget 2020 provides almost $5.6 billion for the health sector, so it can respond to the pandemic while maintaining the sustainable delivery of existing services. With a massive boost to the health sector, one hopes that this will include additional spending on preparations for the next pandemic, as we should not believe that it’s a “one in 100 years” event.
As unemployment rises, and more New Zealander’s seek support in the form of benefits, and with no further increase to benefit levels, many will become reliant on charity and food grants to survive, the health of many New Zealanders, and wellbeing in general will be severely tested.
COVID-19 was none of this Government’s doing, and the Minister of Finance is showing admirable confidence and conviction in leading the country through the mire. If it weren’t for governments taking up the slack in times of crisis, the consequences would be unimaginably worse. But we must be realistic about the challenges we will face as a country well into the future, and realistic about the impact of our ‘First Aid Budget’