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Business & Finance

New Zealand's budget boosts benefits, focuses on pandemic recovery

  • Massive spending was targeted towards housing, healthcare and infrastructure, while funds were also allocated to addressing child poverty and climate change.
Published May 20, 2021

WELLINGTON: New Zealand on Thursday lifted benefit rates and promised billions of dollars towards addressing long-term challenges in its annual 2021 budget, while forecasting a faster economic recovery from the COVID-19 pandemic.

Massive spending was targeted towards housing, healthcare and infrastructure, while funds were also allocated to addressing child poverty and climate change.

The highlight, however, was a boost in weekly benefit rates by up to NZ$55 ($39.38) per adult, which the government said was the biggest hike in a generation.

"Not only will this give a sense of dignity and hope to those who receive that boost in income, it will also help reduce inequality and provide ongoing stimulus to the economy," Prime Minister Jacinda Ardern said in a statement releasing the "Wellbeing" budget.

The Treasury predicted a budget deficit of NZ$15.127 billion ($10.83 billion) for the fiscal year ending June, narrower than the NZ$21.576 billion forecasted in its half-year fiscal update in December.

The deficit peaks at 5.3% of GDP in June 2022 before declining to 0.6% of GDP by June 2025.

Net debt was forecast to peak at 48.0% of gross domestic product (GDP) in 2023 compared to the 52.6% forecast made in December.

New Zealand's GDP for 2021 was seen at 2.9% and gradually reaching 4.4% by 2023.

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