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Budget 2020 - The End of the Beginning

Budget 2020 announced the biggest spending package in New Zealand's history.  The overall sentiment appears to be that this was a good Budget given the fallout from Covid-19.  It is clear the Government is letting New Zealander's know the money is there to get us through this crisis - $50bn (yes that's billion) is currently on offer, but the big question is, will this be enough?  Is the funding (as big as it is) actually targeted to things that will make a big enough impact to take the country forward?  Is there a defined strategy?  Are there specific outcomes they are looking for and how will this significant spend be measured and monitored?  Once spent, how does the Government plan to pay back what it will borrow to get us through?  Will it take New Zealand more than 60 years like it took Britain to pay off its WWII debt?  Only time will tell.

Minister Robertson described this Budget as a "once in a generation Budget" and it is no mean feat for a Government to steer us through this rough patch.  As history has shown us, after the dark days comes the good days, it's just that we are not there yet.  With all the uncertainty around us, one thing is for sure, all things shall pass and there will be a brighter future, so we should look on this time as the end of the beginning.

The Government's $50bn Covid-19 Response and Recovery Fund is to rebuild New Zealand's economy and society.  Minister Robertson was quick to say this was not a target spend, rather it provides the flexibility to respond as needed, now and in the future.

Covid-19 has already seen the Government commit $13.9bn of this fund to earlier Covid support measures, and with Budget 2020 they are committing a further $15.9bn on key areas that they hope will kick-start the economic recovery, create sustainable jobs, and set out the framework to rebuild.

No tax measures have been announced in the Budget primarily because the economic future is too uncertain to try and revenue-raise out of businesses, and there will be no 'helicopter' payments to all, rather the focus is on targeted support.  With the election still scheduled for September, it would be a brave Government who proposes tax increases before then.  But watch and see what comes in Budget 2021 as Minister Robertson has stated "we will grow our economy sustainably to pay back our debt, we will fairly share that burden, and above all we will do it together."

Let's look at what the Budget had in store.


Not surprisingly the largest recipient of the pie was to our Health sector with $5.6bn going towards, primarily, DHB services, and $755m towards capital investment.


This was followed by a further $5bn for housing mostly to create 8,000 public or transitional housing places over the next 4 to 5 years.  Given the success of Kiwibuild, perhaps this should be 1,000 over 10 years.

There was mention of $670m in the form of support and services to tenants which will improve affordability by increasing the supply of houses, we are however yet to see what form this will take.

Speaking of Kiwibuild, no support was announced for housing development and construction in the private residential market, although Minister Robertson did say it was his intention that this will be the subject of further investment in the next phases of the recovery fund.


The business sector comes in third, with a support package of $4bn (in addition to what has already been provided to the sector through recent Covid-19 business support) to help keep people in work and position businesses for recovery and growth. 

The Wage Subsidy Scheme is being extended for a further eight weeks to targeted businesses, being those who have suffered a 50% reduction in turnover over the 30 days prior to application compared to last year. The application period is open for 12 weeks.

There will be increased support for R&D in the form of a $150m one-off short-term temporary loan scheme administered by Callaghan Innovation to incentivise businesses to continue R&D programmes that may be at risk due to COVID-19.  There are numerous R&D incentive schemes. I wonder if it was a missed opportunity to bring them all under one umbrella.

There will be a $216m boost to NZT&E to assist with support provided to exporting businesses, including increasing activity for businesses in priority markets and expanding the digital services available for businesses.  And a further $10m has been earmarked for small businesses to encourage and improve their e-commerce service offerings. 


Our Prime Minister heralded that the Budget would be all about jobs, jobs, jobs - and it was to some degree.  It is great to see trades being elevated with $1.6bn to be spent on trades training to encourage businesses to retain apprentices, the provision of free apprenticeships and training in critical industries, and funding increased enrolments in tertiary education and training.

$1bn is set aside for an environment jobs package that claims to create thousands of jobs that will support habitat protection, pest control and biodiversity on public lands across New Zealand, including restoring wetlands, stabilising riverbanks and removing sediment.  While it is laudable to be creating jobs, while protecting and enhancing our environment, one has to question if this has the taste of vote pulling rather than the perfect ingredient for recovery from COVID-19.

Transport and Infrastructure

I'm sure the majority of kiwis will rejoice in the $1bn set aside to improve transport across the country, $400m of which will be to replace the ageing Interislander ferries.  While a bigger slice of the pie goes towards infrastructure, $3bn, we will however have to wait to see exactly what this has been earmarked for in the coming weeks and months.  No doubt some will find its way to the Provincial Growth Fund projects.

The desire is to unclog our cities, to connect our towns, and to support sustainable development by bringing New Zealand's infrastructure into the 21st century and at the same time meet our climate change goals.  A very big ask.

Tourism and Hospitality

If there are any losers in the Budget, that booby prize would have to go to the hospitality sector.  No funding has been specifically ear-marked for them.  They will have to rely on the Wage Subsidy and other business support measures to get them through.

The tourism sector has managed a little better with a $400m recovery fund which will include a transitions programme to support businesses to plan for the next steps, a fund to ensure key tourism assets survive, a domestic tourism marketing campaign and a public/private taskforce to shape the future of the industry.

Tenants and Landlords

There was no mention in the Budget of any specific assistance to be provided to commercial tenants and landlords.  That's not to say some won't be announced down the track as there is still $20bn of the $50bn not yet ear-marked.  Apparently, discussions are underway to develop a support package for these taxpayers.  Just what that will look like, we do not know, and will it be too little too late?

Students and Education

An initial $20m student hardship fund has been announced, with further support for students to come.  A $1bn education package has also been announced to support the core provision of education services across all levels of education.

Community wellbeing

The Budget will see financial assistance being provided to caregivers in the form of an increase in the current rates of the Foster Care Allowance, Orphan's Benefit and  Unsupported Child's Benefit  by  $25 per week per child, with further support to be announced by the Minister for Children in the coming days. 

The Free and Healthy School Lunch programme will be extended to 200,000 students from Term 4 at a cost of $217m targeted at schools with the highest disadvantage.  A further $32m will go towards increasing support for foodbanks, food rescue and other community food services to leverage surplus donated food from producers, manufacturers and suppliers that would otherwise go to landfill.



While it could be said there were elements of the Budget that were out to score votes, overall, it appears the Government has put funding where it is needed most at this time.  The decisions the Government have had to make over the past three months have been huge, and I wouldn't want to wish their job on anyone.  I believe they have done the best they can.  Although if you are in the hospitality sector you may disagree with me.

It is apt to close with words from Minister Robertson "It is just the end of the beginning, the next chapters are ours to write."

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