The 2020 Budget Policy Statement (BPS) sets out the priorities for the 2020 Wellbeing Budget and outlines the next steps in the Coalition Government's plan to build a more productive, sustainable and inclusive economy.
In May this year the Government delivered New Zealand's first Wellbeing Budget. The Wellbeing Approach, which was used to create the 2019 Budget, fundamentally changed the way budgets are put together and how they are delivered.
We used a broad set of indicators, beyond just economic measures, to identify five areas needing urgent focus. These areas became the five Budget Priorities for 2019: Taking Mental Health Seriously, Improving Child Wellbeing, Supporting Maori and Pacific Aspirations, Building a Productive Nation and Transforming the Economy.
This Government recognises these priority areas require not just urgent focus but also long-term attention, which is why they continue to be the core of the priorities in the 2020 Wellbeing Budget.
Budget 2020 priorities:
- Just Transition - Supporting New Zealanders in the transition to a climate-resilient, sustainable and low-emissions economy
- Future of Work - Enabling all New Zealanders to benefit from new technologies and lift productivity through innovation
- Māori and Pacific - Lifting Māori and Pacific incomes, skills and opportunities
- Child Wellbeing - Reducing child poverty and improving child wellbeing
- Physical and Mental Wellbeing - Supporting improved health outcomes for all New Zealanders.
When the Coalition Government took office in 2017 it was left with crumbling infrastructure, severe underinvestment in public services, degraded rivers and lakes, a housing crisis and rising inequality. The 2018 and 2019 Budgets started the process to repair that neglect and Budget 2020 will continue that work.
The BPS confirms operating allowances of $3.0 billion in Budget 2020, $2.4 billion in Budgets 2021 and 2022, then $2.6 billion in Budget 2023. Major investments will continue to be made in health, education, housing and social programmes to address New Zealand's long-term challenges.
The Government plans to invest an additional $12.0 billion in capital. This will take capital spending to the highest level in more than 20 years. This investment will be directed to areas like transport, health, education and greenhouse gas reductions. It is forecast to initially increase nominal gross domestic product (GDP) by a further $10.0 billion over five years, with further positive impacts on GDP beyond that period.
The Treasury forecasts for the operating balance before gains and losses (OBEGAL) show a small deficit this year, owing to investment at recent Budgets and the effects of falling global growth. However, surpluses thereafter will more than outweigh this, to produce an OBEGAL surplus, on average, over the next five years.
The Government inherited a net debt position of 22.9 per cent of GDP. The Treasury forecasts net core Crown debt to fall to 21.5 per cent of GDP in 2021/22. This includes our increased investment. Net debt is then forecast to fall further to 19.6 per cent of GDP in 2023/24, in line with the Government's target to maintain debt within a prudent range of 15 to 25 per cent of GDP.
Hon Grant Robertson
Minister of Finance
11 December 2019
- Taken from Financial Statements of the Government of New Zealand for the Four Months Ended 31 October 2017.