Finance Minister Grant Robertson has today released his 2021 'Securing Our Recovery' Budget, with benefit rises, a focus on Māori wellbeing, and infrastructure upgrades among the key figures.
The Budget sets out a total of $3.8b in operating allowance this year, and $15.1b over the forecast period.
Treasury: Budget At A Glance 2021
Net government debt was forecast to remain below 50 per cent of GDP, peaking at 48 per cent in 2023.
GDP is forecast by The Treasury to rise from 2.9 per cent this year ending June to 3.2 per cent and 4.4 per cent by 2022 and 2023, respectively.
Speaking on a post-Budget TVNZ panel, ANZ Chief Economist Sharon Zollner said New Zealand "does sit upon a regrettably active faultline", and therefore needs a bigger fiscal buffer than some other countries - but she also noted that New Zealand's debt is still lower than most other countries.
"The economy is the same size as it was before Covid, but the quality of growth has deteriorated massively," she said.
"We have borrowed from the future - that's not a trick that we can keep repeating.
"I think this Budget does strike a reasonable balance of looking out for the obvious problems that society's experiencing here and now - but with a bit of an eye to moving forward to the future and being prepared for the unexpected."
Unemployment is now forecast to trend downwards towards 4.2 per cent by 2025, after previous forecasts during Covid-19 of up to 10 per cent.
The Budget includes a big increase for those on benefits - they'll go up by between $32 and $55 per week from April 2022 onwards, with student Accommodation Benefits also increasing by $25 per week.
The benefit rises are in addition to the $20 rise for all main benefits scheduled for July, and on top of the $25 benefit lift which came in last year.
"They're shoring up the beneficiaries' income, even at a time when the labour market is clearly tight, because the economy is quite distorted and it's actually not easy for employees and employers to match in this environment," Ms Zollner said.
"So you do need to help the economy through what has actually a really difficult time of adjustment."
The Budget also includes a billion-dollar package investing in housing and a dedicated health authority for Māori, as well as significant infrastructure spending.
A total of $810m will go to KiwiRail for new trains, upgrades and maintenance, $761m will go towards education (most of which will be for classroom upgrades) and $700m for new District Health Board assets.
The Budget also puts $300m towards NZ Green Investment Finance Ltd, which is the government fund for investments in climate change mitigation, and $200m towards a tourism recovery package aimed at communities and businesses left most exposed by Covid-19.