Government’s Budget 2021 reprioritises nearly $1 billion

by Roxanne Libatique05 May 2021

The government has confirmed that the COVID-19 Response and Recovery Fund still has some funds left. Now it wants to use the funds to aid New Zealand’s recovery from the pandemic – targeting the areas where it is needed the most.

Deputy Prime Minister Grant Robertson said in his annual pre-Budget speech to the Wellington Chamber of Commerce that the government will treat Budget 2021 (Budget) as a recovery budget as the impacts of the pandemic are still being seen around the world.

“We will strike a careful balance between continuing to invest in our recovery and beginning the task of reducing down the debt we took on to support New Zealanders through COVID-19,” Robertson said.

This term, the government will prioritise accelerating the economic recovery and addressing big three long-term challenges: housing affordability, climate change, and child wellbeing.

“The Prime Minister has also tasked me as Deputy Prime Minister to lead a new implementation unit based in her department to ensure we are tackling these core priorities,” Robertson said.

“The unit will be funded through Budget 2021 and will monitor and support the implementation of a small number of critical initiatives, particularly where multiple agencies are involved in the work.

“At a time where the government is playing a much greater role in supporting the economy and investing for the future, it is crucial that we ensure that we are getting value for money from every dollar of spending, and that public service initiatives are being delivered in a way that supports our economic recovery.”

Century 21 New Zealand owner Derryn Mayne is urging the government to include first-home buyers in its Budget’s goals.

“I truly hope first-home buyers will feature strongly on Budget Day with measures that actually get them into the property market. The Finance Minister has long promised to ‘tilt the balance more towards first-home buyers’, but almost every Kiwi would agree that has yet to be achieved,” Mayne said.

Mayne noted that the government recently lifted the price caps on eligible properties and the income thresholds of first-home buyers applying for HomeStart Grants and First Home Loans. However, she claimed that the government’s decision turned out to be “tinkering with little positive impact so far.”

“Try buying an existing house in Auckland for $625,000, or a new build in Auckland for less than $700,000. In fact, since the higher price caps took effect on April 01, we’ve in turn seen developers bumping up their townhouse and apartment prices to just below the new maximum caps. That’s a terrible public policy outcome and only puts more debt on first-home buyers,” she said.

Mayne advised prospective sellers who own properties outside the reach of most first-home buyers to list sooner rather than later if they want to achieve maximum interest and price. Policies are now taking hold, which are seeing fewer investors competing for property.

“The government has got particularly tougher on property investors, which is already seeing fewer enter the market and more exiting. The Reserve Bank has also introduced a 40% deposit requirement for investors, which is slowing down the likes of ‘mums and dads’ looking at purchasing a second home to rent out,” she added.

“First-home buyers are not expecting a free lunch in Budget 2021, but they will be anticipating some workable policies and plans that ensure a leg up on the property ladder.

“Enabling more young Kiwis into property ownership would be one of the greatest things this government could deliver for the future and security of New Zealanders. Two weeks until Budget Day, and we all wait with bated breath.”

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