Budget 2021 'a missed opportunity for this Government' - analysts say

May 21, 2021

Hillmarè Shulze, BERL’s chief economist, says not spending more is a “missed opportunity” for the Government.

Both an economist and a commentator feel the Government could have borrowed more money to spend in this year's Budget. 

BERL's chief economist, Hillmarè Shulze, and commentator Bernard Hickey told Breakfast the Government could have done a lot more. 

"It's quite a missed opportunity for this Government. We have seen really good economic growth, very low unemployment, and also the debt levels are coming in much lower than expected," Shulze said. 

"I think we should have had the Government spend a lot more in terms of infrastructure, supporting businesses, helping us into a just transition. Money's cheap."

Hickey said the country had a "massive" infrastructure deficit which would not be addressed. 

"One of the most disappointing things about the Budget ... we are reducing our infrastructure spend after next year at a time when now's the time to borrow that money and fill that huge gap's which has been built up over the last 30 years". 

Both agreed the Government "could have done a lot more" around its spend on benefits. 

As part of Budget 2021, Finance Minister Grant Robertson announced increases in benefits for families with children ranging from $36 to $55 per week.

All benefits will get a $20 per week top up from July. A further boost is expected in April 2022, in line with the Welfare Advisory Group recommendations.

From April 1 next year, adults with children will also receive an additional $15 a week each.

"They could have done a lot more on Working For Families, disability payments and a whole lot more around ... sanctions, to make it easier for people who are on benefits," Hickey said. 

Shulze said putting more money into a household would see them spend it on food, quality housing and education as they "make good decisions". 

Hickey said he would also liked to have seen proper analysis of the long-term benefits of rectifying benefit cuts from 1991, particularly Working for Families. 

"Whenever you spend a dollar here that reduces poverty and stress and it means those kids grow up to be much healthier and more productive in the future, that will generate GDP and it will also reduce costs for the government and for the taxpayers in 10, 20 years time."

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