Prime Minister Jacinda Ardern says the government factored in looming pay negotiations with teachers, police and nurses into the Budget.
In her first media engagement since the Budget was unveiled yesterday, Ms Ardern was asked about what will likely be tough pay negotiations and the Government's ability to fund wage increases.
"Of course we know that we are facing those incredibly important pay negotiations and we've had to factor that in when we've crafted the budget," she said.
"For obvious reasons we don't make it particularly obvious where we've placed that contingency," she said.
Pressed on the issue, Ms Ardern said further details of the allocation would remain confidential, ahead of what looked to be tough negotiations.
"Yes, of course you'll understand why we don't put a clear headline in the Budget as to where that contingency is kept because of course we do need to go through a negotiation for each but we have factored that in as we have formulated the budget."
Pay talks for primary teachers began earlier this month, with the New Zealand Educational Institute union seeking a 16 percent pay rise and improved working conditions, especially with regard to support with special education needs.
Ms Ardern said teachers' expectations about Budget funding were not too high.
“I think they probably understand that we have a huge amount of pressure in the education sector, 17,000 students that there wasn’t funding set aside for, both for teacher needs and infrastructure that we had to make sure we were funding in this budget.”
“I think when you have a 46 per cent increase in funding in the education sector and still, there is that need, that goes to show just the amount of work that we’re having to put to rebuild that sector,” she said.
Ms Ardern said special education was prioritised in the budget because the need in that area was so great.
She added that it was a priority of Education Minister Chris Hipkins to attract people into the teaching profession.