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Budget 2021: Benefits boost in ‘quest to reduce inequality’

May 20, 2021

Beneficiaries will reap the rewards of this year's Budget with a welfare boost billed as the "biggest in a generation".

The Labour majority government will lift all benefit rates by between $32 and $55 in line with recommendations by the Welfare Expert Advisory Group.

All main benefits will jump by $20 a week from 1 July, with the remainder to come by April 2022.

"Today, we close a chapter on our past and take a big step towards our goal of making Aotearoa New Zealand the best place in the world to be a child," Prime Minister Jacinda Ardern said.

Finance Minister Grant Robertson said the benefit boost would restore dignity and hope for the lowest income New Zealanders.

"This not only continues our quest to reduce inequality, it also acts as further support and stimulus to our economy as we recover from Covid-19," Robertson said.

The economy is expected to strengthen from the second half of the year, with growth peaking at 4.4 percent in June 2023.

Unemployment is forecast decline to 4.2 percent by 2024.

Read all RNZ coverage of the 2021 Budget


By 1 April 2022, sole parents will see their main benefit increase by an extra $36 a week.

A couple with children will receive an extra $55 a week in Jobseeker Support or an extra $42 in Supported Living Payment.

Individuals without children will have their Jobseeker Support jump by $48 a week, or $55 a week for couples.

The Supported Living Payment will jump by $32 a week for individuals without children, or $42 for couples.

The income thresholds for childcare assistance will also be adjusted each year in line with the average wage.

"These thresholds were frozen by the National-led government in 2010 so the ability of some working families to access this support has fallen as wages have increased," Social Development Minister Carmel Sepuloni said.

Housing and infrastructure

The Budget lifts investment in infrastructure over the next five years from $42.2 billion to $57.3b.

A $380 million boost for Māori housing is the chief new housing measure in the Budget, with the rest of the government's plan outlined in March.

The new funding is expected to pay for 1000 new homes and help repair about 700 dilapidated homes owned by Māori.

$350m has also been ringfenced in the government's $3.8b infrastructure fund to support Māori and iwi providers build houses.

The government expects that to pave the way for at least 2700 new houses.

The government has set aside $131.8m for the overhaul and replacement of the Resource Management Act through to mid-2024.


Pharmac will receive an extra $200m over four years to increase its ability to purchase medicines and drugs for sick New Zealanders.

"Other than the special Covid-19 funding we provided last year, this is one of the biggest budget increases Pharmac has ever had and will help an estimated 370,000 patients a year," Health Minister Andrew Little said.

$486m has also been set aside over four years towards the task of scrapping all 20 district health boards and replacing them a new Health NZ body. It includes $98.1 million to set up the Māori Health Authority.

There will be $126.8m towards Hauora Māori programmes run by the Māori Health Authority.

The government has reneged on its commitment last term to provide a free yearly GP visit and eye check for Supergold Card holders, describing the initiative as being of "limited benefit".

The Budget will increase funding for DHBs by $675m more a year. Primary health care will also receive another $46.7m a year.

"As I said last month, we must keep our hospitals running as we transform the health system so people can keep getting the operations and care that they need," Health Minister Andrew Little said.


Future changes and historic payroll mistakes are among the targets of more than $2b in new education spending.

The four-year total includes $1.7b on school and early childhood education and $470m on tertiary education.

The biggest areas of new spending also include new school property and catch-up funding for polytechnic courses.

The Budget provides a 1.6 percent increase to school operations grant next year and a 1.2 percent increase to early childhood and tertiary education subsidies.

Student allowances and student loans for living costs will go up by $25 a week from 1 April 2022.

Climate Change

The Budget pumps another $300m into the Green Investment Finance fund to support the uptake of low-carbon technologies and low-emissions vehicles.

The investments in transport alone are expected to save up to 240,000 tonnes of greenhouse gas emissions, the government said.


The government will extend the training incentive allowance for about 16,000 people at a cost of $127m over four years.

The allowance assists people on eligible benefits with the costs of study, such as fees, books, transport and childcare.

As signalled last year, the government has also begun work with business and union groups to design a social unemployment insurance scheme.

That would support workers to retain about 80 percent of their income for a period after they lose their jobs.

Read also: The Budget and why it matters: What you need to know

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