At the end of May, New Zealand releases its 2019 Budget. This Budget is hailed by many as a landmark of its time for its undeterred focus on the social sector. Winners for this year’s ‘Wellbeing Budget’ look to be health, education, and environmental industries.
So, what does that mean for New Zealand’s business environment?
We speculate on the features of this year’s Budget, and what the flow of socially conscious public spending brings to the nation’s already-buoyant economy.
Overview of government priorities
New Zealand is a highly-productive economy boasting some impressive world statistics. The nation nurtures the third freest economy in the world, and as such ranks first globally for ease of doing business. Its homegrown Auckland University ranked first in the 2019 Times Higher Education Impact Rankings. The government now considers that the next step for the impressive South Pacific island is to focus on its people.
Since late 2017, the incumbent Labour-coalition government wasted no time in prioritizing New Zealand’s human development, health and wellbeing. The ambitious 100 day plan campaign promise from Labour saw developments towards:
- Making tertiary education more accessible
- Offering financial assistance to low-income households through a Families Package
- Housing construction in population-dense areas
- Protecting the environment
- Addressing the country’s mental health issues
- Ensuring fair taxation for individuals and businesses.
In an increasingly modernizing world where ideas are the new currency, New Zealand’s Wellbeing Budget targets its human potential.
A bolstered social sector brings healthy, resilient and skilled minds to the business end of the country.
Labour’s magnifying glass over New Zealand’s health system aims to tackle the country’s thinly-stretched hospitals and troubling mental health issues.
The government also supports an upskilled workforce by offering the first year of tertiary education free to students. Though enrollment numbers didn’t experience the expected spike due to the extra funding, Labour is determined to continue supporting employability. Just under NZ$200 million (US$130 million) will be reallocated from the tertiary education fund and injected into the vocational education industry.
For business, this means employers will have a highly educated and able-bodied workforce on their hands. An increasingly mental health-conscious population means that staff come into work feeling happier and healthier, supporting business productivity and output.
Sustainable forestry industry
In 2018, the government implemented a One Billion Trees initiative, aiming to plant one billion trees by 2028. The key driver motive this is strengthening the sustainability of New Zealand’s precious forestry industry.
Forestry Minister Shane Jones said in a recent press release “with forestry worth over $6 billion to our economy, the Wellbeing Budget gives clear and visible leadership to Te Uru Rākau to build a sustainable sector that delivers improved social, environmental and economic benefits for New Zealand.”
With a nurtured forestry industry, New Zealand can bring in further investment and supply jobs to rural provinces. Regional development in forestry and related services will build further business opportunities for expansion and urban development.
Government pre-Budget warbling also hints at a boost in New Zealand’s railways.
Locals and visitors alike lament Auckland city transport. As New Zealand’s metropolitan hub, traffic congestion and intricate roading systems are a perpetual bother. In cities like Wellington, the nation’s capital, rail is a much depended-on form of transport that experiences regular mechanical faults.
Though a specific dollar-figure hasn’t been dropped, improvements in railways strengthen connectivity and transportation facilities beyond individual commuters’ needs. Central business districts becoming more easily accessible and cheaper to get around. Furthermore, businesses may find support in rail for transportation of goods and services at more affordable prices. Investors should also keep an eye on potential opportunities for construction bids on forecasted rail projects.
What of other infrastructure projects?
Budget 2019 decisions will also put a clear steer on the government’s Infrastructure Pipeline, an initiative designed to improve infrastructure planning.
Currently a prototype, the Pipeline aims to inform infrastructure companies and contractors on the scale, timing, and sequencing of future infrastructure projects. Ambitious and innovative, the government intends to represent all central government agency projects on the Pipeline by late 2019. In future, the Pipeline will incorporate private sector projects as well.
This is good news for construction businesses and investors. Having a central place to monitor opportunities and make bids on contracts will better advertise and coordinate the country’s infrastructure developments.
Hopes for increased digital inclusion
One important question has been raised regarding Budget 2019’s attention to New Zealander’s digital literacy.
The government’s Digital Inclusion Blueprint puts a spotlight on the need for the country to bring its smaller and rural communities online.
With improved digital skill levels, a larger proportion of the population can participate in online commercial and social communities. Interacting with the digital world, these days, is almost unavoidable.
A tech-savvy population means more agile business solutions, and innovation in the name of convenience. With a multi-faceted technology sector developing in neighboring Australia, the opportunity for New Zealand lies in lifting its digital literacy levels to entice investors and business expansion plans from across the Tasman.
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New Zealand’s innovative and progressive political landscape fosters a healthy and diverse economic environment. If you’re looking to take advantage of the country’s optimal business conditions, it’s important to get help expanding into new territory. We can help make sure your commercial expansion runs as smoothly as possible.
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