Budget 2021: PM Jacinda Ardern on border re-opening, Covid fund, benefits boost

Prime Minister Jacinda Ardern says it is still too soon to say whether a significant opening of the borders is likely by January, despite Treasury basing its assumptions on that in the Budget.

In its Budget forecasts, Treasury worked on the assumption of a partial re-opening of the borders in the second half of the year, and a "significant re-opening" from January next year.

Asked in a post-Budget interview with the Weekend Herald if that date was optimistic, Ardern said there were still a lot of factors that could impact on it.

"We are keeping an open mind. For us it will always be about the data tells us. If we know, for instance, that we can feel really confident about the protection that vaccine offers, that offers up opportunities around things like vaccine passports. It's just a bit soon to know."

Ardern said Treasury's modelling was based on the odds New Zealand would have bubbles with countries as well as Australia and the Cook Islands by then, rather than a wider opening. The Government has said it was open to bubbles with other safe countries.

Ardern said even if the borders were not more widely open by then, it did not mean Treasury's forecasts would be wrong. She said those forecasts in the past had been more pessimistic about the impact of Covid-19 on the economy and unemployment than the reality.

Prime Minister Jacinda Ardern at her Beehive conference room yesterday. Photo / Mark Mitchell

In the Budget, the Covid-19 fund was used for measures such as the Training Incentive Allowance for single parents and disabled people.

Ardern said the Government had flagged that it would use the Fund for more projects that were recovery-related, and the Training Incentive Allowance fitted in with that.

It leaves just $5 billion in the kitty for future needs – including any future lockdowns and wage subsidy rollouts.

Ardern said that did not worry her.

"Yes, we need to keep reserves to enable us to meet the costs of any potential future outbreaks, but at the same time the things we have been spending it on are not just for the response but the recovery."

She said it was also still being used to fund groups such as the Royal NZ Ballet and New Zealand Symphony Orchestra, whose revenue had dried up because of Covid.

The centrepiece of the Budget was Ardern's own; the benefits increase was part of her work as Minister for Child Poverty Reduction.

Ardern did not believe lifting benefits would remove the incentive to work as people "have always and will always" be better off in employment.

"What we were lacking was dignity in the system in the meantime."

The increase will add $3.3 billion to the welfare bill over the next four years, and will be a permanent cost on the books. Ardern said she was confident that would be sustainable; the forecasts showed debt would still decrease with the extra spending.

Ardern said there was no intention of re-visiting the tax policy for this term to try to find other revenue, and no thought had yet been given to what Labour's tax policy would be at the next election.

Prime Minister Jacinda Ardern in the Beehive. Photo / Mark Mitchell

That benefits increase was the largest in more than 20 years.

Finance Minister Grant Robertson described it as "righting a wrong" after the 1990 social welfare cuts of National.

Asked if it was a moral failure by the Helen Clark-led Government of 1999 to 2008 not to have lifted benefits, Ardern said it was not fair to compare now with a government from more than a decade ago.

She said Clark's government had introduced Working for Families, giving extra to low and middle-income families, and the family tax credit to beneficiaries.

"It was one of the most significant issues in terms of moving the dial on child poverty 10 years ago. So I don't think it's fair to make a judgement on a government that many years ago."

She was not concerned about the risk middle New Zealand would feel they had missed out, saying she believed many people who got little from the Budget would think it was right those in poverty were the target of the spending.

Ardern said she had not spoken to NZ First leader Winston Peters about Labour's decision to scrap one of his initiatives: funding for free annual health and eye checks for Supergold Card holders.

She did not expect him to be surprised, saying the views of officials at the time it was discussed was that it was not an effective use of health spending.