Ardern spends big in New Zealand's 'recovery' budget

The centre-left leader -- who faced criticism before last year's election for her cautious approach to implementing change -- announced major funding boosts to welfare payments, social housing and health.

"We're making sure our recovery leaves no one behind," Ardern said.

"It's what some people would call a two-birds-one-stone strategy -- putting in place policies that ensure our finances remain sustainable while building a stronger New Zealand for the future."

Ardern said a NZ$3.3 billion (US$2.4 billion) boost to family benefits was the largest welfare increase in a generation and would help lift 33,000 children from poverty.

Health received an extra NZ$4.7 billion, while spending on public transport and education was increased.

Ardern also identified climate change mitigation as one of her government's priorities, earmarking NZ$300 million for low carbon technology and almost NZ$350 million to refurbish New Zealand's Scott Base in Antarctica, a prime source of climate data.

However, environmental group Greenpeace said the government's commitments amounted to "loose change" accusing it of failing to live up to its rhetoric on the issue.

"It's incredibly frustrating to watch this government continue a slow and incremental approach to dealing with what is a major and urgent crisis," spokeswoman Amanda Larsson said.

Ardern, who won a landslide re-election late last year following successful management of the Covid-19 pandemic, said it would take time to achieve her government's goals.

"It is simply not possible to fulfil every promise or commitment that we made or address all of our long-term challenges in a single budget," she said.

The measures will see government debt as a percentage of gross domestic product (GDP) balloon from 26.3 percent last year to 48.0 percent in 2023.

"This is significantly elevated, of course, from what New Zealanders are used to, but it's the appropriate response to the situation we find ourselves in," Finance Minister Grant Robertson said.

Robertson said the economy had emerged stronger-than-expected from a brief coronavirus-induced recession.

"New Zealanders have weathered the storm of Covid-19 and today we take the next steps in our recovery," he said.

The Treasury estimates GDP growth of 2.9 percent in the 12 months to June this year, rising to 4.4 percent in 2023.

Opposition leader Judith Collins said the budget saddled New Zealand with huge debts but contained nothing for business for middle-income earners.

"All New Zealanders are feeling the pinch right now -- not just those on jobseeker benefits and the minimum wage -- so where is the plan to take the entire country back to prosperity?" she said.