New Zealand budget: Robertson lays out $50bn plan to return jobs to pre-Covid-19 levels | World news
New Zealand’s finance minister Grant Robertson has pledged to spend an unprecedented $50bn in an attempt to save jobs and reduce unemployment to pre-coronavirus levels within two years as he announced a fund for the country’s recovery from Covid-19 alongside his annual Budget on Thursday.
The huge figure, which is about 17% of the nation’s GDP and 17 times more than what a New Zealand government usually allocates to new spending in its budgets, was “the most significant financial commitment” the country’s leaders had made “in modern history”, Robertson said. It underscores the challenges facing the economy as it emerges from lockdown.
The spending, which includes an eight week extension to the government’s Covid-19 wage subsidy as well as spending on training and apprenticeships, public housing and infrastructure, will be funded by steep long-term borrowing, and could save 138,000 jobs according to Treasury models provided by the government. But a large tranche of the new funds were left unallocated as yet, with little detail on some of the government’s spending plans.
The government, led by Jacinda Ardern’s Labour party, faces an election in September and was under pressure to explain how it would preserve jobs and industries imperilled by the pandemic and resulting lockdown.
The announcement came as New Zealand reported a third consecutive day of no new cases of Covid-19 and the government’s lockdown restrictions on the country loosened further, with restaurants and shops permitted to open and people allowed to socialise outside their homes for the first time, in groups of no more than 10.
“Today is about jobs,” Robertson said of his budget in a statement. “It’s about creating new jobs, and preparing people for new jobs.” He said that while unemployment was forecast to hit 9.8% in the June quarter, his stimulus package could reduce the figure to 4.2% in two years, the same jobless number as in March this year, before the coronavirus lockdown.
The $50bn fund – which is separate to the government’s other new operating spending in its Budget – includes $13.9bn that has been spent already, including on an extension to the wage subsidy scheme for struggling businesses, and $15.9bn of measures announced on Thursday or to be unveiled in coming weeks.
The unprecedented total amount was not accompanied by radical spending proposals; it will primarily be allocated to job creation through infrastructure, new housing, and training. $1.1bn has been allocated to creating new nature-based jobs, including pest control and conservation maintenance. Other spending on rail, and widely expanding a school lunch programme for children from low-income families, would create more jobs, Robertson said.
Robertson said that this left $20.2bn remaining for future spending – including on costs incurred by further outbreaks of Covid-19, which he was “optimistic” the country had curbed, he said.
In 2019, Robertson made world headlines for his so-called wellbeing budget, which set out a framework to improve the lives of New Zealanders in five main areas, including child welfare, mental health, and a transition to a lower-carbon economy.
Faced with the “1-in-100 year challenge” of Covid-19, the government’s budget document said, it had been forced to “quickly [reorient]” its spending to “focus on maintaining critical support for exisiting public services and supporting key infrastructure investment.”
That meant that while the title “Wellbeing Budget 2020” featured on the document’s cover, its focus was firmly on Covid-19.
“We will be able to provide an update] when circumstances become more stable, enabling more accurate measurement and analysis,” the document said.
A total of 21 people have died from Covid-19 in New Zealand. Ardern has won praise for shutting down the country one month after the first case of the virus arrived and before there were any deaths.