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The Government will spend up to $ 50 billion to combat the Coronavirus accident with a massive injection of funds for jobs, training and infrastructure.
But he doesn’t know how to spend all the money he’s set aside, he only allocates $ 15.9b from the giant fund in Thursday’s Budget.
The focus of this spending focuses on keeping people on the job through a sudden and deep recession, with a specific extension of $ 3.2b to the wage subsidy scheme for another eight weeks, $ 3b in infrastructure investment with 8000 new public housing under construction. and $ 1.6b for trades and apprenticeship training.
The Treasury expects this spending to save 140,000 jobs over the next two years, but unemployment will still rebound to 9.8 percent in September, thanks to the economy slowing to a fifth in the three months through June.
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This spending will cause debt to rise massively, with government net debt more than half the size of the entire economy in 2023 and 2024, compared to a fifth before Covid-19.
There were no tax increases or large spending cuts for this spending, with low interest rates helping the government to record the expected six-year deficit, with a return to a small surplus in 2028.
“This is the rainy day. Put the umbrella down,” Finance Minister Grant Robertson said of the plan, noting that only the $ 15.9 billion was about five times what governments generally spent on budgets.
Robertson said his scheme had more in common with the policies of the first post-Depression Labor government than the more recent red and blue strip governments.
“I’m not a fan of austerity.”
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Prime Minister Jacinda Ardern, Greens leader James Shaw, and Finance Minister Grant Robertson walk home for the 2020 Budget.
JOBS IN THE CENTER $ 15.9b PACKAGE
A specific eight-week extension of the popular wage subsidy is at the center of the $ 15.9b of employment spending allocated on Thursday.
This extension will pay the same as the current wage subsidy and will continue from mid-June when the first 12 weeks are up. But not many companies will be eligible: Companies will have to show a 50% reduction in revenue for a month compared to last year, instead of a 30% reduction. However, new and high growth companies will be eligible as they are under the current scheme.
It is expected to cost $ 3.2b, which adds up to approximately $ 11b already spent on the scheme so far.
Robertson said the government wanted companies to use the time the extension provides to “reorient” but did not rule out extending it again.
Jobs will also be supported by the government in other ways.
$ 3b is being set aside to finance infrastructure projects, in addition to the $ 12b announced before Covid-19. Kāinga Ora will be allowed to borrow $ 5b to build another 8,000 state and transitional homes.
Eleven thousand “green” jobs will be created in the regions with a $ 1.1b package that includes regional environmental projects, biosecurity roles and pest control, and DOC’s “work for nature” fund.
The jobless will also receive a $ 1.6b package of skills training that essentially extends the “fee-free” vocational trade to the jobless, not just those who drop out of school.
This $ 1.6b package includes $ 334m for additional tertiary enrollment, $ 320m for free trades training, and $ 412m to help employers retain current apprentices.
Another $ 400 million will be spent to expand and strengthen Work and Incomes job support services, and $ 19 million will go to place 10,000 people in jobs in the primary sector.
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Deputy Prime Minister Winston Peters and Prime Minister Jacinda Ardern on budget day.
CHANGE OF SEA OF LARGE NUMBERS
While the government revealed a $ 50 billion Covid-19 fund on Thursday, only $ 15.9 billion will go immediately to spending programs.
The $ 50b also includes $ 13.9b spent in late March and April, but not the initial $ 12b expense for Covid-19’s response. This means that the total amount predicted to spend on the Covid-19 recovery during the four-year forecast period is in fact $ 62b, but $ 20b of that remains unallocated.
Further complicating matters is the fact that this is separate from the regular “cost pressure” budget spending announced today, with increases in Health, Education and other regular spending amounting to $ 3.3b.
Robertson said the $ 20b of spending was available for a “set of initiatives” necessary for Covid-19’s economic response.
LITTLE FOR WELL-BEING
While Robertson has avoided austerity or real spending cuts, the welfare system saw few new spending in Thursday’s Budget.
There are no changes to rates or benefit payments other than those promised in March, when the Winter Energy Payment doubled and benefits increased by $ 25 per week.
The school lunch program is greatly expanded to cover an additional 200,000 children, at a cost of $ 220 million. This is expected to create 2,000 jobs.
Social service providers like food banks get a boost of $ 79 million, community groups $ 46 million and family violence services $ 22 million.
A $ 20 million hardship fund for higher education students is established for this year.
