2020 budget: Prime Minister Jacinda Ardern warns of “very tough winter” ahead of historic budget

Finance Minister Grant Robertson will deliver one of the largest budgets in New Zealand history today.

And while New Zealand looks at the barrel of what was yesterday described as the “deepest and deepest economic recession in history,” the government has a clear focus: “Jobs, jobs, jobs.”

According to Prime Minister Jacinda Ardern, who warned yesterday that the budget would be delivered in the context of the most challenging economic conditions since the Great Depression.

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“New Zealand is about to enter a very tough winter.”

And, if the unprecedented nature of today’s Budget was no longer obvious enough, the Reserve Bank’s expansion of nearly $ 30 billion from its now $ 60 billion money printing program should clarify this.

The coming months and years, according to Ardern, will be some of the most challenging this country has faced in a “very, very long time.”

He warned that companies will close and unemployment will rise: the Reserve Bank estimated yesterday that the Covid-19 pandemic could cause the loss of 150,000 jobs across the country.

At the same time, top economists are picking up government debt levels to almost triple, hitting $ 180 billion in four to five years.

“There is no recovery playbook we are about to embark on,” Ardern said.

The government is expected to announce tens of billions of dollars more in spending today.

The Government has already allocated and spent approximately $ 25 billion on a series of pre-budget Covid-19 related initiatives.

These include the nearly $ 11b salary subsidy scheme, an extra $ 4b for district health boards and the health sector, $ 3b for benefit increases and an increase in winter energy payments, and other $ 3b on tax changes to help struggling businesses.

But both Ardern and Robertson say this is only the beginning.

Today a support package for the tourism sector will be unveiled and there will also be more funding for the New Zealand media industry.

And after Budget Day there will be even more announcements: the Government’s Covid-19 response is a “list of initiatives,” said Robertson.

“We have indicated that there will be sector packages, but not all will be in the Budget.”

However, what will appear in the Budget today will be detailed in the Government’s job creation plan.

“Our number one priority is jobs. That means it will be a job budget,” said Ardern.

In fact, he said the Budget will have a “relentless focus” on jobs and the economy.

Ardern told the House yesterday that the government’s plan is “to invest in our people.”

“We are creating jobs, jobs, jobs and we are looking out for the well-being of all New Zealanders.”

She said the Budget would be the start of a long-term government project to rebuild New Zealand.

But while Ardern focused on “jobs, jobs, jobs,” national leader Simon Bridges said what he expects to see from the Budget is more “debt, debt, debt.”

He agreed that now was the time to invest, but said it depends on what the government is investing in.

“I think we need to see investments in education, health, and job savings.”

Ardern also confirmed what would not be in the Budget: any cut to essential services, such as hospital and teaching staff, and members of the police force.

“We believe that when times are tough, not short, you invest.

“The notion that in this time of need we would cut back on essential services that so many New Zealanders need more than ever is not only immoral, it is financially wrong.”

There will be no cuts in social support, Ardern confirmed.

“We will not drop our 5 million team when times get tough; instead, we will strengthen the general support that the government can provide.”

In addition to a series of new initiatives and expense announcements, the Treasury today will expose the government’s books. Robertson said the numbers will be “sobering”.

He declined to elaborate on what should be expected, but Bagrie Economics chief economist Cameron Bagrie said the numbers will be “horrible.”

Speaking to the Epidemic Response Committee, the former ANZ chief economist predicted that the government deficit will explode to approximately $ 30b, which is higher than the pre-Covid expectation of just a deficit of $ 1b.

Bagrie also predicts that government debt will increase to $ 180 billion in four to five years, that’s almost triple current levels.

At the same time, the economy is going to take a significant hit as the recession bites.

Bagrie chose that Covid-19 will impact the economy of $ 3b per month for each month the country is at level 1.

That means that even at level 1, Covid-19’s economic impact will be greater than that of the global financial crisis, he said.

“[The Government] He will have an excellent job of tax repair, “he told parliamentarians.

• Covid19.govt.nz – The official government Covid-19 advisory website