Budget 2020: Live: what’s in store and what we know so far

At 2 p.m. today, Finance Minister Grant Robertson will deliver one of the most important budgets in New Zealand history.

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.

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

READ MORE:
• 2020 Budget: Prime Minister Jacinda Ardern warns of a “very hard winter” before the historic budget
• Budget 2020: full coverage live on NZ Herald and NewstalkZB
• Premium – 2020 Budget: Small business owners hope the government can stimulate the economy after the coronavirus
• Premium – Budget 2020: Michael Cullen and Steven Joyce on a budget in a crisis

The best team

The Herald’s best team of business writers and politicians will guide you through the complexities of a once-in-a-lifetime budget.

Robertson has hastily repackaged his 2020 Budget as “Rebuilding Together” after the global economic chaos caused by the Covid-19 pandemic, which has already forced the government to spend billions of dollars on emergency measures.

General Herald business editor Liam Dann summed it up when he described this week as one of the largest in New Zealand’s economic history as most of the country returns to work under level 2 restrictions and Robertson tries put our wobbly economy on the road to recovery.

Today and tomorrow, Dann and other top Herald and NewstalkZB journalists and commentators will provide you with detailed and up-to-date coverage of what promises to be a remarkable Budget.

Since the Budget launch at 2pm, political editor Audrey Young has led our parliamentary team’s online coverage at nzherald.co.nz, giving her the budget at a glance and an instant assessment of whether Robertson has done enough to get out New Zealand in trouble.

Meanwhile, senior political writer Claire Trevett joins host Will Trafford on our Budget live video show, outlining the major changes, interviewing top politicians, and asking expert commentators for input.

Trafford will also be joined by one of the country’s most experienced political and economic journalists, NZME business chief Fran O’Sullivan, along with Dann and NewstalkZB presenter Heather du Plessis-Allan, who will continue the debate in her Drive program starting at 4 pm .

Deficit burst

Former Finance Minister Steven Joyce expects the deficit revealed in today’s Budget announcement to be “very large.”

Joyce told Mike Hosking at Newstalk ZB this morning that she didn’t know the exact size, but she estimated debt at 40-50 percent of the country’s GDP.

Joyce said that what Kiwis needed to see was a way back from that level of debt.

After the global financial crisis, it took a “fair time” to get down on debt, Joyce said. But that was because it was the GFC and Canterbury earthquakes.

“Those two flew the debt down to 30 percent.”

He said the national government was criticized for how tight it was in terms of spending, but that was what was needed to reduce the debt.

“It was a tough routine.”

“It’s about survival”

Business columnist Hamish Rutherford writes that Finance Minister Grant Robertson may be planning a budget to restore New Zealand’s economy to a post-Covid world. But it won’t deliver that this week.

Today Robertson will present his third Budget, one that, in the flowery style of the Government, would be the culmination of a trilogy of Welfare Budgets.

All talk of that is gone. The 2020 budget will be about keeping the lights on. About stopping the bleeding caused by the interruption of Covid-19.

“It’s about economic survival,” former Prime Minister Bill English said in a warning issued when the country closed, one that has aged better than most since then.

For weeks, Prime Minister Jacinda Ardern has rejected questions about the impact on the economy of the blockades and the disruption caused by Covid-19 internationally.

In a pre-budget speech on Wednesday, he argued that the best health response was also the best for the economy, but made it clear that the problems remain big.

“Let me be clear, the coming months and years will be some of the most difficult that our country has faced in a long, long time.”

Print money

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.

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

Covid-19 expense

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.

There are no cuts in services.

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.”

Opening the books

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.