Govt balancing crucial investment with careful managementFinance
The Government’s strong focus on keeping the balance between responding to COVID-19 and careful economic management is highlighted by Budget documents released today, Finance Minister Grant Robertson says.
“New Zealand went into COVID-19 with some of the lowest debt in the world after the current Government reduced net debt below 20% of GDP. This made sure we were in a strong position to respond to shocks, like the global COVID-19 pandemic,” Grant Robertson said.
“Our strong focus on controlling debt as we respond to COVID-19 means our debt management plan keeps us lower than other countries like the UK, US and Canada, even when the impacts of COVID are factored in.
“We have invested significant resources into supporting New Zealand businesses and workers, and cushioning the blow of this 1-in-100 year economic shock.”
The Treasury today published the latest set of documents under the ongoing proactive release for Budget 2020 and COVID-19 Response and Recovery Fund decisions. The release covers COVID Fund decisions agreed at Cabinet on 6 July.
“We said at the Budget in May that there would be more investments from the COVID Fund to make sure essential public services like our health system had the resources they need to respond to the impacts of this virus. We also said we would continue investing to create jobs and support the economy. I have always made sure that these decisions faced high levels of scrutiny to make sure they are necessary and give value for money.
“Following the Budget, Cabinet made its next set of decisions on 6 July. We focussed on the most critical cost pressures facing our public services like health, education and employment. We also invested to support jobs and the economy with infrastructure projects like Three Waters, and helped sectors like international education plan for the future. Many bids could not be funded, but I think we have got the balance about right.”
Decisions allowed through in the 6 July package include:
- Funding for PHARMAC to ensure supply of medicines and medical devices in response to supply issues caused by COVID-19 ($150 million)
- Boosting Healthline’s funding to support the response to COVID-19 ($14.6 million)
- Securing additional PPE to protect New Zealanders ($50 million)
- Support to development a National Immunisation Solution so New Zealand is ready for when a COIVD-19 vaccine becomes available ($23 million)
- Creating jobs through a significant investment in Three Waters infrastructure ($710 million)
- Supporting people into employment through a boost to Employment Services ($59.2 million)
- Stabilising international education as the sector rebuilds ($51.6 million)
- Investing in transport infrastructure and supporting jobs by funding the NLTF to cover reduced income as traffic fell during Levels 4 and 3 ($600 million)
“Our careful management of Government spending has also allowed us to provide significant businesses support through the $13.6 billion Wage Subsidy and Leave Support schemes, as well as the Small Business Cashflow Loan Scheme and tax refunds.
“This is about getting the balance right between keeping debt under control while properly funding services like health and supporting businesses to respond to this 1-in-100 year shock.
“On 20 July I announced that the remaining $14 billion in the COVID Fund would be set aside in case New Zealand experienced a second wave or the global recession deepened. I always said the size of the COVID Fund was not a target – if the money isn’t required then it won’t be borrowed.
“Unfortunately, the same can’t be said of the Opposition. National has already said it will spend at least half of the remaining $14 billion of the COVID Fund on election promises. That fund is not set aside for a lolly scramble. It is there to make sure we can respond to whatever this virus throws at us and it shouldn’t be used for electioneering.”
Notes to editors:
- The documents are part of the regular and ongoing Budget 2020 proactive release. They cover Budget Ministers and Cabinet decisions on the tranche of COVID-19 Response and Recovery Fund investments agreed by Cabinet on 6 July. Those decisions have been announced by Ministers since 6 July and can be found here. Previous releases are here.
- On 20 July the Minister of Finance announced the Government was setting aside the remaining $14 billion in the COVID Fund in case New Zealand experienced a second wave.
- Further funding decisions made since July will be subject to further proactive document releases as appropriate, taking into account commercial considerations.