Strong Govt books support ‘go hard, go early’ response

New Zealand’s ability to go hard and go early in the fight against COVID-19 has been underpinned by strong Government finances and the growing economy heading into this global pandemic, Finance Minister Grant Robertson says.

The Treasury today released the Crown financial statements for the eight months to the end of February. Net debt was $600 million below forecast at 19.2% of GDP, and the surplus of $1.4 billion was $100 million above forecast.

“Obviously, these numbers will look a lot different when the next set of accounts come out. But they indicate the economy’s strength and the Government’s ability to soften the impact and support New Zealanders and businesses,” Grant Robertson said.

“Governments around the world are lifting debt to pay for increased health spending and support for their economies. Advanced economies are starting from an average net debt position above 70% of GDP, with the UK around 75%, the US above 80%, Italy above 120% and Ireland above 50% of GDP.

“We are using our Government’s strong balance sheet to go hard and go early in our public health response, cushion the blow for workers and businesses, and position the economy for recovery.

“This includes the wage subsidy scheme that will be worth between $8 billion and $12 billion so businesses can keep workers on their books and support people to stay home, break the chain and save lives during Alert Level 4.”

Other measures the Government has announced to date include:

  • The $500 million increase to public health funding for the immediate response.
  • A six-month deferred mortgage scheme for home-owners affected by the virus, so people don’t lose their homes due to COVID-19.
  • The $6.25 billion Business Finance Guarantee, and business tax measures to support cashflow, and help businesses continue to operate.
  • A doubling of the Winter Energy Payment so older New Zealanders can stay warm during winter.
  • Main benefit increases, and
  • Rent freezes and a ban on terminations of tenancies/evictions other than in exceptional circumstances.