Finance Minister Grant Robertson has revealed that the New Zealand government will be running deficits for an "extended period" of time and its debt levels will reach an all-time high. He says some of the government's major previously mooted budget plans have been "put on ice" as it fights to pump life into the post-COVID economy. And he has revealed that one of the government's priorities will be strengthening and improving the public sector.
In his much-anticipated pre-Budget speech today, Robertson said this was "a necessary and responsible move" as the government looks to "rebuild" the economy. Much of his speech was focused on the rebuild and what the country is going to look like after COVID-19.
"If your house were to burn down, you probably wouldn't build it back exactly the same, would you?" he said, referencing the economy. "There are few times in life when the clock is reset. Now is the time we should address these long-term issues."
He did not go into detail about how badly the economy would be hit by the pandemic, instead saying he would reveal more in next week's budget. He did say, however, say the numbers will be ‘sobering’.
"We will be running operating deficits for an extended period and allowing net core Crown debt to increase to levels well beyond our previous targets." The budget, he said, would focus on helping those impacted worst by the pandemic.
"It is a budget delivered in the shadow of a one-in-100-years shock to our society and economy. We are no longer talking about growth in the near term, but about the scale and length of the economy's contraction."
But it's also a chance to rebuild the economy, Robertson said. "In the midst of the crisis and our desire to return to a sense of normality, we should all acknowledge that things weren't perfect before Covid-19 hit us."
He said that while many of New Zealand's economic indicators were strong – such as its low debt levels, low unemployment, rising wages and government surpluses – there were ways in which New Zealand had not reached the standards most Kiwis aspire to as a country.