Govt approves economic recovery plan
The Budget 2020 legislation approved in Parliament last night puts in place the Government’s comprehensive economic rebuild and recovery plan to deal with the impacts of COVID-19, says Finance Minister Grant Robertson.
“The global COVID-19 pandemic is a 1-in-100 year shock that has required significant Government investment here and around the world to support businesses and protect jobs."
Robertson says this unprecedented event requires an unprecedented response.
“In New Zealand, our careful economic management prior to COVID-19 meant we were in one of the strongest positions in the world to invest to cushion the blow and position the economy for recovery. It has also meant that we will come out of COVID-19 with one of the lowest debt positions for any advanced economy in the world.
“We have always said that the best economic response was a strong health response."
He says New Zealand now has a head start on other countries to create economic opportunities.
Budget 2020 invests in areas to support the five key priorities in the Government’s plan for the economy:
• Investing in our people: Budget 2020 invests in free trades training and apprenticeships to close skills gaps and help workers transition to new industries.
• Creating jobs and improving productivity: Budget 2020 includes significant infrastructure investment to future-proof the economy, including 8,000 new state homes and regional infrastructure projects to support the construction industry. It is also creating 11,000 environmental jobs to provide employment and help our environment at the same time.
• Preparing for the future: Budget 2020 invests to support the economy to take advantage of new opportunities, including helping businesses shift to e-commerce. Budget 2020 also supports decarbonisation through investments to improve energy use, and supports businesses to invest in R&D.
• Supporting small businesses and entrepreneurs: Budget 2020 includes changes to the tax system to support businesses, including up to $3 billion of business tax refunds, the Small Business Cashflow Loan Scheme, and provides up to $5000 for professional business advice for SMEs.
• Positioning New Zealand globally: Budget 2020 invests to better position New Zealand as a place to trade with, invest in and – eventually – visit again, off the back of our success in fighting COVID-19. This includes practical on-the-ground support in overseas markets for Kiwi businesses as we secure free-trade agreements to back our exporters.
Robertson says the Budget also sets out the Government’s responsible debt reduction track as the economy recovers and grows.
“Even after the investments made in Budget 2020 to support the economy, including the Wage Subsidy, the Government’s peak net debt position will be significantly lower than many other countries went into COVID-19 with; the average for advanced economies around the world was net debt around 80 per cent of GDP pre-COVID.
“This is the rainy day New Zealand has been saving for, and we have used our strong position to support New Zealanders through programmes like the Wage Subsidy scheme.
“We’ve said we will continue to manage the books responsibly, which is why we’ve set aside the remaining $14 billion in the COVID-19 Response and Recovery Fund in case it is needed to support businesses and households if there is a second wave, or if the global economic recession continues to deteriorate.
“We’ve also said that if that money isn’t needed, then it won’t be borrowed, meaning even lower debt for New Zealand. This is a responsible approach that gets the balance right between making sure we’re prepared for the worst, and managing the Government’s books carefully."