Today’s budget to deal with Covid inflicted economic challenges

The 2020 budget will be announced by Minister of Finance Grant Robertson at 2 pm today. It is one of the most unpredictable budgets in a long time, having to be re-written to address the unprecedented challenges in dealing with the economic impact of the Covid-19 pandemic.

Some signals have already been made, with jobs and welfare priorities. Some budget decisions have already been announced, such as a big boost to hospital spending and a long overdue boost to spending on dealing with family violence, as wel as a rescue package for the racing industry. See:

  • Record investment in hospitals and health services
    Budget 2020 delivers the biggest ever increase in funding for District Health Boards, as well as additional funding to deliver approximately 153,000 more surgeries and procedures, radiology scans and specialist appointments to help clear the COVID-19 backlog.
  • Next steps to end family and sexual violence: Budget 2020
    The 2020 Budget includes significant support to stabilise New Zealand’s family violence services, whose work has been shown to be so essential throughout the COVID-19 lockdown.
    $183.0 million over the next four years for the Ministry of Social Development to ensure continued access to specialist family violence services
  • Emergency support for Racing’s recovery
    Minister for Racing Winston Peters has announced a $72.5 million dollar COVID-19 emergency support package for the racing industry.

RNZ: What to expect from the 2020 Budget

It’s the “jobs” Budget and one that will come with a hefty price tag.

The driving priority of the 2020 Budget will be to make direct cash injections into industries such as tourism, to staunch the flow of job losses, reinvent the way the sector operates with the prospect of few customers from offshore, and to ensure viable businesses make it through the medium term.

The Budget will also give a much clearer picture of the impact on economic growth, unemployment and government debt.

Last week, Treasury figures for the nine months ended March showed the initial hit to the government’s finances from the pandemic.

The forecast surplus of $1.3 bn had turned into a deficit of $2.7 bn, as government expenses blew out by more than $4 bn as the first few weeks of the wage subsidy took effect.

Expectations are that government borrowing will mushroom by another $100 – $120 bn over the next four years, which would take the net debt ratio to something approaching 60 percent of GDP.

With such big numbers being thrown around and restrictive spending targets and prudence flying out the window opened by Covid around it is possible a number of ‘nice to have’ progressive type policies will be funded.

We will find out more this afternoon.

Leave a comment

7 Comments

  1. artcroft

     /  14th May 2020

    Thank God horse racing will survive. Perhaps Jacinda will have the courage to invest heavily in synchronise swimming as well. They all need saving.

    Reply
    • Duker

       /  14th May 2020

      15,000 full time jobs $1.1Bill value added to economy ( 2016)

      How much did NZ gain from its deal with Peter Thiel in 2012
      Billionaire Peter Thiel makes fortune after ‘sweetheart’ deal with Government
      “The partnering of Thiel’s Valar Ventures and the Government-owned New Zealand Venture Investment Fund (NZVIF) was launched by minister Steven Joyce in March 2012, nine months after Thiel took his oath of citizenship at the New Zealand consulate in Santa Monica.
      Joyce said at the time the venture was “part of the Government’s comprehensive business growth agenda” slush fund
      He made $30 mill after putting in $7 mill in a ‘venture fund’ ( xero shares)
      https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11794020

      Reply
  2. Gezza

     /  14th May 2020

    If Corky’s mates in the chattering class are right we could all possibly club together & buy a helicopter with our free money from the government. 😎

    Reply
  3. adamsmith1922

     /  14th May 2020

    I am concerned that this will be a very political budget, long on progressive politics, short on substance and will do little in reality to aid recovery from the economic crisis created by Covid, but made worse by these incompetent clowns masquerading as a government

    Reply
    • Alan Wilkinson

       /  14th May 2020

      Garden shops and cafes had customers this morning but prob only 50% of normal. Lots of tradees on the roads driving badly.

      Reply
      • Duker

         /  14th May 2020

        Kmart long queues…. the kettle broke- plenty of woman buying trolley loads $200+ – it was a 2hr mission to buy one item

        Reply
        • The recovery isn’t from Covid (our number of cases and deaths hardly constitutes an epidemic by any standard) but the ‘government’s’ ham-fisted dealing with it. They wreck the economy, then borrow billions in an attempt to repair it.

          I heard of another suicide because of the lockdown today.

          Reply

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