Looming job and work hours crunch

The number of people in work recovered in June but there are still 20,000 fewer jobs than before the effects of Covid hit at the end of March, and earnings are down – many people have had wage rates cuts and ordinary and overtime hours cut.

While the New Zealand economy has weathered Covid reasonably well (due to a large amount of Government borrowing) a deep recession is predicted.

The Covid wage subsidy, which is propping up hours and jobs, ends next month so there is a looming job loss and wage cut crunch, unless there’s a sudden turnaround in business activity.

Stuff: Job numbers continue to recover after the Covid-19 slump, but wages still down

The number of jobs filled has continued to rise after the April lockdown, according to Stats NZ numbers out on Tuesday.

Filled jobs were up by 2053 in June, to 2.2 million. This followed a rise of 14,399 jobs in May.

Stats NZ economics statistics manager Sue Chapman said there had been month-on-month increases over the last two months after the sharp drop in April of more than 35,000 jobs.

So that’s about 18,000 down from March.

“We calculate filled jobs by averaging weekly jobs paid throughout the month, based on tax data. Filled jobs include jobs paid by employers who are being subsidised by the Covid-19 wage subsidy scheme.”

But many people who have kept their jobs have had pay cuts. The subsidy for people who had been full time requires them to be paid at least 80% of their previous wages – many have had their pay cut to 80%.

Gross earnings for the three months ending June were down $304 million (0.9 percent) on earnings in the March quarter.

This was the first time since the series began in 1999 that June quarter gross earnings were lower than March, Chapman said.

“While job numbers dropped and then started to recover, it is clear that salaries and wages received throughout the quarter have taken a hit,” Chapman said.

And it is predicted to get quite a bit worse.

Christina Leung, principal economist with the New Zealand Institute of Economic Research (NZEIR) said around 2 million people were either on the benefit or the wage subsidy scheme, which represented around 53 per cent of the working age population.

Around 65 per cent of people employed are on the wage subsidy scheme, she said.

“We forecast job losses of over 200,000 by June 2021,” Leung said.

“We expect unemployment rate to peak at around 8 per cent in late 2022. 

That’s over a year away.

The wage subsidy runs out next month, but I’m hearing employers already looking at what to do from September, and a number are talking about job losses or further pay cuts.

The actual impact of that in numbers will be felt straight away by many workers, but the total numbers probably won’t be apparent until after the election.

And some cuts will be delayed. Many companies are waiting and seeing while propped up by the subsidy. Some have already signalled closures later – a department store in Dunedin will close next January.

The economic news isn’t all bad. Grant Robertson in parliament yesterday – 1. Question No. 1—Finance:

On Friday, Statistics New Zealand released overseas merchandise trade statistics for June 2020. These showed total exports were up from the same time last year.

Goods exports in June were worth $5.1 billion—up $107 million from June 2019. The rise was led by dairy; with milk powder, butter, and cheese up $90 million, or 7.9 percent.

The value of log exports was also up by 7 percent since June 2019. This strong performance from our exporters contributed to a monthly trade surplus of $426 million in June.

The trade deficit for the year ending June was $1.2 billion—the smallest annual trade deficit since December 2014. All of this effort by our exporters demonstrates the continued strength of that part of our economy, despite the difficult prevailing conditions arising from the COVID-19 pandemic.

This is just some sectors. While the trade deficit is relatively small that will be affected by lower imports. And some sectors, particularly tourism and hospitality, have been badly affected, and the outlook for them over the next few months looks bleak.

And we are not over Covid yet, especially world-wide, but as some places have shown (like Victoria in Australia) it can easily come back.

Stuff: Mortgage holidays could be extended, wage subsidy back if needed

Minister of Finance Grant Robertson said the Reserve Bank of New Zealand extending mortgage holidays would be “justified” as he confirmed that the bank is considering elongating the scheme for Kiwi borrowers whose pay packets have taken a hit from Covid-19.

Robertson, in an interview with Stuff, also said that if parts of New Zealand were to enter a new level 3 or level 4 lock down in the event of Covid-19 community transmission re-emerging, that the wage subsidy could be reinstated.

That’s if Covid comes back, but people are already significantly affected.

According to the New Zealand Bankers’ Association, at June 30, 7 per cent of consumer loans (almost 60,000 loans) had had all payments deferred, while another 8 per cent of consumer loans had reduced repayments.

That’s over 120,000 loans.

The next set of National Accounts are due to be released on September 17 two days before election day) and will show the extent of New Zealand’s recession. Those figures will include most of the level 4 lock down period.

Robertson said that $14 billion held back last week from the $50 billion fund the Government created to fight Covid was crucial to wheel out if the economy, which has turned up since lockdown, starts to wobble again. Such measures could be required if the global downturn starts dragging New Zealand down further, or if community transmission broke out, and new regional wage subsidies were required.

That won’t help the many workers likely to be affected when the subsidy comes off, presuming Covid stays away.

Dark economic outlook

Robertson also warned that although economic conditions in New Zealand are comparatively robust, the global economic outlook was looking darker by the day. Official figures come out with the Pre-Election Fiscal Update on August 20, but Robertson said that The Treasury has given him preliminary warnings.

“The New Zealand economy has definitely come out of this better and quicker than we thought albeit still tough circumstances. The global economic story is the opposite. It appears to be getting worse.”

So the New Zealand economy hasn’t ‘come out of this better’, the full impact of an international recession hasn’t hit here yet. And our current economic situation is propped up by billions of borrowed money.

And despite all the money being dished out many workers are likely to find things tougher still after the subsidy runs out next month.

My job is reliant on business getting going again in countries currently severely affected by Covid with no quick turn-around expected. My earnings are down to 80% and could easily drop to half time of not to zero if things don’t improve internationally over the next few months. I know of another local business cutting 50 jobs and cutting hours of remaining employees by 25%.

And with Covid cases rising world wide the worst may not be over.

Flaring virus threatens world economy’s sputtering recovery

The world economy’s fragile recovery is in danger of stalling.

A resurgence of coronavirus infections across the Asia-Pacific region, which was considered to have broadly curbed the virus more effectively than elsewhere, is being viewed as an early warning for the rest of the world.

The pandemic continues to rage in parts of the US, hot spots in Europe, and across big emerging economies including India and Brazil. With little prospect of a circuit breaker until a vaccine is discovered and distributed, governments are having to double down on the US$11 trillion worth of stimulus and unprecedented central-bank support unleashed since the crisis began.

The US Federal Reserve meets this week to decide on interest rates as US lawmakers debate another US$1 trillion fiscal stimulus package. The European Union has just signed off on a planned €750 billion crisis package and governments everywhere are having to extend support programmes.

While China’s economy returned to growth last quarter and readings on industrial output have shown a V-shaped rebound, both consumer demand and private investment remain weak.

The US rebound is stalling after coronavirus infections spiked in a host of states.

“The global economic recovery is at risk,” said Mark Zandi, chief economist at Moody’s Analytics. “Key to ensuring the global economy doesn’t slide back into recession in coming months is continued aggressive monetary and fiscal support.”

In New Zealand we may be heading for a job and earnings crunch in the next month or two, but that may just be a phase in amongst larger and longer financial turmoil.

Government puts hold on Covid fund

Government hs put a hold on the Covid fund, saying “it is not there to be used for any old project in the never-never. It is to provide support and stimulus to recover and rebuild from COVID-19”.

Sounds like this has some connection to the election and policy announcements.

Govt sets aside remaining $14bn in COVID Fund

The remainder of the COVID Response and Recovery Fund is being set aside to make sure New Zealand is in a strong position to fight whatever COVID-19 throws at the economy, Finance Minister Grant Robertson says.

“When we set up the COVID Response and Recovery Fund, the Government was clear that it was to be used for our response to keep New Zealanders safe and for immediate support to help the economic recovery.

“We are sticking to our word on this. We are investing money where it is needed to respond to COVID-19, and we are setting aside a significant sum of money to be used as needed in the future. This is the fiscally and socially responsible thing to do.

“As we look around the world, it is clear that this global pandemic is continuing to grow. In the face of this, and on-going uncertainty, now is the time to be cautious and keep our powder dry. Keeping debt under control, and supporting jobs and businesses are both important. We are committed to getting the balance right, to give New Zealand options,” Grant Robertson said.

At Budget 2020, there was $20.2 billion remaining in the Fund to be allocated. The Government has since announced a number of important investments from the Fund, including $570 million for the COVID Income Relief Payment, an extra $700 million for the wage subsidy extension, and more than $300 million to keep supporting our health response including the $150 million for extra PPE announced at the end of June. There was just over $17 billion in the Fund at the start of July.

“Cabinet has agreed that further support for ongoing health, border and economic response measures will require about $3.2 billion, with announcements to be made before the House rises. This amount includes the $760 million already announced for Three-Waters reform.

“This will leave $14 billion in the COVID Response and Recovery Fund, which is now being set aside in the event, for example, New Zealand experiences a second wave.

“We are doing everything we can to keep COVID-19 at our border – nobody wants a second wave. The responsible course of action is to make sure we are prepared for the worst – to give confidence to New Zealanders that we will be able to continue to act swiftly and decisively in our ongoing fight against this virus.”

“The Fund is not there to be used for any old project in the never-never. It is to provide support and stimulus to recover and rebuild from COVID-19.”

Greens in particular have been suggesting a variety of uses for the Covid Fund (to fund their preferred policies). National have also used the Fund in costings for their infrastructure policy.

Not clear here is whether there will be a hold also put on the Provincial Growth Fund, which has been used to address Covid problems.

Government in Southland with message of scant hope, no plan after smelter closure

Prime Minister Jacinda Ardern, Finance Minister Grant Robertson, Regional Economic Minister Shane Jones and a bunch Labour and NZ First MPs fronted up in Southland yesterday to try to address the planned closure of the Tiwai Point aluminium smelter, after Robertson had signalled on Tuesday the visit was not to save the smelter.

From a distance Winston Peters didn’t help with unified commiserations, suggesting that the Government buy the smelter. Peters has a reputation for being an astute reader of public sentiment in election campaigns, but I’m not sure Southlanders will buy that.

Stuff: Prime Minister Jacinda Ardern and Finance Minister Grant Robertson arrive in Invercargill amidst smelter closure

Senior Government ministers have arrived in Invercargill to talk with Southland leaders in regards to the closure of the Tiwai Point aluminium smelter.

Prime Minister Jacinda Ardern and Finance Minister Grant Robertson landed at Invercargill Airport on Wednesday night.

When asked, after she got off the plane, if she was in Southland to save the smelter, she said: “you’ll probably have a chance to see us tomorrow when we’ve got our stand up”.

Stuff asked Grant Robertson what he would say to Southland business leaders, he replied: “It’s a good opportunity for us to hear from all of the business leaders we’re seeing, and various others, and get a feel for the situation, and then we’ll have some stuff to say to you after that”.

Robertson signalled on Tuesday the visit was not to save the smelter.

A spokesperson from Robertson’s office said the plant was not closing until August next year, which meant there was already some transition time.

So that wasn’t a positive start for the visit. And coverage was dominated by Peters despite him not being there.

ODT:  Ardern distances herself from Peters’ smelter buy-out comments

Prime Minister Jacinda Ardern is distancing herself from the position of her Deputy, Winston Peters, over comments he made about the Tiwai Point smelter.

In an op-ed for the New Zealand Herald, Peters suggested that the Government should step in and save the Southland smelter, currently owned by Rio Tinto.

“A buy-out would give those who have the most stake in the success of the smelter, the people of Southland, the opportunity to directly benefit from owning and managing it,” he said.

But, speaking to reporters in Southland this morning, Ardern distanced herself – and in effect the Government – from Peters’ comments.

Asked specifically about what she thought of the Deputy Prime Minister’s column, Ardern replied that she had seen the position of “the leader of New Zealand First”.

In other words, Ardern was making it clear that Peters’ comments were made in his capacity as a party leader and not as a Government spokesman.

The Prime Minister added that the Government stepping in, in the way suggested by Peters, “wasn’t the nature of the conversation that was had with leaders here [in Southland] today”.

She said any talks about a bailout were not part of the conversation today either.
“For us, it was all about what happens next.”

She mentioned the fact a “transition” is needed in Southland, in terms of the jobs in the region.

With both Ardern and Robertson talking of ‘transition’ with no sign of an attempt to rescue the smelter it looks like a done deal.

There was never any chance the Government would buy the smelter. Peters will know that, he is just playing to Southland voters, but they are likely to see through him.

The Government deputation looked grim (see the ODT video).

Ardern said this morning that the Government has long had plans to help develop new economic opportunities in Southland.

She said the question now is: “How do we expedite those”.

One of the ways she suggested this could occur was through initiatives such as: R&D for food production, aquaculture, data centres and work on New Zealand’s Space agency.

But she said: “We are all in agreement that a transition [in Southland] is needed”.

So it looks like they went with no plan and nothing new to offer.

The  E tū union is affiliated to the Labour Party and even they look like they have given up on the smelter and downstream jobs and businesses that are a huge part of the Southland economy.

Stuff: Tiwai workers ‘have more clarity’ after meeting with PM

Tiwai employee and E tū union delegate Cliff Dobbie says the Government is doing all it can to get Southland going as the aluminium smelter prepares to wind down operations.

Dobbie felt he had a clearer picture of future options for his crew after meeting with Prime Minister Jacinda Ardern and Finance Minister Grant Robertson at the E tū office in Invercargill on Thursday.

While he is nearing retirement himself, Dobbie said he was worried about future income for his crew members – many of whom were under the age of 40.

But after the informal meeting over tea and biscuits, he was fairly confident they would be looked after.

“I feel a lot clearer. They didn’t beat about the bush,” Dobbie said.

E tū organiser Anna Huffstutler said the meeting focused on what a just transition would look like and who needed to be sitting around the table for those discussions.

“It’s about bringing the community and stakeholders together and creating a roadmap,” Huffstutler said.

“Government is fully supportive of that.”

Timelines for these plans would be determined by negotiations between Meridian and Rio Tinto around how the smelter will be shut down, she said.

E tū organiser Mike Kirkword said it was too early to nail down where and how Tiwai staff would be absorbed into the Southland economy.

So no fight, no hope, no plan, just acquiescence and vague platitudes from the Government and despite the closure being signalled for years.

 

 

 

Where’s the plan for Southland post-smelter?

Grant Robertson on the shutdown of Tiwai Point and loss of thousands of jobs – ‘too bad, move on’.

Jacinda Ardern on the shutdown:

While Tinto have just announced they will close their Tiwai Point aluminium smelter next year this was a well signalled possibility. The Government response (acceptance of the decision) suggested they were well aware this announcement was coming.

Grant Robertson said Government will support the people and economy of Southland:

The Government will support the Southland economy in the wake of multinational mining company Rio Tinto’s decision to follow through with its long signalled closure of the Tiwai Point aluminium smelter.

“This day has unfortunately been on the cards for some time now, but nevertheless the final decision is a blow to Southland and all those who work at the smelter,” Grant Robertson said.

Stuff: Invercargill Mayor Tim Shadbolt ‘absolutely shattered’ by news of Tiwai Aluminium Smelter closure

Labour list MP Liz Craig, who is based in Invercargill also said she was devastated by the closure news and said her thoughts were with the workers, families, and businesses affected.

Craig acknowledged it will have a huge impact on the Southland economy.

She spoke with prime minister Jacinda Ardern this morning about the impact this will have on Southland.

“I am pleased that [Finance Minister] Grant Robertson has already signalled the Government will support the Southland community in our transition, in areas such as agriculture, aquaculture and manufacturing.’’

Craig has invited Adern and Robertson to visit in Invercargill to discuss how the Government might help support those affected, grow local jobs, and create a sustainable Southland economy.

Ardern visited the smelter when they reopened a fourth potline in December 2018 – that was good news. Will she frobt up when the news is bad? So far she has left it to Robertson, who seems quite relaxed about.

Bernard Hickey: Newsroom: Why is Labour letting Tiwai Pt shut now?

Finance Minister Grant Robertson seemed much more philosophical and accepting of the news when he spoke a couple of hours later. It became clear that both the Government and Rio Tinto had called each others’ bluffs, leaving Southlanders incredulous.

“This is a blow for the people of Southland and I feel for them, but we need to look to the future,” Robertson said.

“There is a certain sense of inevitability about today’s announcement. Rio Tinto have been trying to sell Tiwai Point for about 10 years now,” he said.

The Government is spending $62b to cushion the impact of Covid-19 on the rest of the economy, including handing out over $12 billion to small to medium enterprises to keep often near-minimum wage jobs going for a few weeks.

But it appears unwilling to consider spending a few tens of millions to keep at least 2,600 highly paid jobs going in a region with few other alternatives for such high-wage jobs.

Robertson talked airily on Thursday about the prospects for agriculture and aquaculture, but in reality those jobs will be much lower wage and have yet to be invented.

He has talked repeatedly about his personal desire to avoid the mistakes made during the 1990-91 recession when manufacturing jobs were gutted in the regions and little was done to soften the blow.

The risk for the Government and those remaining high-wage jobs in the regions in the next three months is that the announcement of closures of Tiwai Point (2,600 jobs), Marsden Point (3,500 jobs) and the Glenbrook Steel Mill (3,900 jobs) could potentially all come in the next six months.

The worst recession since 1990-91 could easily be just as damaging for the regions as that one.

So far the Government response has basically been ‘too bad, move on’.

ODT editorial: Post-smelter plan must be readied

Southland does not need woolly promises of help and platitudinous pep talks. It needs a concrete plan to meet and then beat the economic and social destruction left when New Zealand Aluminium Smelters’ closes Tiwai Point.

The looming costs are hinted at in the figures most often pitched as reasons to move heaven and earth to keep the smelter online. Previous estimates suggest it accounts for more than 6% of the region’s GDP, and well over $400million to the region’s economy.

That cash keeps people in work and businesses in profit. It helps people pay their mortgages and their grocery bills, helps them support local schools and pay their sports club subscriptions, and keeps them working in and contributing to the South.

These people, families and communities do not have long to consider the effect of losing the smelter. NZAS will terminate its electricity contract with Meridian Energy in August 2021, when the wind-down is complete.

They have little time to decide what to do next and an uncertain time in which to do it. They need no reminding we face a prolonged pandemic-induced recession, and that finding good work and a strong income may be difficult.

But there has been plenty of time to prepare for the inevitability that Tiwai would be shut down.

There is little time to prepare for a post-smelter future but successive Governments have had the best part of a decade to ensure there was a plan to cope with, and then fill the gap left when Rio Tinto pulled the plug on its regionally and nationally significant operation at Tiwai Point.

Treasury, Ministry of Business, Innovation and Employment and Ministry of Social Development officials have had plenty of time, regardless of which parties were in Government, to forge all manner of strategies for a post-smelter future. They, and a succession of politicians, have had years to prepare for the inevitable.

As such, Southlanders have every right to expect Prime Minister Jacinda Ardern and Finance Minister Grant Robertson to outline robust, detailed plans when they take up Labour Invercargill List MP Liz Craig’s invitation to visit Invercargill and ‘‘discuss how the Government might help us support those affected, grow local jobs and create a sustainable future for the Southland economy’’.

If not, Southlanders have every right to feel let down by a multi-national company and by the governments that saw this coming.

Robertson seems untroubled by the problems faced by Southland.

What about Ardern? I can’t find any response from her on the shutdown announcement. Nothing since her good news PR money handout announcement on Thursday – NZ Herald: Government to bail out councils with $761m water services investment:

Prime Minister Jacinda Ardern has announced a $761 million investment to help councils upgrade “run down” water services across the country.

In a politically charged piece of symbolism, Ardern and Local Government Minister Nanaia Mahuta chose the site of the water bore found to be the source of the fatal Havelock North campylobacter outbreak in 2016 to make the announcement on Wednesday.

“Investing in water infrastructure is about investing in the health of New Zealanders.”

Southlanders are New Zealanders. They received very bad news this week. Ardern was nowhere to be seen.

 

Tiwai smelter to shut down next year, Government accepting closure

This is one of those ‘shock but not a surprise announcements – Rio Tinto has announced that they won’t renew their power contract for the Tiwai Point aluminium smelter and will shut down permanently.

Rio Tinto have claimed power prices have been too high for years, negotiated a deal with the Government in 2015 – see Key says Government won’t add to NZ$30 million of support given to Rio Tinto to keep Tiwai Pt open –  but have still been losing money as world power prices have declined.

The Government has said they will support the workers and businesses affected in Southland, but they won’t try to keep the smelter running.

RNZ: Rio Tinto announces plans to close Tiwai Point smelter

Rio Tinto has announced that it will wind down New Zealand Aluminium Smelters, best known as Tiwai Point smelter.

In a statement to the Australian Stock Exchange, the company said its strategic review had “shown the business is no longer viable given high energy costs and a challenging outlook for the aluminium industry.”

The company has given Meridian Energy notice to terminate its power contract, which ends in August next year. It expects the wind-down of operations will be done by then.

It said it had had discussions with interested parties but could not secure a power contract that would have kept the smelter competitive and profitable.

The smelter’s viability has been questioned for much of the past decade as it grappled with weak metal prices, power costs, and over capacity which has seen smelters closed around the world.

It employs about 1000 people directly and creates a further 1600 indirect jobs in Southland. The smelter is owned by Rio Tinto and Japan’s Sumitomo Chemical Co.

NZ Aluminium Smelters chief executive Stu Hamilton told Morning Report they were on a path to winding down operations.

“We don’t think there’s a deal that can be done that will deliver competitively-priced power to the smelter which is necessary for it to be sustainable.

“We do believe that nothing has been left on the table but if we’re mistaken then the window is still available for a deal to be put on the table but the window for that is closing fast now that we have terminated our electricity contract with Meridian.

It looks like they aren’t mistaken, the Government seems to be not interested in trying to rescue the situation. Their official response shows they intend to deal with the closure rather than try to prevent it: Government will support the people and economy of Southland

The Government will support the Southland economy in the wake of multinational mining company Rio Tinto’s decision to follow through with its long signalled closure of the Tiwai Point aluminium smelter.

“This day has unfortunately been on the cards for some time now, but nevertheless the final decision is a blow to Southland and all those who work at the smelter,” Grant Robertson said.

“The smelter supports hundreds of jobs in Southland and the Government will work with the local community to support economic development in the region to help offset this loss.

“Rio Tinto has indicated it wants to work with the Government to support the community during the wind down of the smelter.

“As we have done in Taranaki, we will support a just transition to more job opportunities. We know the strengths of Southland and we want to build on them in areas such as agriculture, aquaculture and manufacturing. There is also an opportunity to support other energy intensive projects like green hydrogen and data centres.

“There is a degree of inevitability to the decision, as Tiwai has been on the market since 2011, and former Prime Minister Bill English told Rio Tinto in 2013 there would be no further taxpayer money provided.

“Since the smelter opened taxpayers have been subsidising Rio Tinto to keep it open, either directly or indirectly through cheaper power, and Emissions Trading Scheme allocations of over $48 million per year. The company has made the decision not to keep operating without further subsidies.”

Not only does the Government seem happy to see the smelter close, they are looking at what opportunities that may bring:

“Rio Tinto’s decision not to extend their generous power contract with Meridian will flow through to the rest of the market,” Megan Woods said.

“It is disappointing that Rio Tinto is deciding to close one of the world’s lowest carbon aluminium smelters, in favour of keeping open coal plants.”

“Eventually it will free up around 13 percent of total power generated in New Zealand which will relieve some pressure to build new generation. The increased supply will also have a positive impact on prices.

“I also want to make clear that the Government expects Rio Tinto to meet their obligations for clean-up of the site (an estimated $256 million) and do the right thing on the dross,” Megan Woods said.

RNZ: Tiwai smelter closure: A ‘tough day’ for Southland – Grant Robertson

“The message I have for the people of Southland today is the government stands alongside you and with you to start providing new job opportunities in the region.

“This is a very sad day for Southland but there are also opportunities attached to this.”

Not just a tough day, it could be a tough few years if not decade for Southland. It’s hard to see how ‘new opportunities’ will pick up the slack for two and a half thousand jobs, inevitable business losses and the wider family and community impacts.

The union representing workers at the smelter says about 1000 people directly employed by the smelter would be affected, but the decision would also impact on a further estimated 1600 workers in the supply chains.

E tū union said staff were shocked and dismayed and never thought threats to close the plant would ever eventuate.

Negotiator specialist Joe Gallagher said it was not too late to get back around the table, strike a deal, and save jobs.

Sounds like it is too late.

There was a lot of other response.

Contact Says Smelter Closure Is ‘disappointing’

Contact Energy (“Contact”) CEO Mike Fuge said Rio Tinto’s intention to effectively close New Zealand’s Aluminium Smelter (“NZAS”) by giving 14 months’ notice on their electricity contract with Meridian Energy was “very disappointing”.

He said all commercial parties involved in dealing with NZAS, including Contact, had collectively delivered significant cost reductions for electricity. “We’ve all had a strong desire to help secure the financial sustainability of the unique low-carbon smelter at Tiwai, and retain the 1,000 high-paying jobs in Southland, plus the 1,600 contractor and supplier roles.

Contact’s ‘shovel-ready’ Tauhara geothermal power station remained New Zealand’s cheapest and most attractive option for new, renewable, baseload electricity generation, but Mr Fuge said the sensible option was to defer this investment. “Tauhara remains a fantastic project, however it is prudent to press pause for now. We need to factor in the impact of COVID-19 and the potential exit of NZAS and get a clearer picture of demand,” he said.

So that is one ‘shovel-ready’ project that may not happen now.

Rio Tinto Departure Makes Decarbonisation Projects ‘shovel Ready’

Rio Tinto’s smelter, which uses 13 percent of New Zealand’s electricity, is now due to close in August 2021. Greenpeace Executive Director, Dr Russel Norman, says the Tiwai closure will release a huge amount of low-carbon and affordable power back onto the grid.

“The Tiwai closure will mean cheaper power for New Zealand households. It also means there is more clean, renewable energy that can be used to power our cars and industries as we move to a zero carbon economy.

“This will cut climate emissions out of the transport and industrial sectors, while simultaneously helping to reduce New Zealand’s current account deficit by cutting the billions of dollars we spend on importing oil for the transport sector.

“With a ready supply of clean and affordable hydropower now being made available, the Government should create the conditions needed to increase the number of electric cars, buses and trains.”

Norman also says Rio Tinto’s departure blows any case for new coal, gas or oil development completely out of the water.

Rio Tinto Decision Following Strategic Review Of Tiwai Smelter

Mercury notes Rio Tinto’s announcement to wind-down operations at New Zealand Aluminium Smelters Limited (NZAS) with expected closure in August 2021.

Mercury reiterates previously made statements that it is relatively well placed to respond to the decision to close the smelter, with all of its renewable generation assets in the North Island close to load centres and largely free of major transmission constraints as a consequence of reduced South Island electricity demand.

Tiwai Closure Points To End Of Heavy Industry Under Ardern

“The closure of Tiwai Point signals the end of heavy industry under the Ardern Government,” according to ACT Leader David Seymour.

“Labour is squeezing the life out of the economy. For the past three years, it has made it much more difficult and costly for businesses like Tiwai Point to be productive.

“We have a Wellington-centric government of former student politicians that just doesn’t get how the economy works.

I doubt ACT would support a government subsidy of a foreign owned company.

New Zealand First Disappointed Rio Tinto Playing Games With Southlanders

Australian mining company Rio Tinto is playing games with the people of Southland, says New Zealand First List MP, Mark Patterson, following today’s announcement that Tiwai Point is to close.

“It is unconscionable that despite massive support from New Zealand, multi-billion dollar company Rio Tinto is bailing on Southlanders at the height of an economic crisis,” said Mr Patterson.

“New Zealand First has consistently warned that Rio Tinto would walk away, just as they did in Australia, when it no longer suited them. And with a 14 month timeframe, this looks like Rio Tinto is using local workers to play hard-ball with New Zealand power companies.

Patterson seems to be speaking to people who will be adversely affected by the closure while ignoring that NZ First are a part of the Government that is waving goodbye as Rio Tinto walks away.

The End Of Tiwai Pt Could Open Huge Opportunities For NZ

The announced closure of Tiwai Point is welcome news for the clean energy future of New Zealand, and presents huge opportunities in areas such as electrifying transport and developing new, high-tech industries, Coal Action Network Aotearoa said today.

Provided this is not a negotiating tactic, Tiwai’s shutdown should see the closing of the country’s only coal-fired power station at Huntly, which Meridian persuaded Genesis to keep it open as part of the deal it did with Rio Tinto in 2016.

Once the smelter is closed, New Zealand’s emissions will drop by upwards of 1.5 million tonnes a year, emissions the taxpayer has been subsidising NZ Aluminium Smelters for.

“We now have a massive opportunity to look at where and how we will use the renewable energy that will be freed up: we could electrify the South Island’s rail network, and make huge steps toward electric transport,” said CANA’s Rosemary Penwarden.

Union Calls For Just Transition For Workers As Smelter To Close

E tū union is calling for a ‘Just Transition’ for workers in the wake of Rio Tinto’s announcement it will be closing its smelter at Tiwai Point.

“This is a significant employer and this company is at the heart of its community. A closure will affect the entire supply chain, including other local suppliers,” he says.

Joe says the Government needs to consider a similar approach to that used in Taranaki with the Taranaki 2050 Roadmap, to ensure a Just Transition takes place.

I wonder if the E tū union supports the Labour led government letting Tiwai close:  Affiliations – E tū is affiliated to the New Zealand Labour Party.

Infracom To Factor Tiwai Closure In Infrastructure Strategy

Today’s announcement of the potential closure of the Tiwai aluminium smelter by Rio Tinto has very significant implications for the economy and energy market. This will be a key consideration in Infracom’s thinking as it develops New Zealand’s 30 year Infrastructure Strategy.

Tiwai Point Closure – Expert Reaction

Associate Professor Nicola Gaston, Co-director, MacDiarmid Institute for Advanced Materials and Nanotechnology:

“The closure of Tiwai Point is first and foremost a loss for the people of Southland who will be impacted by the loss of thousands of jobs at an awful time. However, it is not a huge surprise, on some level: Rio Tinto has threatened to pull out previously, repeatedly, in negotiating the cost of the electricity supply with Government, and the discussion about what New Zealand should do with the energy is not new.

Jeanette Fitzsimons (former Green Party leader) pointed out late last year that ETS subsidies for the smelter would total a billion dollars by 2030, and that we should consider better uses for the 13 per cent of our electricity supply, all of it renewable.

“Many of my colleagues at the MacDiarmid Institute are deeply passionate about this being the right time to invest in new tech to make the most of our renewable energy advantages in New Zealand – whether this is a form of energy storage, which could include green hydrogen generation, or something even more ambitious, such as using the energy for manufacture of other components needed for a zero carbon economy, such as solar panels – these options exist, but require a government-led business case to be developed.

Dr Anna Berka, Lecturer in Management, Entrepreneurship & Innovation, Massey University:

“Rio Tinto has flagged potential closure for some years. The current crisis has clearly pushed it over the edge. Previous governments went far to make it comfortable here; it was granted some of the lowest electricity prices, reportedly below cost. In return, Rio Tinto has been obstructive to emissions pricing, and by all indications seems to have abused our resource consent process as well. As the largest consumer of electricity in the country, its closure will have ripple effects on the entire energy sector, resulting in temporary surplus capacity – and resulting in downwards pressure on market prices, as well as very likely reducing the viability of new generation capacity currently under development.

Professor Emeritus Ralph Sims, Sustainable Energy and Climate Mitigation, Massey University:

“Few countries have surplus power generation available to meet the present electricity demand as will be the case in New Zealand once the Tiwai Point smelter starts phasing out its high electricity-consuming aluminium potlines over the next year or two.

“We know there will be growing demand over the next decade or two for electricity, especially for electric vehicle charging and industrial and commercial heating by companies, schools etc., looking to displace coal with electricity.

“This will also further reduce the combustion of gas and coal used for power generation and therefore help lower the total carbon dioxide emissions from electricity generation.

“So, in a perfect world, closing Tiwai Point should theoretically result in greater shares of renewable electricity, a reduction in greenhouse gas emissions, and cheaper electricity prices for all New Zealanders.

“However, it’s not that easy.

“So, will New Zealand electricity consumers reap the economic and environmental benefits of having cheaper hydro power suddenly becoming available once the smelter starts winding down?

“I have my doubts.”

Associate Professor Nirmal Nair, Department of Electrical, Computer and Software Engineering, University of Auckland:

“What the likely energy consequences are, which we as a country need to prepare for, is based on how this news is going to play out in the next two to 10 years or so.

“If the demand destruction of electricity load happens in the next two to three years, we will need to spend some dollars to strengthen the transmission assets there to port the electricity to North Island.”

Adjunct Professor Harvey Weake, Faculty of Engineering, University of Auckland:

“I guess the industry has been bracing for this announcement for some time. Given the plant is close to 50 years old, that is a pretty good innings for such a plant and without a major capital injection to maintain its competitiveness, it was just a matter of time. Newer plants are just more energy efficient.

“Short-term economic losses from the loss of Tiwai will be primarily through the loss of local fixed costs from that industry, but given it is foreign held, the impact to New Zealand’s economy will be pretty modest given it wasn’t projected to make significant profits anytime soon.”

Professor Sally Brooker, Department of Chemistry, University of Otago:

“New Zealand should make the most of that electricity for producing green products (e.g., hydrogen, ammonia, silica for PVs, and/or even keep making super green aluminium on a smaller scale as Jeanette Fitzsimmons suggested in an earlier Spinoff article), and use the Regional Development Fund or COVID-19 budget to develop the necessary plant at Tiwai. It is a great site to do so. And it would keep skilled jobs in Southland as, without the smelter, the region will be absolutely hammered by the job losses.

“New Zealand needs to be investing heavily in further developing green energy generation and use, as part of our current government spending/investment. We could be world leaders in going completely to green energy (including transport – electricity, green hydrogen etc), as the world looks to respond to global climate change. We start from such a strong position with our high percentage of green electricity.”

We will see over the next few days or weeks whether the Government was preparing for this and has plans for alternative use of the Manapouri power, and has alternative job and business opportunities for Southland. The Government must have known the closure of Tiwai was likely.

 

 

 

 

 

 

Infrastructure handouts announced

$3 billion aimed at fast tracking infrastructure projects to try to boost recovery from the economic effects of the Covid-19 pandemic were announced yesterday.

Infrastructure investment to create jobs, kick-start COVID rebuild

A new package of infrastructure investments will help kick-start the post-COVID rebuild by creating more than 20,000 jobs and unlocking more than $5 billion of projects up and down New Zealand.

That is presumably an estimate of job numbers. There is no indication whether people with the right qualifications and skills  are available to do the jobs, or if they will need to be trained – which would take time.

Finance Minister Grant Robertson and Infrastructure Minister Shane Jones today outlined how the $3 billion infrastructure fund in the COVID Response and Recovery Fund will be allocated across regions, following extensive engagement with local councils and businesses.

The investment package includes about $210 million for climate resilience and flood protection projects, $155 million for transformative energy projects, about $180 million for large-scale construction projects and $50 million for enhanced regional digital connectivity.

The COVID Response and Recovery Fund (CRRF) set out in Budget 2020 earmarked $3 billion for infrastructure projects. Cabinet’s initial decisions on this allocation include:

  • Housing and urban development: $464m
  • Environmental: $460m
  • Community and social development: $670m
  • Transport (cycleways, walkways, ports and roads): $708m

The projects are in addition to the $12 billion New Zealand Upgrade Programme and existing Provincial Growth Fund investments.

Infrastructure Minister Shane Jones said the pipeline of projects would create immediate economic activity in the metropolitan centres as well as the regions.

Cabinet has now made initial decisions about key sectors it would like to support and general regional distribution of funds, with more than 150 projects worth $2.6 billion being approved in principal. Officials are now undertaking final due diligence to ensure projects are viable and offer the benefits stated by applicants.

That doesn’t sound like ‘immediate economic activity’.

About $400 million has been set aside as a contingency as the Government takes a responsible approach to managing spending on behalf of taxpayers. Funds not required in the contingency will be put towards further infrastructure projects, providing an incentive for local councils to deliver the approved projects on time and on budget, as this would unlock a further potential $400 million of investment.

Large infrastructure projects have a habit of running over budget, especially when the investigations and planning of them is rushed.

Rushing projects also raises the risks of them being ill-conceived and chosen so the Government is seen to be doling something.

And there are suggestions the announcements that the announcements are more timed for the election than practical progression of the projects. This announcement included government self promotion:

“This is about creating jobs as we recover and rebuild from the recession caused by the global COVID-19 pandemic. Because we went hard and early with our health response, we’ve been able to open up the economy quicker than other countries and get a head start on our recovery,” Finance Minister Grant Robertson said.

“This package will provide Kiwis with confidence that the Government is backing them in this challenging economic environment by creating new jobs and opportunities in communities around the country.”

Infrastructure Minister Shane Jones said the pipeline of projects would create immediate economic activity in the metropolitan centres as well as the regions.

“Both are critical to our economic and social recovery from the COVID-19 crisis,” Shane Jones said.

“Not only has this massive undertaking provided us with the largest stocktake of infrastructure projects we’ve ever had but it’s enabled us to partner with central and local government, the private sector and community groups to deliver projects for all Kiwis.

“The specific projects we’re announcing today are examples of the sort of projects we’re supporting – from nationwide investments in flood protection and better digital connectivity to civic facilities that we know form the bedrock of our communities.

“I am extremely proud of the depth and breadth of this unprecedented piece of work,” Shane Jones said.

Jones may also be hoping this unprecedented piece of work will help his electorate election chances, and Robertson may be hoping it helps Labour’s chances of being re-elected (but he may not be hoping for NZ First to interfere with them governing again next term).

It will be well after the election before the worth of the projects being pushed have been money well spent, or squandered.

The Government drip feed of spending announcements

National spokesperson for finance Paul Goldsmith is nudging Minister of Finance Grant Robertson on the drip feeding of spending announcements.

Usually most spending is signalled in budgets – this year’s budget was published in mid-May, but unusually, due to the Covid pandemic, a there was a lot of additional spending plus $20 billion not allocated to anything specific.

Obviously spending on measures related to Covid would have to be announced and that would happen gradually as needed. But like $1 billion a year Provincial Growth Fund it leaves open perceptions and allegations of election campaign assistance.

Every Government times announcements they think will be favourable to their chances of re-election, it is a major benefit of incumbency. But most spending is signalled in the election year budget.

In Parliament’s Question Time yesterday:

Hon Paul Goldsmith: Does he stand by his response to my question on Tuesday, which asked how much additional spending he had so far planned to announce before the general election in September, “As the member knows, the Government has been very flexible all the way through our response to ensure we meet need as it arises, but I don’t have any specific plans in that regard.”?

Hon GRANT ROBERTSON: I stand by all of the statements I made in that answer, and I think the member’s impression wasn’t too bad just then.

Hon Paul Goldsmith: How did he not have any specific plans for new spending on Tuesday and then have his Government announce $400 million of new spending on Wednesday?

Hon GRANT ROBERTSON: The basis of that spending was in the Budget and the COVID-19 Response and Recovery Fund announcements we made.

Hon PAUL GOLDSMITH: Does he think he can just dismiss questions about his intentions for billions of dollars of spending?

Hon GRANT ROBERTSON: No, and I haven’t.

Hon Paul Goldsmith: Can he assure New Zealanders that he’ll keep a substantial part of the $20 billion spare from the COVID fund as a contingency in the case of a later outbreak?

Hon GRANT ROBERTSON: I, in fact, talked exactly about that when I announced it on Budget day.

Hon Paul Goldsmith: How long is he planning to keep up his average of announcing $200 million of new spending a day since the Budget, and how does he think New Zealand will pay for it?

Hon GRANT ROBERTSON: I would have to go back and look at the figures that the member has just put forward there. What we have done throughout the last 2½ months or so is what New Zealanders wanted us to do, which is cushioned the blow of this virus on both our economy and our society, and we will keep doing that.

On Wednesday:

Govt boosts innovation, R&D for economic rebuild

New Zealand’s entrepreneurs, innovators and crown researchers will benefit from a $401.3 million funding boost through Budget 2020 and the COVID Response and Recovery Fund to help deliver jobs and a stronger economy in a post-COVID world, Research, Science and Innovation Minister Dr Megan Woods said.

Free period products in schools to combat poverty

During term 3, the Ministry of Education will begin providing free period products to schools following the Government’s $2.6 million investment. The roll-out will begin at 15 Waikato schools and be expanded to all state and state-integrated schools on an opt-in basis in 2021.

“Our plan to halve child poverty in 10 years is making a difference but there is more to do and with families hit hard by the COVID-19 global pandemic, it’s important to increase that support in the areas it can make an immediate difference.

Free period products to schools seems like a worthwhile initiative but it has been campaigned for by the Greens for some time and it seems very loosely connected to Covid.

Thursday:

An iconic New Zealand tourism attraction and the country’s 31 Regional Tourism Organisations are the first recipients of support from the $400 million Tourism Sector Recovery Plan, to help position the sector for recovery from COVID-19, Tourism Minister Kelvin Davis announced today.

Sport and Recreation Minister Grant Robertson has welcomed the first release of funds from the $265 million Sport Recovery Package announced as part of Budget 2020.

It will be difficult for Goldsmith and the Opposition to pin specific spending more on electioneering than being necessary, but the COVID Response and Recovery Fund decisions should be scrutinised.

Government will wait to make next decision despite only 1 live Covid-case

Yesterday’s Ministry of health Covid-19 update showed that there have been no new cases for a week, and that there is now only now only case that is still ‘active’ (and that may have been active for a month so is nowhere near new).

But Grant Robertson says the Government will still wait a week and a half before making any decision about changing the current Level 2 restrictions.

On Monday Jacinda Ardern said that Cabinet would only re-evaluate Level 2 restrictions in two weeks time – that’s on 8 June, and a change to Level 1 may not happen for up to four weeks (to 22 June).

NZ Herald: Only one active case, but Grant Robertson won’t be drawn on lifting level 2 restrictions

New Zealand has just one active Covid-19 case today — but Finance Minister Grant Robertson refuses to be drawn on the possibility of lifting restrictions earlier than expected.

Robertson said New Zealand had done “incredibly well” in the fight against Covid-19.

The Government was flexible and would review alert level settings on June 8, he said, and reiterated Cabinet would look at moving to level 1 no later than June 22.

But he would not commit to action when asked whether having only one active case made it more likely that Cabinet might consider whether New Zealand was ready to move to level 1 earlier.

“The worst thing of all would be for New Zealand to move backwards again,” he told a media conference in Wellington.

No one wants to go back to Level 4, or even Level 3. But if people see ongoing restrictions as unjustified and ignore them, and don’t take seriously and future restrictions that poses greater risks.

The Government had wide and strong public support when we went into lockdown in March. But as the apparent dangers from Covid quickly reduced the public has tended to relax more quickly that Government restrictions were lifted.

There appears to be virtually no threat now. If the Government keeps restrictions on despite this they risk losing public support, which is likely to lead to people pushing boundaries or ignoring restrictions more.

Headlines like this from the ODT yesterday don’t help:  Police allowed gang tangi

Police allowed dozens of people to gather for the tangi of a Black Power member in Dunedin during lockdown.

As many as 50 people waited in a car park outside a funeral home for the tangi on April 30, blocked roads and later gathered at a gang pad, documents released to the Otago Daily Times under the Official Information Act show.

Many had travelled from outside Dunedin for the event.

Despite the breaches, police said in an internal email ‘‘trying to stop it will only create a worse situation for all’’.

There’s a real risk that if the Government is too cautious and pedantic in trying to prevent any cases at all it will create a worse situation if there is a second wave, and the public don’t care about restrictions that may be applied again and ignore them.

With next to no cases in the country now the public is largely moving forward while the Government retains restrictions and holds back business and employment.

Big boost to Covid unemployment benefit

A big boost to benefits for people who have become unemployed mostly due to Covid (since 1 March) has been both welcomed and criticised.

New payment to support Kiwis through COVID

The Government today announced a new temporary payment to support New Zealanders who lose their jobs due to the global COVID-19 pandemic to adjust and find new employment or retrain.

  • Further support for New Zealanders affected by 1-in-100 year global economic shock
  • 12-week payment will support people searching for new work or retraining
  • Work programme on employment insurance to support workers and businesses

A new COVID Income Relief Payment is being introduced, alongside a wider work programme on possible future employment insurance as we rebuild our economy in a way that supports workers and businesses together.

The payment will be available for 12 weeks from 8 June for anyone who has lost their job due to the impact of COVID-19 since March 1. It will pay $490 a week to those who lost full-time work and $250 for part-time. The payment will not be taxed.

Finance Minister Grant Robertson said the payment acknowledges that the global economy is facing a 1-in-100 year recession, which is impacting on New Zealand, and supports the Governments priority of protecting jobs where possible and supporting workers back into jobs where necessary.

The scheme announced today is very similar to the Job Loss Cover payment introduced by the previous Government during the Canterbury earthquakes, and has a number of similarities to the ReStart package for workers who lost their jobs in the Global Financial Crisis.

Receipt of the payment comes with expectations from the Government, and responsibilities. People who receive the COVID payment will be required to:

  • Be available for, and actively seeking, suitable work opportunities while they receive the payment
  • Take appropriate steps towards gaining new employment; and
  • Identify and take opportunities for employment, re-deployment and training.

Students who have lost part-time work as a result of COVID-19 may also be eligible for the part-time rate.

The 12-week scheme is forecast to cost about $570 million. This incorporates $1.2 billion of payments offset by $635 million of saved benefit payments, with small administrative costs. This fits with the Government’s intention for COVID response spending to be targeted, temporary and timely. It will be funded from the COVID Response and Recovery Fund.

Susan Edmunds (Stuff): Unemployment payment scheme shows Govt knows benefits insufficient

“The Government’s announcement that it will introduce a new payment of up to $490 a week for people who lose work because of Covid-19 will be welcome to the thousands of people expected to find themselves out of a job in the coming months.

But you can’t help thinking that it will be a rude shock to those who were already unemployed, who could barely dream of the sort of income the Government will provide those newly jobless.

The new scheme is generous – about twice the rate of the JobSeeker Support benefit – and, crucially, your partner can earn up to $2000 a week before tax, without it affecting your ability to claim.

Compare that to the Jobseeker Support, where you and your partner can only earn a combined $90 a week before it starts to reduce the rate of benefit you can qualify for.

A household receiving this new Covid-19 support could end up bringing in $1976 a week for 12 weeks, after tax, in total. That’s a much more comfortable life than the $375 for a single parent (plus up to $305 in accommodation supplement) on Jobseeker Support.

It seems that the Government has decided there are two classes of unemployed – those “worthy” unemployed who are only out of a job because of a global pandemic, and so should be allowed to carry on with their lives much as before, and those “unworthy” who lost their jobs or were unable to work for other reasons and so should be expected to live a subsistence lifestyle.”

Gezza commented:


This also came up on 1News at 6 last night & Robertson’s attempt to defend the government’s decision to be more generous to presumably a high proportion of white middle class pakeha affected by Covid-19 was presented in a way that made him appear unconvincing.

Muller was shown pointing out (as Labour would if in Opposition) that this was unfair & there needed to be consistency & equivalence.

Muller also said in that 1News item that the focus should be on businesses and how to keep them afloat to keep people in jobs.

Newshub’s picked it up too:

“We support supporting New Zealanders in a moment of significant need, but our concern with that announcement is it’s ill-defined and ill-directed,” he said on Monday during a press conference.

“What would’ve been better is a stronger focus on businesses to keep them in business… When we build together our economic plan, our focus will be on what do those small businesses actually need to be able to stay afloat. And I think that’s where the focus should be.”

https://www.newshub.co.nz/home/politics/2020/05/todd-muller-slams-government-s-income-relief-payments-as-ill-defined-and-ill-directed.html

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.