Pre-election Economic and Fiscal Update – economy “better than predicted”

The Pre-election Economic and Fiscal Update has been released today. Minister of Finance Grant Robertson’s take on it:


  • PREFU shows economy doing better than forecast
  • Unemployment to peak at 7.8%, down from 9.8% forecast in the Budget
  • Year-to-June accounts show tax revenue, debt and OBEGAL better than forecast
  • Global forecast downgraded as COVID-19 second waves and uncertainty grows
  • Balanced plan to support critical public services, manage debt and reduce the deficit caused by COVID-19

The Pre-election Economic and Fiscal Update released today shows that the near-term economic recovery has been stronger than the Treasury and many economists predicted at the May Budget, as the economy bounced back strongly out of lockdown.

“The Treasury now forecasts the unemployment rate to peak at 7.8%, down from 9.8% forecast in the Budget, because the economy is stronger than expected. That compares to an expected peak of 10% in Australia, while countries like the US and Canada have already recorded unemployment peaks above 13%,” Finance Minister Grant Robertson said.

“The unaudited Crown accounts for the year to 30 June 2020 back up the evidence of a rebounding economy, with core Crown tax revenue of $84.9 billion coming in higher than the $82.3 billion forecast, indicating more activity than expected.

“Net core Crown debt was 27.6% of GDP at 30 June, compared to the Budget forecast of 30.2%, and the OBEGAL deficit of 7.7% of GDP at 30 June was lower than the 9.6% forecast.

“These are signs that the New Zealand economy is robust, and that our plan to eliminate COVID-19 and open up the economy faster is the right approach. We can see this in the forecasts, with the New Zealand economy predicted by the Treasury to grow by an average of 4.2% across 2021 and 2022, compared to Australia at 3.6% and the US at 3.5%.

“The Treasury – similar to other economists – initially forecast June quarter GDP to fall by about 23.5% in June from March. In today’s forecasts, the Treasury has reduced that to 16%. All this goes to show is that forecasting month-to-month, let alone years in the future, is incredibly difficult with such an uncertain global environment and an unpredictable virus.

“However, global headwinds and this 1-in-100 year economic shock caused by COVID-19 will have a long-term effect on the Government’s books.

“The forecasts illustrate our balanced plan to manage debt and reduce the deficit caused by COVID-19, while protecting our investment in services like health and education.

“COVID-19 is hurting economies around the world but because New Zealand went into this with low debt and a growing economy, we will come out better than other advanced countries,” Grant Robertson said.

“Policies like the Wage Subsidy, business tax refunds and small business cashflow loans protected jobs and kept businesses going. We’ve also invested to secure PPE and ventilators, and make sure our testing and contact tracing systems are world-class. Taking on debt to fund this response is the right thing to do as we fight COVID-19.

“There is no free lunch here.These measures require significant investment. It has been necessary to use the Government’s strong financial position to do this.

“What counts is our strong track record. Before COVID-19, despite constant urging to the contrary we stayed disciplined with our spending and reduced debt below 20% of GDP while successfully investing in critical public services.

“Our strong starting position that means even at its peak of around 56%, New Zealand’s net debt will be considerably lower than other economies around the world – advanced economies went into COVID-19 with net debt averaging about 80% of GDP.

“The PREFU’s long-term projection model shows debt reducing to 48% of GDP by the end of the projection period. The difference between debt of 56% and 48% at the end of the projection period represents $46 billion less debt than if debt just remained at its peak.

“The projections show the deficit caused by COVID-19 reduces steadily each year from 10.5% of GDP this year, to less than 1% of GDP by June 2028.

“The PREFU also shows the benefit of locking in low interest rates for the long-term debt that has been used to fund the response, with annual core Crown finance costs forecast to reduce by around $800 million over the next four years.

“Because the Government can borrow for 20 years or longer at rates below 1%, it makes sense to lock these in now to fund the response before interest rates rise. Because the Treasury has already been able to secure more funding at lower rates, and because the Government’s cash position has improved since the Budget, the Treasury today announced it has reduced its debt programme over the next four years by $10 billion.

“There are challenges ahead, but we have a five point plan to grow the economy, support businesses and seize the opportunities created by our world-leading COVID response.”


While the economy may not be as bad as predicted the effects could have been delayed and may be yet to bite. Or not.

Daily update – more cases but not much change

75 more cases today and another 6 recovered, with a total of confirmed and probably cases now 589.

Summary

As at 9.00 am, 30 March 2020
Total to date New in last 24 hours
Number of confirmed cases in New Zealand 552 76
Number of probable cases 37 -1
Number of confirmed and probable cases 589 75
Number of cases in hospital 12
Number of recovered cases 63 6
Number of deaths 1

View full details of the confirmed cases.

View details of significant COVID-19 clusters.

Case numbers are still expected to keep rising over the next week or so but at this stage things seem to be reasonably under control.

Police Commissioner Mike Bush:

Says two staff have tested positive for Covid-19. They are at home and not been hospitalised.

Mike Bush says 4547 Kiwis have returned over the past three days; 94 of those people were symptomatic and are in quarantine.

1200 did not have a satisfactory self-isolation plan.

About 3200 did have a plan and are self isolating, and police will ensure they are complying with those restrictions.

Three people have been arrested for repeat offences of breaching the lockdown and one person is still in custody, Mike Bush says.

He says tourists should refrain from travelling around the country.
If they persistently breach rules, police will take action, Bush says.

The New Zealand Government is today launching a daily email newsletter to give people a new way to stay up-to-date with COVID-19 information.

The daily updates will include:

  • The latest COVID-19 news
  • Answers to frequently asked questions, eg advice for essential workers
  • The latest resources, including translations, posters, and social media images

Sign up to get the latest updates from Unite Against Covid-19(external link)


How easily it can spread.

The Waikato District Health Board has confirmed a cluster of Covid-19 cases in Matamata can be linked to a St Patrick’s Day celebration at a local bar. There are now 23 confirmed cases in the area and most have been identified as attending the event on 17 March at the Redoubt bar, or are directly linked to those who attended.

There was at least one bar open for St Patricks day and also student parties.

Bars were closed and parades cancelled in Ireland for St Patricks Day

More New Zealanders in their 20s have Covid-19 than any other age group, Ministry of Health figures show, and it’s likely because most cases are connected to overseas travel. Ministry of Health data about the first 500 cases of Covid-19 shows people of European ethnicity in their 20s are the most likely to test positive for the virus.

OE exposure.

The Auckland girl’s school Marist College has 47 confirmed and probable cases of Covid-19. It is the biggest cluster of infection being tracked by health authorities. The board chairperson Stephen Dallow says the confirmed cases include teachers, students and adults within the community.

That’s why protecting schools was important (managed very well at Logan Park in Dunedin).

Covid-19 update – first NZ death reported

The Prime Minister and Director-General of Health are holding a joint press conference at Parliament today (PM Ardern has been having a separate one later in the afternoon).

 

Director-General of Health Ashley Bloomfield (who had his first day off for a while yesterday) case update:

First death from Covid-19 on the West Coast, a woman in her seventies. She was admitted to hospital with what was thought to be influenza they were well known to the hospital due to other health conditions. When she was initially treated staff were not fully Covid protected, so 21 staff have been put in 14 day isolation (that makes it tough on health staffing).

Dr Bloomfield says that in preparation for Covid all hospitals have stopped elective surgery and other non-urgent work so are running at about 50% capacity, so staffing levels aren’t a concern.

63 new cases in the last 24 hours (up to 9 am Sunday) – so this is a lower increase than for the lastt few days, but this doesn’t mean a general downturn. It could still rise again.

56 now recovered.

9 in hospital, 1 in ICU on a ventilator.

The combined total of cases is now 514.

Summary

As at 9.00 am, 29 March 2020
Total to date New in last 24 hours
Number of confirmed cases in New Zealand 476 60
Number of probable cases 38 3
Number of confirmed and probable cases 514 63
Number of cases in hospital 9 (28 total to date)
Number of recovered cases 56 6
Number of deaths 1

View full details of the confirmed cases.

Prime Minister Jacinda Ardern:

The first death brings home why the measures have been taken to stop the spread.

“It is critical we all stay at home to stop the spread.”

Ardern is critical of online bullying of people who have contracted Covid-19.

Some people have been flouting restrictions. This puts others at risk, and risks extending the lockdown period.

Police have launched an online form  to report breaches of home isolation at 105 Police Non-Emergency Supporting Information

(More details when they post them online)

In an emergency, always call 111.

You can now report to Police online

  • Suspected COVID-19 L4 isolation breaches
  • Businesses you suspect are breaching the essential services rule.

Before making your report, please refer to information from the Ministry of Health about self-isolation(link is external) the Government guidelines about Essential businesses(link is external).

To complete this report you will need to provide your name and email address so we can contact you if required.

Start your COVID-19 L4 breach report

Police non-emergencies

For all other Police non-emergencies that don’t need urgent Police assistance, please refer below.

Please read the information in the ‘Assistance required’ options listed below for the best way to report a non-emergency, get advice or request something – before making an online report. This will help us work though the high volume of online reports resulting from the COVID-19 Pandemic.

When making an online report please note:

  • You will need to provide a date of birth, email address and phone number to complete this report.
  • Please allow up to 10 minutes to complete this report.
  • The report cannot be saved to complete later.

 

UK Update – Conservatives

Missy is back in action with a report from the UK and Europe. Report 1:


Conservatives

The big news today is that David Cameron has resigned from Parliament effective immediately. This has forced a by-election in his electorate, but it shouldn’t be an issue as it is a safe Conservative seat.

Last week Brexit Minister David Davis intimated that the UK would not be looking for a deal that necessary included remaining in the single market by saying it was very improbable that they would. He was rebuked by Theresa May, with a spokesperson saying that it is not right to be putting all their cards on the table before negotiations, and claimed that it was his opinion not Government policy. This has led some commentators to think that it will be a soft Brexit, whilst others think she is wanting to keep all negotiating points secret in order to execute a hard Brexit.

On Theresa May, and Brexit, she has stated that there will not be a points based immigration system after Brexit. Theresa May is not in favour of points based systems as she said it does not curb immigration, and does not necessarily bring in people who contribute to society, she is in favour of a work permit based system, where immigrants will have to have a job prior to migrating to the UK. This will include EU citizens as well.