Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

COVID economic scenarios back ‘go hard, go early’

Hon Grant Robertson
Minister of Finance

14 April 2020 PĀNUI PĀPĀHO
MEDIA STATEMENT


Economic scenarios released today back the Government’s decision to go hard and early in the fight against COVID-19 while putting significant measures in place to protect jobs and support businesses through the lockdown, Finance Minister Grant Robertson says.

The Treasury has released a range of scenarios for the economy, based on assumptions of different amounts of time under the Alert Levels. The report shows how extra Government spending will cushion the blow by protecting jobs and supporting businesses.

“This global pandemic is dramatically affecting countries and their economies around the world. We are seeing dire forecasts for global growth and unemployment levels rising rapidly in many countries. As an open export-led economy, New Zealand will feel these global effects for some time to come,” Grant Robertson said.

“New Zealand is in a good position to fight COVID-19 due to our strong public health system, low debt and growing economy heading into this situation. The best way to protect the economy is to fight this virus, which is why we’ve acted swiftly and decisively to stamp out COVID-19. This will give our businesses and the economy the best chance to get going again on the other side.”

The scenarios released today were guided by a range of previously released public health modelling. The Treasury has purposefully included scenarios that show what might happen if the lockdown has to be extended, or if the country has to return to Alert Level 4 in the future.

“These should not be taken as any guide as to the Government’s thinking or decision on changing alert levels. That decision will be taken on April 20 as the Prime Minister has foreshadowed. What they do show is how important it is that we continue to unite against COVID-19 and follow the public health guidelines; stay home and save lives – we know it’s working,” Grant Robertson said.

The scenarios show:

• That unemployment can be kept below 10%, and return to 5% in 2021 with additional Government support. Work is already well advanced on further fiscal support.
• Without additional support, unemployment could have hit 13.5% under scenario 1 (four weeks in Level 4), while scenarios requiring more time in Level 4 showed a peak of 17.5%-26%.
• New Zealand’s underlying strength means the economy can bounce back to be $70 billion larger by 2024 than in 2019.

Work on further significant Government investment to protect jobs, support cashflow, and prepare the economy for recovery is well advanced. The next steps in the Government’s plan to support businesses will be released later this week.

“The Budget is also another important part of the response, and it will include significant support to respond to and recover from COVID-19. As is usual with the Budget, there may well be pre-announcements, especially where they relate to urgent COVID-19 response activities,” Grant Robertson said.

The Government has already provided support to businesses including:

• $9.6 billion through the wage subsidy to protect the jobs of over a million working New Zealanders and keep them connected to their employers during the lockdown.
• Changes to the business tax system worth $2.8 billion to boost cashflow, encourage investment, and support working from home, including:
o Allowing businesses to immediately claim tax deductions for low value assets like computers, mobile phones, cameras, microphones, headphones and other equipment required to work from home
o Raising the threshold for provisional tax to support cashflow
o Writing off penalties for late tax payments to take pressure off business owners
o Restoring the ability to depreciate some buildings to support cashflow and investment
• Working with the banks to deliver a six-month mortgage deferral scheme so Kiwis don’t lose their homes as a result of COVID-19, and a $6.25 billion Business Finance Guarantee to encourage bank lending to small and medium-sized businesses.

“We can do this because we entered this situation with strong Government books and a growing economy. Net debt at 19.2% of GDP is well below the OECD average around 70%, giving us greater ability than many to protect jobs and incomes with the Government’s strong balance sheet,” Grant Robertson said.


1. The scenarios do not foreshadow Government decisions on the lockdown. Cabinet will make the decision on whether to exit Alert Level 4 on April 20.

2. Fiscal forecasts, including for measures like the Government’s operating balance and net debt, will be released as normal in the Budget on 14 May.

https://img.scoop.co.nz/media/pdfs/2004/Economic_Scenarios.pdf

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Twitter Wars, And The Muller Muddles

Whatever the failings of our own politicians, spare a kind thought for the majority of Americans who did not vote for Donald Trump. Sure, it was depressing this week to watch Todd Muller clinging for dear life to his talking points on Q&A, lest he be carried away in the slavering jaws of Jack Tame…. but this was mere incompetence, not malice. At the same time the President of the United States was (a) falsely accusing one of his media critics of murder, and (b) threatening to shut down Twitter for attaching a warning label to Trump’s attempt at poisoning the electoral process by falsely claiming that postal voting has led to extensive voter fraud... More>>


 


Government: Freshwater Package Backed By Comprehensive Economic Analysis

Decisions on the Action for Healthy Waterways package are supported by comprehensive environmental and economic impact analysis by leading New Zealand research institutes, universities, and private sector firms. More>>

ALSO:

National: "Todd Muller Announces Shape Of Next Government"

National Party Leader Todd Muller has announced the line-up of the next Government. “New Zealand is facing perhaps the toughest time that almost anyone alive can remember. “We are borrowing tens of billions of dollars to get us through this crisis. There ... More>>

ALSO:

Lockdown Rules: Timeline For Moving To Level 1 Needed

The BusinessNZ Network is calling for more clarity about the conditions under which businesses can move to Covid level 1. The network is concerned about large numbers of businesses that are at risk of closure if restrictions continue at the current ... More>>

Gordon Campbell: On National’s Day Of Reckoning

Congratulations. You are one of the 55 members of the National caucus being called together tomorrow to choose who will lead you to either (a) catastrophic or (b) honourable defeat on September 19, thereby saving some (but not all) of the jobs currently on the line. Good luck. Your decision process starts NOW... More>>

ALSO:


Budget 2020: Jobs Budget To Get Economy Moving Again

Investments to both save and create jobs in Budget 2020 mean unemployment can be back to pre COVID-19 levels within two years and could see the economy growing again as early as next year. More>>

ALSO:

Covid-19 Response: Law Setting Up Legal Framework For Covid-19 Alert Level 2 Passes


The law establishing a legal framework for the response to Covid-19 has passed its final reading and will become law in time for the move to Alert Level 2 tonight.
This is a bespoke Act designed specifically to stop the spread of COVID-19... More>>

ALSO:


Trans-Tasman Bubble: PMs Jacinda And Morrison Announce Plans

Australia and New Zealand are committed to introducing a trans-Tasman COVID-safe travel zone as soon as it is safe to do so, Prime Minister Rt Hon Jacinda Ardern and Prime Minister the Hon Scott Morrison MP have announced... More>>

ALSO:

Government: Support For Arts And Music Sector Recovery

A jobseekers programme for the creative sector and four new funds have been set up by the Government to help our arts and music industry recover from the blow of COVID-19. Thousands of jobs will be supported through today’s $175 million package ... More>>

ALSO:

Government: New Zealand Joins Global Search For COVID-19 Vaccine

Foreign Affairs Minister Winston Peters, Research, Science and Innovation Minister Megan Woods, and Health Minister David Clark today announced a COVID-19 vaccine strategy, which will enable New Zealand scientists to contribute to global research efforts ... More>>

ALSO:

The Dig: Steady State Economics: We’ve Got Some (systems) Thinking To Do

In this time of impending economic and ecological crises, we urgently need to aim for a sustainable or ‘steady state’ economy. In order to get there, we will need to adopt a ‘systems-thinking’ outlook taking into account the interconnections of our complex world.

In short, we’ve got some systems thinking to do... More>>

ALSO:

Election 2020: Parties Get Into gear

The Green Party is pleased to reveal its candidate list for the upcoming election. With a mix of familiar faces and fresh new talent, this exceptional group of candidates are ready to lead the Greens back into Government. Using the most democratic list ... More>>

ALSO:

Insight Into Regenerative Agriculture In New Zealand

There is a fast growing movement in New Zealand that has been happening out in paddocks, fields, gardens and hill country across the nation. It is a movement that holds the promise to reshape our productive land use industries towards systems that work with the natural environment to regenerate the land. The movement is that of regenerative agriculture. More>>

ALSO:

Covid-19: Tracer App Released To Support Contact Tracing

The Ministry of Health has today formally released the NZ COVID Tracer app to support contact tracing in New Zealand. Kiwis who download the app will create a digital diary of the places they visit by scanning QR codes displayed at the entrances to ... More>>

ALSO:


Govt: Deep Concern At Hong Kong National Security Legislation
Foreign Affairs Minister Winston Peters today reiterated the deep concern of the New Zealand Government following confirmation by China’s National People’s Congress of national security legislation relating to Hong Kong.... More>>

ALSO:


 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 


 

InfoPages News Channels