WELLINGTON – New Zealand’s government plans to borrow and spend vast amounts of money as it tries to keep unemployment below 10% in the wake of the coronavirus pandemic.
Finance Minister Grant Robertson on Thursday unveiled a budget unlike any in the nation's history. Debt would shoot up from just over 20% of GDP to 54% by 2023, and thousands of jobs created by putting people to work building homes and improving the environment.
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Still, the increased spending will not be enough to offset the economic devastation caused by the pandemic. Unemployment is expected to rise from just over 4% to nearly 10% by June. And Robertson acknowledged that tourism, which had accounted for about 10% of the economy, was not going to be the same for many years to come.
“We face a global economic and health crisis not seen since the Great Depression,” Robertson said.
The budget was released on the same day the nation lifted most of its lockdown restrictions. Malls, retail stores and restaurants all reopened, and many people returned to their workplaces. That reflected the country's success to date in its attempts to eliminate the virus. Health authorities on Thursday reported zero new infections for the third day in a row. New Zealand has reported a total of about 1,500 confirmed infections and 21 deaths.
Under the budget plan, the government will spend 50 billion New Zealand dollars ($30 billion) over four years to help boost the economy.
The government had entered the crisis running a surplus and with its books in good shape compared to many other countries. Robertson said the crisis called for increased spending rather than cutting back.
“I’m not a fan of austerity,” he said.
More than half of all workers in New Zealand are currently being subsidized by the government under a program that was quickly set up as the nation went into a strict lockdown in March. The budget would extend the scheme for hard-hit businesses.
The plan also calls for 11,000 environmental jobs to be created, some of them temporary. People would be put to work killing pests and restoring wetlands. And up to 8,000 new homes would be built, creating thousands of construction jobs. Spending would also be increased on everything from health care and education to school lunches and the postal service.
Opposition leader Simon Bridges said the plan lacked detail and accountability and would add the equivalent of a second mortgage of debt per household.
“It’s our children and grandchildren who will be paying for it,” Bridges said.
Lawmakers started discussions Thursday afternoon and were expected to approve the budget.