Finance Minister, Grant Robertson, has announced in the 2020-21 Budget that the Government will spend $50 billion over the next four years on getting the New Zealand economy moving again.
The Budget lays out the first $15.9 billion of investment including an extension of the Wage Subsidy Scheme, free trades training, and a state house building programme. Approximately $14 billion has already been allocated to previously announced initiatives, leaving about $20 billion unspent.
The key items in the Budget include:
- $3.2 billion extension of the wage subsidy scheme for a further eight weeks
- $1.2 billion railway package
- $3 billion infrastructure investment with 8,000 new public homes being built
- $1.6 billion trades and apprenticeship training
- $220 million expansion of the school lunches initiative
- $400 million targeted tourism support fund
- $830 million disability support package.
Another funding package for the media sector is also in the works, with details to be announced later.
Treasury expects this spending to save 140,000 jobs over the next two years, but for unemployment to still bounce up to 9.8 per cent in September (due to the economy shrinking by as much as a fifth in the three months to June).
This spending will see debt ramped up massively, with the Government’s net debt over half the size of the entire economy in 2023 and 2024, up from about a fifth pre-COVID-19.
No tax hikes or big spending cuts are pencilled in for this spending, with low interest rates helping the Government books through six years of expected deficits, returning to a minor surplus in 2028.