The Finance Minister says Budget 2020 will be a chance to rebuild New Zealand "better and together", while refusing to "sugar coat" an impending run of deficits with debt set to go "well beyond" previous targets.
It will be a Budget "far from business as usual", Grant Robertson said today in his pre-Budget speech, calling it "just one staging post" in the fight against Covid-19.
Mr Robertson's speech came ahead of next week's Budget 2020 on May 14.
"In the wake of this dreadful and devastating crisis we have a shot at making things better, and we will take it," Mr Robertson told Business NZ.
Previous Budget priorities have been "put on ice", with the focus solely on the rebuild as business investment and confidence would no doubt "take a hit" and unemployment would rise.
Budget 2020
The Budget 2020 priorities previously included shifting to a low-emission economy, moving to a digitalised nation, reducing child poverty, lifting incomes and opportunities for Māori and Pacific people, and focusing on improving the mental wellbeing.
"The new spending packages planned on our five priorities that were announced in the Budget Policy Statement have been re-assessed," Mr Robertson said today. "Unless they are meeting a core cost pressure, we have put them on ice."
Mr Robertson indicated the numbers from Treasury's Budget forecasts would be "sobering".
"Obviously we are no longer talking about growth in the near term, but about the scale and length of the economy’s contraction."
Fiscal outlook
The billion dollar investments, through policies such as the business package, wage subsidy and Small Business Cashflow Loan Scheme, are set to cause the country to run operating deficits "for an extended period, and allowing net core Crown debt to increase to levels well beyond our previous targets," Mr Robertson said.
The Government's books showed a $1.4b surplus with debt just below forecast , right before Covid-19 hit.
Covid-19
Mr Roberston said the support for Covid-19 hit industries at Budget 2020 would become "more targeted".
"It is a Budget delivered in the shadow of 1-in-100 year shock to our society and economy. So, it is far from business as usual."
He said the previous economic measures to combat Covid-19 added to more than $20 billion "to help businesses and households weather the initial shock".
"We have already supported early hit industries like forestry, tourism and the media. Budget 2020 will carry on this work."
Covid-19 rebuild
Mr Roberston said as the country moved forward from its immediate Covid-19 response, the next "purpose is to see people back at work... and to lay the foundations for our rebuild".
"A move to Level 2 will see the vast majority of our businesses and workers back at it," he said. Cabinet is set to decide on Monday when to move from Level 3.
"Our recovery will continue with interventions to sustain households and businesses and get people working, in combination with sector-specific support to help boost wider economic confidence, and regenerate some of the sectors hit hardest by the pandemic.
Mr Robertson said it should be acknowledged "things weren’t perfect before Covid-19 hit us".
"Too many children were growing up without the basics, housing has been too expensive, many of our waterways are still not swimmable, our emissions have been rising, people are working harder but don’t feel they are getting ahead.
"There are few times in life when the clock is reset. Now is the time we should address these long-term issues. It is a privilege many countries won’t have. It’s not one we should squander."
"Budget 2020 gives us the chance to begin this rebuild, better and together."
Mr Robertson said there was an opportunity to "break our housing shortage once and for all, and give New Zealanders the shot at the Kiwi dream they have been denied".
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