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Government had $1.4 billion surplus prior to Covid-19 pandemic

The Government's books showed a $1.4b surplus with debt just below forecast, before the economic impact of Covid-19 hit the country forcing billions to be spent during the pandemic.

New Zealand money. Source: istock.com

Debt was sitting $600 million below Treasury forecasts at 19.2 per cent of GDP.

Treasury released the interim financial statements for the eight months ending February 2020, which compares figures against the 2019 Half Year Economic and Fiscal Update

Core Crown tax revenue was $57.9b and Core Crown expenses were $60.3b.

Finance Minister Grant Robertson said the Government was using the finances "to go hard and go early in our public health response, cushion the blow for workers and businesses, and position the economy for recovery". 

"This includes the wage subsidy scheme... so businesses can keep workers on their books and support people to stay home, break the chain and save lives during Alert Level 4."

He warned the Government books would "look a lot different when the next set of accounts come out".

"Governments around the world are lifting debt to pay for increased health spending and support for their economies."

It comes as more New Zealand businesses take up the multi-billion dollar wage subsidy scheme during the Covid-19 lockdown, which has seen its estimated cost jump by billions in just a few weeks.

Today, Air New Zealand also confirmed it would be applying for the scheme. It came after Air New Zealand CEO Greg Foran said last night the airline was looking to lay off over 3000 staff due to the impacts of coronavirus.

The scheme is $585.80 per week for full-time workers and $350 for part-time workers. It is paid in a lump sum over seven weeks. Overall, a full time worker is a total payment of $7,029.60.

On March 17, the Government announced what it thought would be a $12.1 billion Covid-19 business package, including a $8.7 billion injection into business and jobs, including wage subsidies and tax changes.

Of that, $5.1b was set aside for the wage subsidy scheme for business that had a 30 per cent or more decline between January to June 2020.

That figure rose to $9.3b on March 23 - pulling the worth of the entire business package up to $16.3b.

On March 27, changes to the scheme brought the estimated cost to between $8b to $12b.

At that stage, $2.7 billion was paid out for 428,768 workers.

The Prime Minister said today, just four days later, $4.1b had been paid to 642,000 workers. 

Earlier today, National again called for the Government to put off tomorrow's minimum wage rise, saying businesses were "already facing huge financial struggles" due to the Covid-19 coronavirus pandemic.

The minimum wage is set to go up to $18.90 an hour on April 1. It is currently $17.70 an hour, which would mean an extra $48 a week for Kiwis working full-time. 

"We are urging the Government to defer the increase for six months while we reassess its affordability during this unprecedented economic situation."