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Retirement age needs to rise in wake of Covid-19 crisis - economist

Hard decisions will need to be made to grapple with the economic fallout of Covid-19, with one of those being a raise to the retirement age, says economist Cameron Bagrie.

An elderly couple walks along the beach.

Ahead of tomorrow's Budget reveal, Mr Bagrie presented today to the Covid-19 select committee. 

Budget 2020: Deficits expected 'for an extended period', debts to go 'well beyond' targets

"Hope is not a strategy, but New Zealand is going to need some," he said. 

"The numbers [at Budget 2020] are going to be absolutely terrible."

Mr Bagrie anticipates deficits in excess of $30 billion next year and net Government debt in excess of $180 billion at the end of the projection period.

"Boy, do we have one hell of a fiscal repair job that we’re going to need to undertake."

He said there are aspects that are essential in the rebuild of the economy. 

"The response needs to be microeconomic-based, not just built around a massive spend up.

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"The key issue here is how quickly is the economy going to go back to pre-Covid levels? I suspect it's going to be quite some time,” he said. Source: Q+A

"The temptation is going to be to think big, as opposed to small, and throw money around like confetti. That growth is going to have to come from the private sector.

"Don’t just think big, think small."

Mr Bagrie said the Government needs to make tough decisions. 

"The retirement age is going to need to have to go up at some stage. KiwiBuild, that money needs redirecting into Housing New Zealand. 

"I want to see signs it will be a pragmatic economic plan as opposed to and ideology driven one."

He says it will take an “incredibly long time” to get back to levels that we saw before Covid-19.