New Zealand’s government plans to borrow and spend vast amounts of money as it tries to keep unemployment below 10 per cent 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 per cent of GDP to 54 per cent by 2023, and thousands of jobs created by putting people to work building homes and improving the environment.
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 per cent to nearly 10 per cent by June. And Robertson acknowledged that tourism, which had accounted for about 10 per cent 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 ($42 billion Cdn) 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 scheme 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.
Lawmakers were expected to approve the budget later Thursday.