New Zealand on Thursday released an unprecedented “once in a generation” budget with a NZ$50 billion (almost $30 billion) rescue fund to mitigate the economic impact of the coronavirus crisis.
The record budget released by Finance Minister Grant Robertson equates to about 17 per cent of the country’s GDP, reports Efe news.
“This is the most significant financial commitment by a New Zealand government in modern history,” Robertson said.
The plan, which has a focus on employment, includes a NZD$4 billion business support package with up to NZD$3.2 billion for the eight-week extension of the wage subsidy scheme, NZD$3 billion on infrastructure investment, a NZD$1.6 billion trades and apprenticeship training package, a NZD$1 billion environmental jobs package, and NZD$3.3 billion on new funding to strengthen core services, including health and education.
“Today is about jobs. It’s about creating new jobs and it’s about preparing people for new jobs,” Robertson said.
Investments totalling NZD$13.9 billion have already been allocated from the fund to fight the virus and cushion the blow, with NZD$15.9 billion to continue the immediate response and kick-start the economy, leaving NZD$20.2 billion for future investment, Robertson said.
The New Zealand government, which is scheduled hold elections in September, aims to save 140,000 jobs over the next two years and create 370,000 new ones by 2024, while reducing unemployment from an expected peak of 9.6 per cent next month to the current 4.2 per cent within two years
The government estimates that the budget deficit will be an average of 9.3 per cent of GDP, equivalent to NZ$28 billion, until 2022, with deficit reduced to 1.3 per cent of GDP, or NZ$4.9 billion by June 2024.
“It is then possible that the Government books return to surplus from 2024/25,” Robertson said.
“It is a once in a generation Budget. It is bold because the task we face is monumental,” he added.
Prime Minister Jacinda Ardern, who has been praised internationally for her leadership through the epidemic, said there were still tough times ahead.
“Global predictions are dire. Unemployment will rise, and growth will slow dramatically,” she said.
“We know as a trading nation that will have an impact, and it will be significant and it will be painful.”
New Zealand, which has recorded 1,147 COVID-19 cases and 21 deaths, began to gradually reopen businesses on Thursday after undergoing one of the most stringent lockdowns in the world in order to eradicate virus.