Govt: Covid-19 fallout will well-exceed GFC

The Government is forecasting a hit from coronavirus that significantly exceeds the global financial crisis with unemployment possibly in the double digits.

But Finance Minister Grant Robertson and Treasury Secretary Caralee McLiesh were unable to provide many hard figures for the select committee that has replaced Parliament as a check on Government during the lockdown.

Instead Robertson spoke mostly in generalities while McLiesh said estimates from bank economists broadly matched Treasury’s thinking.

Robertson was not able to provide the exact number of people who had applied for an unemployment benefit since the level 4 lockdown was introduced.

He was not looking to sugarcoat things however, saying the economic hit from coronavirus would be massive and would blow out the Government’s debt targets.

‘‘We’re going to move well beyond the 15-25 per cent net debt range. GDP is going to take a serious hit as will unemployment. I have no doubt that the effect will be a quantum greater than the global financial crisis.’’

He said the unemployment rate would definitely exceed the 6.7 per cent reached during the 2008 global financial crisis.

McLiesh referred to estimates from bank economists that the unemployment rate would creep ‘‘well into the double digits’’, saying Treasury’s figures were broadly similar.

The impact of the gigantic wage-subsidy was not yet certain however.

McLiesh said economic output was estimated to drop by between 30 and 40 per cent because of the lockdown.

Opposition members on the select committee asked repeatedly for more certain economic figures from Treasury or Robertson, and echoed a call from economist Shamubeel Eaqub for a weekly update on big economic indicators like unemployment benefit applications.

National’s finance spokesman Paul Goldsmith noted that the Government was able to release many health figures every day.

Robertson said he accepted the general need for more regular economic updates and would talk to the Ministry of Social Development about getting more regular benefit numbers.

The Finance Minister said the Government was looking to do more for commercial renters and would have more to say about that in the coming days. The Government has frozen residential rents and ended most evictions.

He was receptive to the idea that rate rises should be reconsidered, but was not keen for central government to intervene in the matter, saying the decision was up to each council.