Robertson announces more money for Budget
There will be more spending and lower debt levels in the 2021 Budget than expected, Finance Minister Grant Robertson says.
He told an audience of business leaders at a breakfast at Deloitte in Auckland that there would now be more money both for day-today spending and capital investment than he’d signalled in his last major Budget update in February.
But improving economic conditions mean this additional spending won’t be accompanied by increased debt levels; instead, he said the Government’s new debt track would show lower borrowing levels.
He said the better- than-expected recovery allowed the Government to ‘‘keep a lid on debt and look towards a faster reduction in that debt once the recovery is secure’’.
Robertson didn’t put any numbers on these promises – likely saving those surprises for Budget day itself – but as it stands, the Government has promised to spend $2.625 billion on new day-today initiatives this budget, and $7.8b on capital investment over the next four years.
Treasury’s most recent forecasts show net core Crown debt – the Government’s preferred way of measuring debt – rising as a percentage of GDP (gross domestic product) to 52.6 per cent in 2023, before falling to 46.9 in 2025.
Robertson said that this improved outlook was a result of the Government’s stewardship of the public finances during the pandemic.
On debt, he said that there was ‘‘some more scope to keep a lid on debt and look towards a faster reduction in that debt once the recovery is secure’’.
He told the audience he ‘‘will not implement austerity measures in order to try to reduce our levels of debt before the recovery is secure’’.
‘‘In my view, the record of such policies is clear. We have seen internationally the toll that cuts to social services take on the most vulnerable in society, and how social capital can be eroded by a country attempting to cut its way to some particular numerical goal that is divorced from the economic realities of that country.
‘‘Our high levels of social capital are among our most valuable assets, and it is a large part of the reason why we were able to respond to Covid-19 as a country as well as we did,’’ Robertson said.
Robertson cautioned that the optimistic economic data seen recently didn’t guarantee a rosier future – economists around the world are warning the recovery from the pandemic could be lumpy and variable.