Not paying debt early
WELLINGTON: The Government has no plans to pay down its debt early, despite ‘‘betterthanexpected’’ economic outcomes across the board, Finance Minister Grant Robertson says.
Nor does it have any plans to rein in spending in a major way or implement austerity measures, he told a business breakfast yesterday morning.
As a result of Covid, the Government was forced to borrow billions of dollars to fund various different initiatives to help keep the economy afloat.
Although most of that has either been spent, or already allocated, there is still money left.
Mr Robertson credited the Government’s fiscal management and the resilience of New Zealand businesses for a ‘‘betterthanexpected’’ economic outcome.
And yesterday morning, Mr Robertson announced that $1 billion of the money that was never spent had been put back into his Covid fund to spend on new initiatives.
But he said that money would not be used to pay down the Government’s debt, which is now sitting at 22% of GDP, or about $71 billion. That is up from around 19% before the pandemic.
‘‘If we were to try to return to those preCovid levels of debt more quickly, that would undermine our public services; it would undermine our recovery,’’ Mr Robertson told media yesterday morning.
‘‘And the reason we don’t have to make those cuts is because we’re not trying to get those levels of debt back within a budget cycle or even within this term.’’
In his speech, he was singing a similar tune: ‘‘Any attempt to hasten this [debt repayment] runs the risk of undermining the recovery.’’
‘‘A turn to austerity measures will simply mean it takes longer for us to rebuild society in pursuit of numerical goals that ignore the real world we are living in.’’
Speaking to media yesterday, Prime Minister Jacinda Ardern said it was important the Government was spending money within the economy.
This helped ensure ‘‘we’re getting the type of stimulus and growth in the economy that, in the long term, helps us pay down debt and also helps keep our people employed’’.