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The Government will spend up to $50b fighting the coronavirus crash with a massive injection of funding for jobs, training, and infrastructure.
But it doesn’t know how to spend all of the money it has set aside, allocating only $15.9b of the giant fund in the Budget.
At the centre of this spending is a focus on keeping people in work through a sudden and deep recession, with a $3.2b targeted extension to the wage subsidy scheme for a further eight weeks, $3b in infrastructure investment with 8000 new public homes being built, and $1.6b for trades and apprenticeship training.
Treasury expects this spending to save 140,000 jobs over the next two years, but for unemployment to still bounce up to 9.8 per cent in September, thanks to the economy shrinking by as much as a fifth in the three months to June.
This spending will see debt ramped up massively, with the Crown’s net debt over half the size of the entire economy in 2023 and 2024, up from about a fifth preCovid-19.
No tax hikes or big spending cuts are pencilled in for this spending, with low interest rates helping the Government books through six years of expected deficits, with a return to a tiny surplus in 2028.
‘‘This is the rainy day. Put the umbrella up,’’ Finance Minister Grant Robertson said of the plan, noting that just the $15.9b was about five times what governments generally got to spend on Budgets.
He said his scheme had more in common with the policies of the post-Depression first Labour government than more recent governments of both red and blue stripe.
‘‘I am not a fan of austerity.’’
Jobs at centre of $15.9b package
An eight-week targeted extension of the popular wage subsidy is at the centre of the $15.9b of jobs spending allocated yesterday.
This extension will pay out the same as the present wage subsidy and will continue on from midJune when the first 12 weeks runs out.
But not as many businesses will be eligible: Enterprises will need to show a 50 per cent reduction in revenue over a month when compared to last year, instead of a 30 per cent reduction. New and high-growth businesses will be eligible as they are under the current scheme however.
It is expected to cost $3.2b, adding to about $11b already spent on the scheme thus far.
Jobs will also be supported by the Government in other ways.
There is $3b being set aside to fund infrastructure projects, on top of the $12b announced before Covid-19. Ka¯inga Ora will be allowed to borrow $5b to help build another 8000 state and transitional homes.
Eleven-thousand ‘‘green’’ jobs will be created in the regions with a $1.1b package.
Those out of work will also be supported with a $1.6b package for trades training that essentially extends ‘‘fees-free’’ vocational trading to those out of work, not just school leavers.
This $1.6b includes $334m for additional tertiary enrolments, $320m for free trades training, and $412m to help employers retain current apprentices.
A further $400m will be spent expanding and strengthening Work and Income employment support services, and $19m will go towards placing 10,000 people in primary sector jobs.
Shifting sea of huge numbers
While the Government revealed a $50b Covid-19 fund yesterday, only $15.9b of it is being immediately allocated to spending programmes.
The $50b also takes in $13.9b spent over late-March and April, but not the initial $12b spend for the Covid-19 response. This means the total amount forecast to be spent on Covid-19 recovery over the four-year forecast period is in fact $62b, but $20b of that remains unallocated.
Further complicating things is the fact this is separate from regular ‘‘cost-pressure’’ Budget spending announced, with increases in health, education, and other regular spending amounting to $3.3b.
Robertson said the $20b of spending was available for a ‘‘rolling maul of initiatives’’ needed for the Covid-19 economic response.
Little for welfare
While Robertson has avoided austerity or real spending cuts, the welfare system saw little new spending.
No changes to benefit rates or payments are set out other than those already promised in March, when the Winter Energy Payment was doubled and benefits increased by $25 a week.
The school lunch programme is greatly expanded to cover 200,000 more children, at a cost of $220m.
Social service providers like food banks get a $79m boost, community groups $46m, and family violence services $22m.
A $20m tertiary student hardship fund is established for this year.
National: a lot of debt without focus
National leader Simon Bridges supported parts of the Budget such as the wage subsidy scheme, but was concerned about ballooning debt.
‘‘There is good in this Budget – the business support, the extension in a targeted way of the wage subsidy,’’ he said.
‘‘I see pet projects, whether they’re rail or pest eradication. They may have worth but added up, they mean colossal debt and don’t create sustainable jobs.’’
‘‘Spending money is the easy part, but Grant Robertson doesn’t even know today how he will spend it all. That’s not a plan.’’