Sugar-hit vital but fix underlying ills too

This is a Budget for extraordinary times. In a few short weeks, the Government has had to tear up its plans and focus on a massive recovery plan to fight the Covid crisis. In times of crisis, voters want strong action to keep them safe and protect their livelihoods. They expect a government to do all it can and lead from the front. That was true in the fight to eliminate coronavirus and it’s true now in the fight to revive the economy.

This Budget shows the Government is prepared to do whatever it takes to save jobs and businesses.

We’re now moving into the ‘‘recover’’ stage of the Government’s ‘‘respond, recover, rebuild’’ plan. The mammoth $50 billion Covid package includes support to save businesses, keep workers in jobs, and help those who lose their jobs to retrain.

Building on the success of the wage subsidy, these new investments will give households and businesses confidence to spend, and get us out of recession faster.

But this is about more than giving the economy a sugar-hit. With huge sums to invest, it makes sense to simultaneously tackle New Zealand’s underlying ills.

This crisis has shown us that, together, New Zealanders can beat big problems. With a spirit of kindness towards each other and with good leadership, we have succeeded in beating back a threat that has overwhelmed over countries.

Now is the time to harness our rekindled sense of unity and belief in ourselves to combat long-running problems, like the housing shortage, child poverty, and the environment.

It’s good to see money to insulate thousands of homes and build thousands of new state houses, funds to roll out school lunches to 200,000 kids, $1b for conservation jobs, another billion for rail infrastructure, and a big investment in retraining.

About $39b of the Covid package is still available for the rebuild. I would like to see investment directed towards stepping up our fight against climate change through investment in renewable energy and public transport.

We should build even more homes to finally fix the housing crisis. Making tertiary education free would see our young people equipped for the future, not burdened with debt. With more workers unemployed, we need to increase benefits and make them easier to get.

Governments do not usually get the chance to rebuild on this scale. We need to seize this chance to make lasting improvements for decades to come.

Fighting this recession isn’t cheap but austerity costs more. The economic consensus is that governments should increase spending to mitigate recessions; cuts worsen recessions.

The First Labour Government fought the Depression by building our public services and infrastructure and this Government is following that proven approach. Its record of posting surpluses means it can afford to spend more now. Having saved for a rainy day, it now has the ability fight the recession.

But the Government also knows it must get back to running surpluses, and has set out a track to achieve that. It’s clear things will get worse in the short term. Unemployment will near 10 per cent as the global crisis pummels the economy but, by the end of the year, unemployment will be falling. We won’t be in the same boat as the US, which has already lost one in five jobs, or Australia, where 1 million workers are on the dole.

For National, there is not much to say. Simon Bridges’ main complaint is that the Government is borrowing to counter the recession, which every economist says it should be doing. Opposing this investment is economically irresponsible.

We’ve saved for the rainy day. Now it’s here, Bridges is complaining about getting the umbrella wet.

Jacinda Ardern’s confidence and kindness has shaped our Covid response and it’s on display again in this Budget, not to just get us through this crisis, but to build a better New Zealand for all.

Clint Smith is director of Victor Strategy and Communications, former communications strategist for Jacinda Ardern, and a former ministerial adviser.