'Generations of Kiwis' will pay for recovery

Finance Minister Grant Robertson. Photo: Getty Images
Finance Minister Grant Robertson. Photo: Getty Images
Generations of New Zealanders will be paying for the economic recovery caused by the devastating impact of the coronavirus pandemic, Finance Minister Grant Robertson says.

Robertson told Newstalk ZB's Mike Hosking this morning the Government needed to take a long-term view - balancing what was needed now to help individuals and businesses, with how a diversified New Zealand economy would look in the future.

"Generations will be paying for it, that's the truth. The massive investment we are making and that other countries are making... will take many years to deal with.

"That's why we have to have a plan for what the economy looks like... [one] that allows us to pay debt back, have taxes at a reasonable level and allows us to maintain living standards.

"We are all aware that in the short term we want to make sure people have money to put food on the table we want to make sure that businesses have a sense of continuity."

Robertson's comments come as the Government is enlisting Kiwis to be its spies and pass on any proof of supermarkets price-gouging, or to report their neighbours for breaking the lockdown rules.

The number of coronavirus cases has reached almost 740,000 globally, with more than 35,000 deaths. The United States and Europe are now the epicentre of the outbreak, which began in mainland China in late December.

In the US, President Donald Trump - siding with public health experts' dire projections - defended his decision to extend restrictive social distancing guidelines through to the end of April, while bracing the nation for a coronavirus death toll that could reach 200,000 people.

The Government will today release the sets of modelling on the spread of Covid-19 that it has based many of its decisions on, including the decision to go into lockdown.

The first meeting of the new Pandemic Response committee, chaired by National Party leader Simon Bridges, will be held today. That committee of 11 MPs will hear from Covid-19 response team head John Ombler and Director-General of Health Ashley Bloomfield first.

Robertson said a post-lockdown New Zealand economy would need to diversify, to overcome gaps left as industries such as tourism and international education recover.

"We need to look at manufacturing, and adding value to products in New Zealand as well as exporting them. Tourism, international education won't be coming back for a while."

The Government was working on a package of initiatives, including infrastructure and other regional schemes, to roll out as soon as possible to help the economy recover.

Credit ratings agencies would be looking at all countries, not just New Zealand, and in that sense, we were in a relatively good position, Robertson said.

Net core Crown debt was at just under 20% of GDP, but this would significantly lift as a result of the initiatives caused by the virus economic impact. "Other countries have higher debt in most cases than we do."

Robertson had seen predictions of unemployment growing to anywhere from the current 4% to anywhere between 8% and 30%. Some economists, he said, were putting their fingers in their wind, but the Government would have an outlook soon.

He said the Government was working with Air New Zealand "every day" as the airline felt the full impacts of Covid-19. Airline chief executive Greg Foran revealed in an email to customers last night that annual revenue was set to fall from $6 billion to $500 million.

Up to a third of staff and 95% of its schedule are set to be cut, and Robertson urged the airline to use the Government's wage subsidy scheme.

About 580,000 Kiwis are already on the scheme.

"Air New Zealand is in an incredibly difficult position... we are working with them every day. We want an airline that comes through this."

 

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