$50b budget to restart economy

A $50 billion COVID-19 Response and Recovery Fund to invest in the economy and jobs has been announced as part of the Government’s Budget 2020, “Rebuilding Together”.

It puts $3.2b towards a wage subsidy scheme extension and $1.4b into trades training and apprenticeships.

Infrastructure investment gets $3b with ministers soon to decide which projects to progress and consider advice from the Infrastructure Industry Reference Group (IRG) which received 1924 submissions across some 40 sectors with a combined value of $136b.

More than $1.2b goes to rail, including $246 million to support investment in the track and supporting infrastructure, $400m to help replace the Interislander ferries and associated portside infrastructures and $421m for new wagons and locomotives Whether the locomotives are electric isn’t explained and any EV incentives are absent.

Investments to both save and create jobs in Budget 2020 mean unemployment can be back to pre COVID-19 levels within two years and could see the economy growing again as early as next year, finance minister Grant Robertson reveals.

“From June 10, businesses that have suffered, or expect to suffer, revenue loss of at least 50% for the 30-day period prior to the application date versus the nearest comparable period last year will be eligible for the extension of the wage subsidy scheme,” he says.

The scheme extensions will include pre-revenue research and development start-up firms recognised by Callaghan Innovation to support firms crucial for New Zealand’s economic recovery, Robertson adds.

“The subsidy will be open for applications for a 12-week period and will be paid as an eight-week lump sum to employers at the same weekly rates as the current scheme.”

About $400 million is targeted for a Tourism Recovery Fund.

Prime minister Jacinda Ardern says the COVID-19 Response and Recovery Fund will deliver major investments in jobs such as making certain trades training and apprenticeships free.

“Treasury budget forecasts suggest our package of jobs stimulus measures could see as many as 138,000 jobs saved in the current economic quarter alone and employment rise by 234,000 jobs over the next two years.”

The economy is forecast to grow next year and a return to 4.2% unemployment is forecast by 2022.