Our strong fiscal position meant we were able to set aside $50 billion in the Covid Response and Recovery Fund for investments relating to New Zealand's response, recovery and rebuild. We've been clear that these are investments to deal with the immediate impact of Covid and to support the immediate recovery and rebuild to create jobs.
As Finance Minister, I have said that the remaining $14b that remains in the Covid Fund is not going to be spent before the election. It is being set aside so that we are prepared for if a second outbreak were to occur, or circumstances change including to the international economic environment. If the money isn't required, it won't be spent — meaning it won't be borrowed.
This is in recognition of the risks that a second wave poses to the economy. We only have to look over at Australia to see the economic impact of having to go back into lockdown and how that affects confidence.
That's why we are always going to be careful when it comes to making big changes that might put New Zealand's stable underlying operating environment at risk — including any decisions to re-open the border to other parts of the world. It must first be entirely safe to do so.
By maintaining the stable underlying environment we currently have, with the fewest restrictions in the world, our focus is on helping businesses gain the confidence to invest and create jobs.
Ultimately, it is growing the economy that will help us to repay the debt taken on to fight Covid.
We can see from recent data like card spending, traffic movements and expansion in the manufacturing and services sectors that the economy is bouncing back quicker than expected.
My focus is on how we mitigate the worsening global outlook over the medium-to-long-term.
The ways to grow the economy and create jobs as we recover is going to look different to New Zealand's traditional growth drivers of inward migration and the housing market.
Our post-Covid economic plan focuses on five key priorities:
• Investing in our people through policies like free apprenticeships to close the skills gap;
• Creating jobs and improving productivity through infrastructure investment that will future-proof the economy like our funding for Mill Road, the third main line from Wiri to Quay Park, and SkyPath;
• Preparing for the future through digital transformation, decarbonisation and R&D;
• Supporting small businesses and entrepreneurs through the tax system and business advice, and
• Positioning New Zealand globally as a place to trade with, invest in and, eventually, visit again.
New Zealand has a number of competitive advantages — not least our success in fighting Covid-19.
As we look to what is needed to help grow the economy and improve our fiscal position, we will continue to build off these. We are in a strong position to do so.
As part of our plan, we have announced the first of a number of industry transformation plans outlining how the Government will work with specific sectors to create opportunities and boost productivity. It made sense to start with the Agritech industry, given our global status as an agricultural trading nation. The Government has provided funding so the sector can invest in innovative technologies to help our farmers create more value and become more sustainable.
By creating internationally competitive firms and more export opportunities, we become more productive as a country.
That generates economic growth and allows us to continue to responsibly manage our fiscal position.
The world is faced with increasing fiscal challenges as Governments take action to respond to Covid-19. While New Zealand is in a relatively better position than most, our focus will be to continue managing the fiscal position responsibly by only spending what is required, while targeting investment to what will make the greatest difference for productivity and growth.
- Grant Robertson is the Minister of Finance.
