Barry Soper: Coronavirus package is $12b that we'd rather not be spending

Name: In Full: Robertson and Clark announce economic response to coronavirus
Uploaded: 2020-03-17T14:23:45+13:00
Duration: 1170 s
Description: Focus: Full announcement of Finance Minister Grant Robertson and Health Minister David Clark’s coronavirus financial package. Video / Mark Mitchell

By Barry Soper

Newstalk ZB's senior political correspondent·NZ Herald·

17 Mar, 2020 04:00 PM3 mins to read

Focus: Full announcement of Finance Minister Grant Robertson and Health Minister David Clark’s coronavirus financial package. Video / Mark Mitchell

COMMENT:

It wasn't a mini Budget. it was a mega Budget. Four per cent of GDP in one fell swoop. It's $12 billion that we would rather not be spending.

It makes the Muldoon Government's ill-fated 'Think Big' era look small.

The Beehive sold us its $12b infrastructure spend earlier this year, saying we've never been able to borrow money at such competitive rates, at around 1 per cent interest over 10 years.

Well they've now more than doubled that and of course there's one big winner in all of this: the banks and big international corporates who want a safe park for their money through government bonds.

But before you get spooked about what will be a significant borrowing programme, think back nine years when Bill English was borrowing $380 million a week, running a Budget deficit of more than $15 billion, the highest in the country's history.

John Key even publicly admitted the borrowing was "absolutely unaffordable". Much of it was in response to the Christchurch earthquakes which at least was a tangible problem to grapple with.

With coronavirus no-one knows where it's going to end up and Treasury's even telling the Beehive it could be worse than the global financial crisis - which given that the world's now in a state of flux, is probably something of an understatement.

Finance Minister Grant Robertson says his package is about fighting the virus, which is essentially containing it, or in other words preventing it from spreading within the wider community. Crowd control is unlikely to prevent what would seem to be the inevitable, albeit delayed, spread.

The package is also about cushioning the blow with most of the money going into wage subsidies for struggling businesses. That had Simon Bridges beating the drum saying it'd only pay 20 fulltime workers for twelve weeks before the $150,000 cap's reached and he reckons it's going to last much longer than that.

By the time he had finished, the drum sounded more like a grating cymbal. He ignored the fact that the vast majority of businesses in New Zealand have fewer than 20 people.

The third part of the package is aimed at positioning the country for recovery which will be played out in Robertson's May Budget. Well at least he hopes it'll be played out there but in reality no-one really knows because it's inevitable things are going to get worse before they get better.