Pre-Election Fiscal Update 2020

Today’s Pre-election Economic and Fiscal Update forecasts a longer and more painful economic crisis than earlier forecast and requires a serious growth plan to get New Zealand back on track.

Treasury is forecasting that under Labour New Zealand will be in deficit every year for at least the next 15 years. Grant Robertson and his Government have no plan to get New Zealand back into surplus. Ever.

High level figures:

  • New Zealand will have budget deficits for at least the next 15 years.

  • $32 billion deficit in 2020/21. Or 10.5% of GDP.

  • 100,000 more New Zealanders will lose their jobs in the next two years.

  • Our country will be taking on an extra $200 billion in debt.

  • Unemployment to hit 7.7% next year and remain over 5% until 2027.

Our economy is forecast to have shrunk by 16 per cent in the June quarter, and we will be taking on even more debt, an extra $200 billion. Every dollar and cent of this will have to be paid back by our children and grandchildren.

Unemployment will be substantially worse in 2022 and 2023. Treasury predicts 100,000 more New Zealanders will lose their jobs in the next two years.

The Minister of Finance shouldn’t try to sugar coat these figures. He has taken a rose-tinted glasses view at a dreadful picture that cannot be described as anything other than catastrophic. Any short-term improvement on the Budget forecasts is far outweighed by the worsening picture past 2021. 

The contrast between Treasury’s estimate of more than 16 per cent contraction in our economy in the June quarter compared with 7 per cent in Australia shows he should be careful about making comparisons.

Grant Robertson’s only plan is higher taxes, and no country has ever taxed its way out of a recession, and this a huge one.

New Zealanders have a choice for our economic recovery: more government programmes, welfare and costs for business under Labour or lower taxes, more business investment and quality infrastructure under National.

National has a comprehensive plan to secure our border and prevent New Zealand from yo-yoing in and out of lockdown. Effective border management, coupled with common sense and pragmatism around the rules, is an important aspect to help our economy can recover.

We will do everything we can to make it easier for businesses to hire – 90 day trials, flexible employment laws, low taxes and innovative policies like JobStart and BusinessStart.

Our economic plan of job friendly policies and investment in quality infrastructure will grow our economy, give businesses the confidence to grow and restore household incomes for New Zealanders.

National will release our fiscal plan soon which will carefully balance the need to inject stimulus, increase investment in core public services and restore Government debt back to prudent levels.