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Summary
- With NZ economy gaining steam, will the Budget 2021 be a reset one?
- The Finance Minister has clarified that it is going to be a recovery Budget
- Vaccine roll-outs and securing borders to remain a priority.
Is it going to be a well-being Budget or COVID-19 recovery Budget for 2021? According to Finance Minister Grant Robertson, it will, in many ways, still be a COVID-19 Budget.
Even though, the NZ economy has been resilient to the impacts of COVID-19 in terms of employment and GDP numbers, recovery from COVID-19 disruptions is still going on.
There is no doubt that New Zealand has successfully handled the virus and also showed economic resilience. Its employment rate at 4.9% is still lower than countries like Australia, the United States, the U.K., and Canada. GDP also saw a strong recovery in September 2020. The Global demand for NZ products also continued to be high.
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Despite this, difficult times both globally and in NZ still continue. Therefore, the first priority for the Budget is health and safety. Investments are needed to keep the borders secure and in a successful administration of the vaccine. By the end of the year, all 16 years and above will be fully vaccinated free of cost. Economic impacts of COVID-19 are still being felt in the supply-chain disruptions. Some sectors and regions are still under the shadow of the disease, which took the world by storm last year. For instance, travel and tourism is still badly hit by the coronavirus pandemic. Accordingly, a stimulus was announced for the travel and tourism sector.
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The Finance Minister even quoted the IMF’s growth forecast and said even if it was being optimistic, uncertainty still remained in the Budget. He was very optimistic about growth, but also said that uncertainty and the need for caution still remained. So, fiscal support and stimulus are still required. The funding in this Budget will be targeted at where it is required. Finance Minister said that he was committed to spending for COVID-19 response and recovery.
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Further, clearly a huge debt that NZ has incurred as stimulus needs to be settled. The Budget would also begin the process of paying down the debt that was racked up to deal with COVID-19. Against this background, the Budget 2021 will take a balanced approach.
It will emphasise on investment where it is needed the most, stressed the Finance Minister in his pre-Budget speech. He called it a recovery Budget with three main goals — to keep New Zealand safe from COVID-19, accelerating economic recovery, and addressing some urgent issues like housing, climate change, and child welfare.
