Recover + Rebuild OR Borrow + Hope
May 15, 2020
Today’s Budget 2020 announcement by the Government aims to help the economy recover and rebuild from what is now looking like a sudden and deep recession. It is disappointing that there is not much detail on the spending, particularly in relation to assistance for business.
Today’s Budget 2020 includes:
- $50 billion fund to deliver COVID response and economic recovery plan at centre of jobs budget
- $4 billion business support package, including targeted $3.2 billion wage subsidy extension
- $3 billion infrastructure investment package, and 8,000 public house build programme to boost productivity and create jobs
- $1.6 billion trades and apprenticeships training package
- $1 billion environmental jobs package
- $220 million expansion of the school lunches initiative
- $400 million targeted tourism support fund
- $830 million disability support package
- $3.3 billion new funding to strengthen core services including health and education
$50 billion COVID-19
The direct spend on COVID-19 will be a $50 billion recovery plan. The aim of this fund is to grow jobs and support New Zealanders and the economy through the effects of COVID-19 and the global recession. $15.9 billion of this has been immediately allocated to spending programmes.
There is still $20 billion of the $50 billion that remains unallocated, with no details as to how this will be spent. We all await details on this.
$3.2 billion wage subsidy extension
Announced today is an eight-week extension of the wage subsidy. This extension will pay out the same as the present wage subsidy and will continue on from mid-June when the first 12 weeks runs out. It will be available for a further eight week period for those who have suffered a 50% reduction in turnover over the 30 days prior to application, compared to last year. The 50% is a change from the 30% reduction needed previously. Applications open from 10 June 2020 after the current 12 week subsidy runs out.
The Government expects unemployment to reach 9.8 per cent in September, however they hope that the spending in the budget will ensure that there is a relatively quick recovery and unemployment will be back at 4.2 per cent within two years – roughly the level was at pre COVID-19.
Here at Greenlion we were looking forward to hearing how the government was going to help business, in particular. We like plans, not Borrow + Hope. We were hoping the budget would deliver assistance to businesses to help them Recover + Rebuild with some targeted assistance, strategy and direction to drive productivity. Unfortunately this was not what was delivered. Hopefully we will see this when we get some detail on how the remaining $20 billion is to be spent.
If you do have any questions about the budget or wish to discuss other challenges your organisation is facing please do get in touch. We’re here to help.