Jobs should 'definitely' be focus for Budget - economist

Thursday's Budget should "definitely" focus on jobs and employment to help people who are no longer working due to COVID-19, an economist says.

Prime Minister Jacinda Ardern said on Wednesday the Government would use the Budget to "shelter New Zealand from the worst impacts" of the pandemic, and signalled jobs would be a focus.

Economist Tony Alexander says it's important to keep people optimistic with employment prospects in this year's Budget.

"It most definitely has to be [a focus]. I guess in the short term you want to try and give people some hope that, although they're going to be unemployed, there will be some other opportunities out there," he told Rebuilding Paradise with Paul Henry.

But he fears there will be a disconnection between people who have lost their jobs and the skills that are needed.

"When we're talking about the bulk of people who are going to be out of work, coming from the hospitality and tourism sectors, everyone's got this image of building roads and building stuff. Well you can't just take a person who's been a barista and put them in a front-end loader and have things go well. Retraining is what I'm going to be looking for [in the Budget]."

Alexander says although there will be a "debt blowout" from the pandemic, New Zealand has a record of good fiscal management and he believes that's what will follow the crisis.

"I think you can guarantee that there'll be some other crisis come along - God forbid it's something remotely like this - but we have actually been through this process before back in 1992. The ratio of Government's net debt to GDP was 55 percent, and then over 16 years it went down to just 6 percent."

In terms of paying off the debt from COVID-19, he says printing money won't solve the problem and tax rates don't need to increase either.

"When we got that debt level down from 1992 to 2008, we didn't see the tax rates going up… It was achieved because we saw the economy grow, on average, over 3.5 percent per annum and the Government maintained really good fiscal management."

He added that a target of getting debt down over 15 to 20 years is a "quite reasonable timeframe".