Coronavirus: 'Helicopter money' for everyone an option to boost economy - Grant Robertson

Finance Minister Grant Robertson has hinted at potential 'helicopter money' in this year's Budget, to get the economy moving again after the level 4 lockdown.

With tax cuts ruled out, Robertson said the Government is looking at other ways to get people - many who have lost their jobs or had pay cuts - spending again.

The US is planning to give most people a literal cheque for US$1200 (less if you earn too much), and Robertson told NZME something similar is being considered for New Zealand. 

"Things like helicopter money, as it's sometimes called, is part of a potential package, but obviously it's downsides as well because... it's not particularly targeted. There are upsides and downsides to all of these options, and that's what we have to work through."  

Helicopter money, a term coined by prominent economist Milton Friedman in the 1960s, is literally giving money away. The hope is people will spend it, boosting the economy.

Economist Shamubeel Eaqub suggested last year - before the COVID-19 pandemic hit - if directed at the poor,it could work.

"Literally just cash out to poor people," Eaqub told The AM Show. "If you give poor people money, they will spend it."

Grant Robertson.
Grant Robertson. Photo credit: Getty

Infometrics economist Brad Olsen told Stuff earlier this month helicopter money would be useless in the immediate aftermath of the level 4 lockdown, as people would remain cautious about spending. But once cinemas and cafes were open, and travel restrictions lifted, he said it could encourage people to spend on non-essentials again. 

The Budget is due to be delivered in mid-May. Robertson said even if there weren't direct payments, there would "absolutely" be more spending than in previous years. 

"We've been prepared to be pragmatic, we've been prepared to listen and shift and change, and we're going to continue to do that right through from now until the Budget, and beyond."

 

It's not clear yet how many people are out of work thanks to the pandemic lockdown. Robertson said exact figures wouldn't be known until the Household Force Labour Survey could be completed.

"For fairly obvious reasons, the Household Force Labour Survey itself is quite difficult to undertake under level 4." 

The economic outlook remains unclear for the medium-term, and Robertson warned against taking Treasury's predictions in the Budget as gospel.

"What's a bit harder from our perspective is to get the crystal ball out and say, 'Where will we be this time next year?'  We're going to have to leave ourselves a little bit of room to respond and recover from COVID-19." 

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