The Prime Minister has promised not to overlook economic concerns in a pre-Budget 2020 speech as the Government prepares for one of the "most challenging economic conditions since the Great Depression".
Jacinda Ardern delivered the speech on the eve of New Zealand's shift to alert level 2, when just about every businesses will be able to open again as COVID-19 restrictions imposed for more than a month will finally ease.
For the second consecutive day, the Ministry of Health reported no new cases of the coronavirus in New Zealand, highlighting how the country has managed to dodge the huge number of cases and deaths seen overseas.
But the Prime Minister admitted that around the world unemployment will rise "significantly" and New Zealand will not be immune. She said businesses will "fail and close" while Government revenue "will decline".
"We will feel the pain here too. New Zealand is about to enter a very tough winter. But every winter is followed by spring, and if we make the right choices we can get New Zealanders back to work and our economy moving again quickly."
As the unveiling of Budget 2020 looms, the Prime Minister is promising that her team will bring "the same determination and focus to the economic rebuild as we brought to our health response".
She said the Government will "run the ruler over every line of expenditure", and that there is "no question we need to ensure our expenditure provides value for money and supports our primary goal of jobs".
The Government's "number one priority is jobs", Ardern emphasised. "That means this will be a jobs Budget. That means doing all we can to support people staying in their current job or move to a new job if needed."
The Prime Minister said the last few months have shown that New Zealand is a "formidable force" and that when Kiwis channel their energies into a goal collectively they are "stronger for it".
She said prior to the virus New Zealand faced "serious long-term challenges", from inequality and poverty, to climate change, the need to diversify the economy and low productivity.
"Do we return to those settings or is now the time to find a better way?" Ardern asked, signalling an opportunity to change the status quo in New Zealand.
The PM acknowledged the unemployment rate will increase, but said Treasury scenarios suggest that because we stayed at level 4 and 3 for a shorter period of time, our unemployment rate could end up be at the "lower end" of the global spectrum.
"Projections suggest our economic shock could be sharp, but hopefully short. That means we need a plan to get us through the worst and position us well for recovery."
But Ardern said the Government will not consider cuts to essential services, describing the notion as "not only immoral" but "economically wrong".
She said that's why the Government this week made a record pre-Budget investment in health and delivered pay equity for early childhood teachers.
"Now more than ever we need our schools and hospitals, our public houses and roads and railways. We need our police and our nurses, and we need our welfare safety net."
Looking ahead, Ardern said the "biggest fiscal asset we currently have" to get the country through the worst of the crisis is the Government's balance sheet.
"Due to our prudent economic management of the books heading into the lockdown we had debt under 20 percent of GDP, lower than what we inherited it at, low unemployment around 4 percent.
"I defended the surpluses we ran in our first two Budgets on the basis that we needed to prepare financially for a rainy day. Well that day has well and truly arrived and we are ready for it."
Budget 2020 will be unveiled on Thursday afternoon.
The Finance Minister announced last week Government's original Budget 2020 priorities have been "put on ice" to prioritise the "1-in-100 year shock" to the economy caused by COVID-19.
Here's what's been announced so far:
- $160 million boost to Pharmac's budget over four years
- $203 million boost for family violence services
- $230 million early learning services package including a pay increase for teachers
- $72.5 million support package to ease the financial strain on the racing industry
- $3.92 billion package for DHBs to 'help clear the COVID-19 backlog'