Simon Bridges questions COVID-19 'economic management' as tens of thousands join benefit queue

Simon Bridges is questioning the Government's "economic management" of COVID-19 as figures show tens of thousands of Kiwis have joined the benefit queue since the lockdown began.  

The Ministry of Social Development released new figures on Friday showing about 40,000 New Zealanders have applied for the benefit since March 20, and Bridges is attributing it to the Government's handling of the COVID-19 crisis. 

"Thanks to the sacrifices of Kiwis, we've flattened the COVID curve. However, just having a low number of COVID-19 cases isn't success when we have tens of thousands out of work and more that are coming."

"Irresponsible economic management will put a mortgage on our children and our grandchildren's future."

With Budget 2020 to be unveiled next week, the National Party leader said the Government needs to "carefully consider every spending decision they make because every dollar will have to be paid off with higher taxes and by future generations". 

Bridges has repeatedly called on the Government to shift New Zealand out of alert level 3 to allow more business activity. The Prime Minister has revealed what level 2 would look like and Cabinet will decide on Monday if the time is right. 

Finance Minister Grant Robertson said on Friday level 2 has been designed to get as many people back to work as possible and get the economy back up and running safely. 

Retail and hospitality businesses will finally be able to open for face-to-face interaction, but customers will have to be seated and must be served by one person, so the Ministry of Health can keep up with contact tracing. 

Robertson said "going hard and going early on the virus" means the Government can be "more open, more quickly" in terms of reviving the economy, and he said that has "been our plan all along". 

"We know the restrictions associated with level 4 and level 3 have had a significant impact and I'm acutely aware of the sacrifices made by many people in businesses.

"We're doing everything we can to mitigate this through significant investments to support businesses, jobs and incomes."

The latest Treasury figures show the number of Jobseeker Support beneficiaries reached 184,000 on May 1, which is around 6 percent of the estimated working-age population. 

The figures also show that total wage subsidy payments reached $10.6 billion, subsidising the wages of about 1.7 million New Zealanders. 

Robertson said by comparison, in the United States, new jobless claims relating to COVID-19 have reached 33 million, or 10 percent of their population, compared to New Zealand's new jobless claims representing about 0.8 percent. 

But the wage subsidy scheme will run out in about a month as it was announced on March 17 as a 12-week package, and there are fears that unemployment will spike when it ends. 

Robertson said he's aware of those concerns but that the Government is considering how to support businesses with more targeted measures, now that many workers have returned under level 3, and even more will return under level 2. 

"The wage subsidy was a very open scheme... The work that we're doing is to look at what kinds of support suits an environment with more economic activity."

Treasury's scenarios show economic output could be about 75 percent of normal activity at level 3 and improve to 85-90 percent under level 2, while the Reserve Bank puts activity at about 80 percent at level 3 and 91 percent under level 2. 

Robertson pointed to the Government's accounts for the nine months to the end of March released by Treasury on Friday, showing the first signs of the COVID-19 impact on New Zealand's finances, with core Crown debt at 21.3 percent of GDP. 

Treasury noted how the results "only shows a small proportion of the expected impacts of the Government's response to COVID-19", with the full impact expected to be shown next week in Budget 2020. 

For example, the results show that expenses were $72.5 billion, $4.4 billion above forecast, and at that point only $3.4 billion had been paid out for the wage subsidy, so we expect that to balloon in the results next week. 

Crown revenue was $0.4 billion above December forecast thanks to tax income, which Robertson said reflected "the growing economy before COVID-19". 

He noted how New Zealand's net debt of 21.3 percent of GDP was comparatively lower than the likes of the UK, US and Ireland, who went into the crisis with debt above 75 percent, 90 percent and 40 percent, respectively. 

"We used our Government's strong balance sheet to move quickly with our public health response, reduce the impact on workers and businesses, and position the economy for recovery."