Finance Minister Grant Robertson told Parliament this week “this has been a tough year for everybody”.
He says going back into a period of restrictions, in the Auckland area in particular, is psychologically tough.
“It is important we acknowledge that—this has been a difficult year”.
So is Robertson changing his tune? After all, for months he has been telling us that NZ had “gone early, and gone hard”, the government had “cushioned the blow economically” and the NZ economy has been doing better than any of those it normally compares itself with.
Robertson has been singing from the same song sheet for long enough now he is not going to strike a false note—-even if it has been a “tough year for everybody”.
Yes, there is a new outbreak,
“ … but we are getting it under control quicker than most, and every single day New Zealanders contribute to that”.
According to the updated Robertson version, it is important to remember that “we” have done well throughout this year—103 days of no community transmission
“ … that saw the country operating at a level that had not been forecast and was not seen virtually anywhere in the world. The New Zealand Activity Index actually showed that the months of June and July were better—from an economic perspective—in New Zealand than those comparable months in 2019. We saw expansion in our manufacturing and our services indexes through that same period. The New Zealand economy was recovering well, and that was a result of the fact that we had done well”.
“Yes, the virus came back again—as it has done almost everywhere else in the world. But, again, we acted swiftly and decisively, and New Zealanders have swung in behind”.
He concedes there has been “some sacrifice” but “we’ve done it once and we can do it again”. It’s the result of the government operating to a consistent strategy of “going early and hard”, with the addition of a “gold standard” contact tracing system.
Hasn’t it been tough for business generally and the hospitality and tourist industries?
Well, yes, but the scale of support provided by the government to businesses and workers throughout the Covid-19 pandemic has been “unprecedented”.
Robertson recounts 1.65 million jobs have been supported by the almost $11bn paid out under the original 12-week wage subsidy scheme.
The Ministry of Social Development estimates that around 58% of all jobs were supported during this time. This includes $3.5bn in support of 528,000 jobs in Auckland alone.
The original wage subsidy injected cash into firms across many industries, including the construction sector, which received nearly $1.4bn, supporting 203,000 jobs; the accommodation and food services sector, over $1bn, supporting 164,000 jobs; and the retail trade sector, $1bn supporting 156,000 jobs.
So why did the government extend the wage subsidy beyond the initial 12 weeks?
Robertson explains that the wage subsidy extension was designed to target assistance to those businesses whose revenue was still significantly down, even at levels 1 and 2, such as tourism operators and the hospitality sector, enabling them to adjust to the new normal, while many other firms were able to largely go back to business as usual.
“The amount of support provided to these sectors is apparent in MSD’s data, which shows that up to 14 August, the accommodation and food services industry was the greatest recipient of the wage subsidy extension, receiving $302m to support 73,000 jobs”.
With the new wage subsidy announced last week the government has already granted $145m to 45,000 businesses.
Businesses which have taken on all phases of the wage subsidy have received 22 weeks of support in a period in which Auckland businesses have seen 9½ weeks at either levels 3 or 4. Since 12 August, the government has also approved wage subsidy applications for 22,358 businesses, providing them $4,686.40 per full-time employee.
So, according to Robertson, “we can all bounce back stronger together”.
But perhaps not those whose businesses have folded. And those who have lost their jobs might be feeling less than bouncy .
And down the track a bit, NZ will have to find a way to pay back all the money borrowed to fund those subsidies.