Hurrah! We can all bounce back stronger together (and then we can think about paying back the borrowed billions)

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”.

 Whoopee.

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”.

 And:

 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.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.