Finance Minister Grant Robertson has signalled it’s unlikely the Government will provide “helicopter money” before the election.
Speaking on a Bloomberg webinar, Robertson said handing out universal cash payments was not in his “immediate plan”, although all options remained on the table.
The Opposition has repeatedly attacked the Government for setting $20 billion aside in the May Budget for yet-to-be-determined COVID-19-related spending, arguing it would spend this on pre-election bribes.
However, Robertson reiterated his plan wasn’t to drain this fund, but rather use it to maintain a “buffer” that could be used “as is needed and as is required”.
In question time in Parliament on Tuesday he told National’s Paul Goldsmith, $17.6 billion of the fund remained unallocated.
Altogether, the Government has allocated $62 billion towards the COVID-19 recovery - the equivalent of 20% of gross domestic product (GDP).
Robertson said Treasury estimated $26 billion of this would be spent by June 30. The wage subsidy will account for a large portion of this.
Pressed by Goldsmith on what rules - if any - he has put around spending the unallocated $17.6 billion pre-election, Robertson said, “It is designed to ensure that New Zealand can continue to respond to COVID-19 in the way that we have…”
Goldsmith then asked, “Does he believe higher taxes will be necessary?”
Robertson responded: “The way that New Zealand will get through this is to grow our economy sustainably. The long-term projections show that debt will reduce as we do that.”
Asked by Goldsmith whether he could rule out income tax increases, Robertson didn’t provide an explicit answer, but said each party would take its own tax policy to the election.
Prime Minister Jacinda Ardern on Monday said Labour’s tax policy would look different to the wealth tax put forward by the Greens.
Robertson also repeated a line he’s used in the past, that his focus is on putting money in people’s pockets, not taking it out.
Treasury secretary and chief executive, Caralee McLiesh, in May said the Government had not asked it to model how tax hikes could help cover the cost of the COVID-19 response.
She did however say Treasury was looking at additional ways the Government could stimulate the economy, including through helicopter money.
And while the Reserve Bank on June 26 said the Government’s Budget spending plans were “slightly larger” than it expected, it reiterated: “The main support for the economy in this environment is appropriately being provided through increased fiscal spending. However, monetary policy will continue to provide significant support.”
29 Comments
Good decision in its own right. For a start how do you differentiate between those who sat at home for nine weeks or so on unaffected pay and many not having to do any work whatsoever. Should it ever go ahead it can only cover those who have become unemployed, or lost normal income to be expected in some other way.
Have provided much more than helicopter money in terms of Wage Subsidy to many who exploited and made a tidy fortune (Not business affected by travel/border restriction and business unable to operate due to coronavirus) .
IRD / Government if serious should investigate or they do not care :
1 : New emoloyees added to get wage subsidy and mostly all family members.
2 : Invoice / Execution of order delayed (Though business done much more than 100%) to avail wage subsidy by showing low business - IRD /Government should investigate if syddenly just after 30 - 35 days cut off date - *sees surge is sales volume of the company(Sepecially in second lot)
3 : Many had many part time students / delivery boys working for 5 hours or 6 hours and for each got $350 but had to actually pay hust &$80 or $100 and had quite a few like 10 or 20 deliver boys and made heaps - like 250 per week so $3000 per delivery boy and if had 12 was a jackpot of $36000 (Though allowed in first installment to pay and use the surplus for other expenses).
4. Many company who were hiring contractors - like delivery whose business / subscribtion did not drop but dropped ther contract by 40% so contractors could collect wage subsidy and make profit.
5: Definitely must be many other ways which a good Chartered Accountant could suggest.
Any subsidy should be to cushion the adverse affect and not to exploit and make fortune.
IRD/Government should look into to avoid corruption which now is creping in NZ.
Is government not aware what everyone knows. Cannot be that stupid.
Why stop there? There are tens of thousands of people scamming the welfare system every day, so why have different rules for different people? Stupid assumption to have “one law for everybody” I suppose, as this principle died a long time ago... hence our current culture of corruption and “I’m entitled”. It’s going to be epic when it all falls apart...
I never thought i'd say this but I feel a bit sorry for IRD. They have had a major structural overhaul and reduced staffing levels massively and before they have had an opportunity to bed in, a pandemic and major economic crisis hits. They were then tasked with processing changes to tax policy, processing millions in the cash-flow loans and will be inundated with requests to delay tax payments for individuals and businesses. If you read Terry Baucher's reports, IRD have lost some of their most experienced tax auditors and investigators and recently have had to send much of their remaining investigation and auditing team to man the phonelines during the system overhaul and then the pandemic, working from home too.
I don't see how IRD can take on investigating the obvious wage subsidiary frauds that have occurred, let alone keep on top of any recent or current tax evasion. Will there ever be a great reckoning? I suspect that the level of response to the pandemic that government agencies have experienced will take years to recover from and that they might never wade through the backlog.
"Robertson said handing out universal cash payments was not in his “immediate plan”, although all options remained on the table."
Get ready for helicopter money then, but not next week. Either just prior to the election or, vote for labour and get free money for xmas
Allow me to buck my recent trend here, but his comments are what he would be saying if he was doing the responsible thing here too.
If he commits, people stop spending in the here and now and wait for their free cash.
If he rules it out, people know that there's no more government assistance past wage subsidies and tax write-backs.
I see this as much as a 'keeping his powder dry' as anything else. But I would have preferred it wasn't against the backdrop of a $20b mystery electoral warchest.
That "$20b mystery electoral warchest, let's all recall, is in fact a $20b spend up on the credit card sneaked out of our childrens' (and their children's) wallet on the pretext of 'Be Kind'. Because it isn't the current crop of pollies who have to face the bill, and the Interest.....
So essentially Jenee has cherry picked various comments to come up with an article that contradicts itself and say nothing. GR says "..his focus is on putting money in people’s pockets, not taking it out." But she has also cited JA as saying "Labour’s tax policy would look different to the wealth tax put forward by the Greens." What does this mean? My interpretation will be that there will be a wealth tax, but the threshold is not yet defined, and Labour will try to ensure lower income groups at least will not loose any spending power.
I feel this is dangerous territory for ordinary people and the country. Everyone needs to be saving, but the banks, with the help of the RBNZ are actively discouraging that, the Greens want a wealth tax, so people with perceived valuable assets but no income will be in trouble, and National is anybody's guess, but they will open the borders without quarantine.
So nothing smart, no innovation, no 'reset' of the economy, no development of resilience. We are in deep shit if this is the best they can offer us.
Hi Murray, the nature of my job involves picking comments that tell a story. The subtext here is that National is putting pressure on Labour to announce its tax policy. It wants to attack it for supposedly taxing people more. Robertson is aware of this. He has said he wants to put money in people's pockets, not take it out. It isn't clear exactly what he means. However Ardern has pretty much said she doesn't like the Greens' wealth tax. Labour has also ruled out a capital gains tax. We now wait to see what tax policies Labour and National will take to the election.
Thanks Jenee, I get more from this comment than the article, and appreciate the response. And it is no criticism of you, but I stand by my last comment in that our respective options in the upcoming election don't offer much (yet?).
Frankly I am tired of Governments picking the low hanging fruit, doing the easy stuff, which by the way inevitably dumps on the ordinary people more than the wealth, but rarely deliver anything of substance that would genuinely offer a future for people and the country.
Believe all thinking NZrs realise that CV19 has caused massive government financial outgoing that were obviously unforeseen. Whether they agree entirely with the nature and recipients of the outgoings, is largely irrelevant. Out of that comes the inevitable prospect of the next government needing to increase revenue to a degree that would not have been contemplated four months ago. Before the last election it was obvious that Labour had an agenda to embark on a significant tax grab, just as the Clark/Cullen lot did, behind the screen of Jim Anderton though. The electorate got wind of it and then there was the spectacle of a hasty eleventh hour back down by Labour. Have said all that to say that it would be immoral and disingenuous for Labour to now dust off and present all those thwarted tax plans under the pretext and smokescreen of a unprecedented event, ie CV19.
Well a bit like you I was reading between the lines here, by dint of omission. There has been no approach by the government to obtain detail on how tax hikes might impact post CV19. That struck me as odd as it is a reasonably obvious question for consideration.. Does that then mean the proposals are already developed and set, hence the theme of my earlier email. And then there is this proposal out of left field by The Greens which has the hallmark of the classic stake in the sand, but thrown by an ally. I mean if there was a publication authored by the good Dr Cullen titled How to Get at the Rich Pricks, then this proposal would hardly go astray as a chapter. Actually what shocked me more about that proposal was the accompanying powers that would need to be vested in government to gather, store and audit the requisite information. Compiling dossiers on private citizens is Orwellian, not welcome in NZ past, present and future.
Households are going to try to save and decrease consumption now due to uncertainty and fear of unemployment. The government needs to accommodate that by deficit spending to accommodate the saving without economic activity lowering and increasing unemployment. Government spending needs to replace the gap left by household saving. One's household's increased saving is another's lost income. If we all attempt mass saving without a government spend to replace it it will not result in an investment splurge a la a single corn based commodity Robinson Crusoe La la land. It will reduce economic activity and gdp will fall and investment will fall even more as sales plummet. Everyone's saving will be thwarted as incomes fall. Personally I think the emphasis needs to be on deficit spending right now and not new taxes. It's a distraction. Yes, NZ is too unequal and we need to tax to redistribute purchasing power for the health of our democracy and macroeconomic health if we choose. But not cause the government needs the money. But IMHO tax increases are tomorrow's problem. Not today's.
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