Finance Minister Grant Robertson has revealed the Government will be running deficits for an "extended period" of time and its debt levels will reach an all-time high.
The only news was Grant Robertson confirming, as if there was any doubt, was that the Crown would be "running operating deficits for an extended period" pushing debt to well beyond the Government's earlier targets.
The lack of headline policy announcement also probably reflects that a major mix-up meant the Government had to announce a small business loan scheme last Friday, after legislation enabling the scheme was passed without the Government realising.
Finance Minister Grant Robertson delivers the traditional Wellington Chamber of Commerce pre-Budget speech from within the Beehive. Photo / Mark Mitchell
While the Government has been spending money at breathtaking speed, Robertson warned that the Budget would not be a lolly scramble. Areas the Government had previously prioritised would not get the boost they had expected.
"Unless they are meeting a core cost pressure, we have put them on ice."
But the speech also searched for opportunity. Robertson said - for the umpteenth time - that while New Zealand was doing well (before Covid-19) on a number of indicators, such as low Government debt and low unemployment, in other ways we "not quite the nation we like to think we are" - children growing up in poverty, declining water quality and expensive housing.
"There are few times in life when the clock is reset. Now is the time we should address these long-term issues. It is a privilege many countries won't have. It's not one we should squander," Robertson said, to an audience of about a dozen socially distant journalists.
"As someone said to me the other day, if your house were to burn down, you probably wouldn't build it back exactly the same, would you? Budget 2020 gives us the chance to begin this rebuild, better and together."
What that means was a little hazy, beyond buzzwords of skills, infrastructure and sustainability.
"Enabling businesses to grow in a digital age, to trade with a country they might not be able to even visit and to sell new added-value products to the world is essential."
To be fair to Robertson, it would be something of a surprise given the day-to-day emergencies the Government is currently operating under if he had a cohesive idea of exactly what a reset might look like.
We also need to be realistic though. This is not a rainy day - this is a violent storm.
Economic forecasting is a difficult game at the best of times, but in the age of Covid-19 it is massively uncertain.
BNZ economists said this week things were so difficult to measure that they were predicting the impact on the Crown accounts over the next few years to the nearest $10 billion.
But we know for certain that the picture will not be bright. Even before Covid-19 Robertson was expected to present a deficit at next week's Budget.
A lockdown of the economy and the series of programmes to nurse the economy through the initial disruption will have an immediate impact on the books, while higher unemployment and company failures will mean income is lower and spending is higher for years to come.
National leader Simon Bridges challenged Prime Minister Jacinda Ardern to confirm whether this year's deficit will be more than $20b. While she avoided answering directly, the reality is it could be considerably higher.
There are signs that New Zealand's primary industries are doing surprisingly well in the circumstances; a sector which has previously felt maligned by the Government is now our advantage.
But as Robertson's speech conceded, Covid-19 will make Governments review how much they want to depend on other countries. This is an environment in which trade-dependent countries like New Zealand are at a disadvantage, especially when it is difficult to visit trading partners to resolve disputes.
Debt is expected to climb sharply, to levels not seen in New Zealand in at least a generation, as is unemployment.
Robertson is right that the Government should not waste a crisis, but there are immediate issues to face up to.
Yes, you might not rebuild the house the same way if we had the chance. But we also need to make sure we can make a living in the meantime.
