Almost $1 billion that was allocated for the Covid-19 response last year was never spent, and Finance Minister Grant Robertson has put it back into the Covid fund to spend on the recovery.
Robertson delivered the first of his pre-Budget speeches this morning to the Wellington Chamber of Commerce, saying Budget 2021 would be a "recovery Budget".
He also announced he had been tasked by Prime Minister Jacinda Ardern with heading a new unit in her department that was responsible for ensuring delivery on the Government's priorities such as mental health, infrastructure, climate change, and housing.
It is a response to the pressure Labour has come under over its delivery on some fronts – including housing and infrastructure - and an attempt to re-ignite Labour's former priorities as part of the Covid recovery.
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Advertise with NZME."At a time where the Government is playing a much greater role in supporting the economy and investing for the future, it is crucial we ensure we are getting value for money from every dollar of spending, and that across the public service initiatives are being delivered in a way that supports out economic recovery."
Robertson said he had asked ministers to do a stocktake of the Covid spending in their portfolios, and return any un-spent money. About $926 million was released back into the fund.
It is a small portion of the total $50 billion Covid-19 Fund Robertson set up in the 2020 Budget, funded primarily through debt. Less than $10 billion of that fund remains.
Robertson said it was important to target the funding where it was required. "We have committed to only spending what we need to in terms of our response and recovery."
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Advertise with NZME.The Budget would also begin the process of paying down the debt that was racked up to deal with Covid-19.
"New Zealand's economy continues to perform better than forecast, but we know the impacts of Covid-19 are still being felt around the world. We will strike a careful balance between continuing to invest in our recovery and beginning the task of reducing down the debt we took on to support New Zealanders through Covid-19."
He said there were "no costless decisions in our response to Covid-19" but he stood by the actions the Government took.
"It was expensive, it was not perfect, but it has given us a headstart we are determined to follow through on."
He emphasised the resilience the economy had shown through Covid-19, despite dire forecasts of a year ago.
"Our stronger than expected economic performance means we have more options than we have expected to invest in critical services. But we are also mindful that we have an obligation to future generations to prioritise spending, and over time reduce the debt we incurred fighting a one in 100 year economic shock."
He said while sectors such as tourism and international education had suffered, New Zealand's unemployment levels and GDP was strong compared to other countries it traditionally compared itself to.
He put that down to trade, noting strong exports in logs, fruit, and wine as well as dairy and meat.
"Even in the tough times of Covid, consumers all around the world need what New Zealand sells."
However, he said the ongoing impact remained uncertain, and that meant the Budget still had to focus on keeping New Zealand Covid-free.
