Deputy PM on NZ's ongoing fightback a year after Covid hit

Grant Robertson says the country's economy is in a pretty good place but he's expecting 2021 to still be troublesome for some sectors, especially tourism. Photo / Mark Mitchell

New Zealand's retail sector bounced back by the end of 2020 and Air New Zealand is hiring new staff, but there's still a few challenges ahead for the country this year, the Deputy Prime Minister says.

But the country's Covid-19 recovery was going "better than expected" says Grant Robertson, who is also Finance Minister, and was buoyed by lower than expected unemployment figures which were nearly a third down on what was projected early last year.

Speaking to Tim Dower on Newstalk ZB this morning, Robertson said there were early projections of unemployment hitting as high as 15 per cent.

However, it was currently sitting around 5.3 per cent.

"That's a lot and it's a number of people who have lost their jobs and we're working hard to support those people, but I do see a resilient economy."

Over summer Kiwis had been out shopping - "the tills have been ringing in retail".

"The New Zealand economy is doing well but we do continue to be in very challenging times and as we see these major, further outbreaks around the world... no doubt this is going to continue to be an issue for health and economic reasons through 2021."

The Government's tax revenue streams of GST and PAYE were also strong, he said.

"The last numbers were very good. GST, PAYE was better than expected... GST that was well above too because retail was doing better."

Retails sales in 2020 were "just up on 2019", which was also a good result, he said.

"But it has certainly been a difficult time and some industries, like tourism, are looking towards March and April and will be asking, where is our income coming from?"

The Government was keen on a travel bubble with Australia but only when it was safe.

As for Air New Zealand, he said it would survive and the Government "needed it to".

The company was back hiring staff again after the Government's $900m loan injection last year. However, it was unlikely to be in the same state prior to Covid-19.

"They're now re-hiring and we're waiting to see what it will look like but the airline won't be what it was before Covid-19."

Asked where New Zealand's vaccines were, Robertson said he had been writing cheques and signing contracts but other countries battling outbreaks had been given higher priority.

"They will be with us as soon as they possibly can be.

"I don't think it will be a surprise to anybody that countries where thousands of people are dying every day that those are countries where the vaccines are going out right now."

He assured Dower that the Government was doing everything it could to get them as soon as possible.

"We do know that we're doing every single thing possible... it is inevitable... that there are likely to be some delays.

"We have been negotiating, we've got those contracts signed."

However, he also added that he wanted the vaccines to be safe for Kiwis, and once we get it, they needed a large percentage of New Zealanders to actually take it.

"You can rest assured we are doing everything we can to get it out the door."

He denied they were being polite and letting other countries go first.

"I wouldn't describe it as polite, I would just describe it as real. They are really struggling at the moment with very tragic levels of cases."

When quizzed about what areas needed stimulus and what needed cooling, Robertson noted the housing market was an issue.

"Almost every economist last year, we were told that prices were going to plummet and they didn't and they increased significantly so that's an area where we'll be making announcements further into the year around how we can manage demand but also increase supply.

"We also want to see our infrastructure projects working and rolling out.

"There's important work to be done there."

When asked whether would include more work on the bright-line test, Robertson wouldn't specify but said it "would be stuff we would be working our way through it over the next few weeks".

The bright-line test requires those who sell residential property, that isn't their main home, within five years of purchasing it to pay income tax on any capital gains.

"Quite clearly we've asked Treasury and others to take a look at our existing settings such as the bright-line test but also to make sure that we're doing everything that we can to create a fair playing field when it comes to housing.

"It's not only around the supply side but also demand."

He said KiwiBuild still formed part of the picture but it was only that - part of the picture.