Government's debt level expected to be $60b lower than predicted– Grant Robertson

Finance Minister Grant Robertson said the government will target housing in Budget 2021. Video / Mark Mitchell

Finance Minister Grant Robertson has revealed New Zealand's Covid-19 economic recovery will cost $60 billion less than the Government was anticipating.

He has also teased his Government's "bold" plan for housing, which he would unveil in May's Budget.

This morning, he told a business breakfast that the expected level of Government debt had been slashed dramatically by the Treasury, given New Zealand's strong economic bounce-back.

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Robertson said that in September last year, officials expected the Government's overall level of debt to jump from the pre-pandemic roughly 20 per cent range, to 48 per cent in 2034.

But new data from the Treasury, released by Robertson this morning, shows that figure is now expected to be 36.5 per cent.

"That represents about $60 billion less debt at the end of the projection period than at the pre-election update."

Robertson also used his speech to tease new Government spending – he said the capital allowance over the next 11 years is roughly $7b.

That money, he said, will go towards more next infrastructure spending across the country.

Robertson also specifically spoke about housing – "There is a crisis when it comes to the housing situation right now in New Zealand".

He would not give away much about the Government's impending housing announcements in the budget – only that it would build on the Government's current housing programme.

But he did say it was time for "bold action".

"The market has moved quickly and rapidly in a way that is not sustainable. We have to confront some tough decisions, and we will do that.

Looking ahead to this year's Budget, Robertson was careful to not promise a lolly scramble.

"Budget 2021 will include a strong focus on making sure spending continues to be carefully prioritised and targeted at the areas and people that require it the most."

He revealed that this year's Budget will include information about how Covid-19 has affected wellbeing in New Zealand.

New data from Stats NZ has traced people's wellbeing across the lockdowns and the recovery – it also tracks things like anxiety, loneliness, financial wellbeing, and life satisfaction.

Meanwhile, he is promising there will be no issues around the photo used on the budget document this year.

In 2019, there was some controversy around the photo used on the front page of the Budget document.

It was a stock image of a mother and child smiling and playing together. As it turned out, the pair had moved to Australia as living costs in New Zealand were too high.

But Robertson was confident this would not be a problem in 2021.

"I can say with absolute confidence that there is no issue with this year's image – because I took the photo.

"It is of Waikawau Bay on the Coromandel Peninsula where I was very fortunate to spend some time over the break."