At 2pm today Finance Minister Grant Robertson will deliver one of the most significant Budgets in New Zealand's history.

And as New Zealand stares down the barrel of what was yesterday described as the "sharpest and deepest economic slump ever," the Government has a clear focus: "Jobs, jobs, jobs".

That's according to Prime Minister Jacinda Ardern, who yesterday warned that the Budget would be delivered against the backdrop of the most challenging economic conditions since the Great Depression.

"New Zealand is about to enter a very tough winter."

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Budget 2020: Prime Minister Jacinda Ardern warns of 'very tough winter' ahead of landmark Budget
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Top team

The Herald's top team of business and political writers will guide you through the complexities of a once-in-a-lifetime Budget.

Robertson has hastily repackaged his Budget 2020 as "Rebuilding Together" after global economic chaos caused by the Covid-19 pandemic, which has already forced the Government to spend billions of dollars in emergency measures.

Herald business editor at large Liam Dann summed it up when he described this week as one of the biggest in New Zealand's economic history, as most of the country returns to work under level 2 restrictions and Robertson attempts to put our reeling economy on the road to recovery.

Today and tomorrow Dann and other leading journalists and commentators from the Herald and NewstalkZB will bring you in-depth and up-to-date coverage of what promises to be a remarkable Budget.

From the launch of the Budget at 2pm, political editor Audrey Young leads our parliamentary team's online coverage at nzherald.co.nz, giving you the Budget at a glance and an instant assessment of whether Robertson has done enough to get New Zealand out of trouble.

Meanwhile, senior political writer Claire Trevett joins host Will Trafford on our live Budget video show, outlining the major changes, interviewing top politicians and asking expert commentators for their views.

Trafford will also be joined by one of the country's most experienced political and economic journalists, NZME head of business Fran O'Sullivan, along with Dann and NewstalkZB host Heather du Plessis-Allan, who will carry on the debate on her Drive show from 4pm.

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Deficit blowout

Former Finance Minister Steven Joyce is expecting the deficit revealed in today's Budget announcement to be a "bloody big one".

Joyce told Mike Hosking on Newstalk ZB this morning he didn't know the exact size, but estimated debt of 40-50 per cent of the country's GDP.

Joyce said what Kiwis needed to see was a path back from that level of debt.

After the Global Financial Crisis it took a "fair while" to get debt down, said Joyce. But that was because it was both the GFC and the Canterbury earthquakes.

"Those two blew debt out to 30 per cent."

He said the National Government was criticised for how tight it was in terms of spending but that was what it took to get the debt down.

"It was a hard grind back."

"It's about survival"

Business columnist Hamish Rutherford writes that Finance Minister Grant Robertson may well be planning a Budget to reset New Zealand's economy for a post-Covid world. But he won't be delivering that this week.

Today Robertson will present his third Budget, one which, in the Government's florid style, was to be the culmination of a trilogy of wellbeing Budgets.

All talk of that is gone. Budget 2020 will be about keeping the lights on. About stemming the bleeding caused by the disruption of Covid-19.

" This is about economic survival, " former Prime Minister Bill English said in a warning delivered as the country first went into lockdown, one that has aged better than most made since.

For weeks, Prime Minister Jacinda Ardern has fended off questions about the impact on the economy of the lockdowns and the disruption caused by Covid-19 internationally.

In a pre-Budget speech on Wednesday, she maintained the best health response was also what was best for the economy, but made it clear the problems are still big.

"Let me be clear, the coming months and years will be some of the most challenging our country has faced in a very, very long time."

Prime Minister Jacinda Ardern and Finance Minister Grant Robertson, say jobs will be the focus of the Budget. Photo / file
Prime Minister Jacinda Ardern and Finance Minister Grant Robertson, say jobs will be the focus of the Budget. Photo / file

Printing money

If the unprecedented nature of today's Budget wasn't already obvious enough, the Reserve Bank's near $30 billion expansion of its now $60b money printing programme should make that clear.

The coming months and years, according to Ardern, will be some of the most challenging this country has faced in a "very, very long time".

She warned that businesses will close and unemployment will rise – the Reserve Bank yesterday estimated the Covid-19 pandemic could result in 150,000 job losses across the country.

At the same time, top economists are picking the Government's debt levels to almost triple – reaching as high as $180b in four or five years.

It is widely expected that the Government will announce tens of billions of dollars more in spending today.

Covid-19 spending

The Government has already earmarked, and spent, roughly $25b on a series of pre-Budget Covid-19 related initiatives.

These include the almost $11b wage subsidy scheme, an extra $4b for district health boards and the health sector, $3b for benefit increases and a winter energy payment boost, and another $3b on tax changes to help struggling businesses.

But both Ardern and Robertson say this is just the beginning.

A support package for the tourism sector will be unveiled today and there will also be more funding for New Zealand's media industry.

And after Budget Day there will be even more announcements – the Government's Covid-19 response is a "rolling maul" of initiatives, Robertson said.

"We have indicated there will be sector packages, but not all of them will be in the Budget."

What will be in the Budget today, however, will be detailed on the Government's job creation plan.

"Our number one priority is jobs. That means this will be a jobs Budget," Ardern said.

No cuts to services

Ardern also confirmed what would not be in the Budget – any cuts to essential services, such as hospital and teaching staff, and members of the police force.

"We believe when times are hard, you don't cut – you invest.

"The notion that at this time of need we would make cuts to the essential services so many New Zealanders need more than ever is not only immoral, it is economically wrong."

There will be no cuts to welfare support, Ardern confirmed.

"We will not let our team of 5 million fall when the times get tough; instead we will strengthen the blanket of support the Government can provide."

Opening the books

As well as a series of new spending initiatives and announcements, Treasury will today lay bare the Government's books – Robertson said the numbers will be "sobering".

He has declined to go into detail about what should be expected, but Bagrie Economics chief economist Cameron Bagrie said the numbers will be "horrible".

Speaking to the Epidemic Response Committee, the former head ANZ economist forecast the Government's deficit to explode to roughly $30b – that's up from a pre-Covid expectation of just a $1b deficit.

Bagrie is also forecasting Government debt to increase to $180b within four or five years – that's almost triple the current levels.

At the same time, the economy is going to take a significant hit as the recession bites.

Bagrie picked that Covid-19 will impact the economy by $3b a month for every month the country is in level 1.

That means even at level 1, the economic hit of Covid-19 will be bigger than that of the Global Financial Crisis, he said.

"[The Government] will have one hell of a fiscal repair job," he told MPs.