The wage subsidy scheme may be extended a third time as the Government strives to keep unemployment below 10 per cent following the ravages of the Covid crisis.

Finance Minister Grant Robertson said today Treasury had painted three scenarios for unemployment - including coming down to 8 per cent by the end of the year - but "I want to see it even lower".

"We have to make sure it stays below 10," he told Newstalk ZB's Mike Hosking.

The unemployment rate for the March quarter was 4.2 per cent - but that was before the full impact of Covid-19. One of Treasury's scenarios has it rising to 9.8 per cent, before coming back.

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The Government yesterday unveiled an unprecedented $50 billion rescue and recovery Budget in a bid to save tens of thousands of jobs, as Covid-19 continues to wreak havoc on the world's economy.

As part of the Budget, the wage subsidy scheme has been extended for a second time - a further eight weeks to businesses who have lost at least 50 per cent of their revenue.

Asked by Hosking whether the scheme might be extended a third time, Robertson said: "We are going to be flexible. We will keep making sure it's fit for purpose."

He said the Government would be keeping an eye on specific sectors, including tourism and hospitality. "We are now targeting this to industries that are struggling to get out and trade."

While the tourism sector has been critical of the Budget, Robertson said details announced yesterday were only an initial contribution. Government would now be working with industry on future support packages and reimagination of the sector.

Meanwhile, he described the relationship with China as "very robust" following concerns it might retaliate over comments made by Deputy Prime Minister Winston Peters, who wants Taiwan to be represented at the World Health Organisation.

"The relationship with China is strong. Export numbers for China are holding up much better than other countries," said Robertson.

Yesterday's Budget is the single biggest spending package in New Zealand's history.

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Although Prime Minister Jacinda Ardern is confident her "rebuilding Budget" will prevent major economic carnage in New Zealand, she admits there is still pain ahead.

"It will be significant and it will be painful."

Government debt is forecast to double to $200b and there will be deficits in the tens of billions of dollars for years to come.

And, according to Treasury, unemployment is expected to reach a whisker under 10 per cent by September.

But Ardern was at pains to point out the Government was sparing no expense when it comes to saving as many jobs as it could.

Illustration / Rod Emmerson
Illustration / Rod Emmerson

She promised unemployment would fall back to 4.2 per cent in two years' time – roughly the level it's at now.

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The Budget, as she told the House, was "relentlessly focused on jobs".

In fact, she said it will save almost 140,000 jobs across the country and prevent the runaway unemployment which would have otherwise occurred, as a result of Covid-19.

And at the centre of her Government's plan is an eight-week extension of the wage subsidy scheme, first announced in March.

The Government poured an additional $3.2b into the scheme yesterday, taking the fund's total to $14b.

From June 10, businesses which have suffered, or are expecting to suffer, a 50 per cent loss of revenue, will be eligible for the scheme's extension.

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And there are a number of other multi-billion dollar job creation and saving schemes included in the Budget, as well as a massive push for training and re-training.

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There was $221m to bolster the free lunches in schools programme and an additional $1.2b for New Zealand's railways.

And the Government revealed it would borrow $5b in the next four to five years to build 8000 state and transitional houses in partnership with housing providers.

But, given Covid-19-related spending was the Government's priority, some previously announced policies were put on ice.

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For example, the expansion of the fees-free tertiary education scheme appears to have been shelved – when asked about the future of the policy Ardern refused to be drawn.

Big-ticket items of the budget include:

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• A $3.2 billion extension of the wage subsidy scheme

• A $1.2 billion railway package

• A $3 billion infrastructure investment package

• A $1.6 billion trades and training scheme

• A $220 million expansion of the school lunches initiative

• A $400 million targeted tourism support fund

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• A $830 million disability support package

Finance Minister Grant Robertson described yesterday's Budget as "the most significant financial commitment by a New Zealand Government in modern history".

However, National leader Simon Bridges was critical of a number of areas within the Budget, notably the expected increase in Government debt.

Treasury forecasts show by 2024, the Government would have borrowed close to $200b – that's up from the current $90b already owed.

That figure was $65b just two months ago.

This is, according to Bridges, a "tsunami of debt".

But Ardern said Covid-19 was the "rainy day" the Government had been saving for.

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"To say that a rainy day demands of us that we shelter and protect New Zealand to weather the storm," she said.

Finance Minister Grant Robertson in the House delivering Budget 2020. Photo / Pool
Finance Minister Grant Robertson in the House delivering Budget 2020. Photo / Pool

"Rather than argue about who gets to hold the umbrella, I hope the Opposition steps away from business as usual, and votes for this Budget and the jobs it will create."

Although National did not move the traditional "no confidence" vote in the Budget, Bridges confirmed his party would vote against it.

He was also worried about the upcoming Government deficits – averaging $28b a year over the next two years – reaching as high as $30b next year.

The Government is not expected to return to surplus until at least 2028.

"I'm disappointed because I don't see a plan for jobs and growth," he said in the House.

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He pointed out that there was a lack of detail in some of the announcements, such as the $400m earmarked for the tourism sector.

"Spending money is the easy part but Grant Robertson doesn't even know today how he would spend it all. Much is unallocated and it all needs to be paid back."

The $50b is over four years – $16b announced yesterday and $14b announced before the Budget.

The remaining $20b is yet to be allocated.

The Government has signalled that a funding package for arts and sports will be unveiled in the coming days and more money for New Zealand's media sector will also be announced soon.

But a number of stakeholders have already begun lobbying the Government to use that yet-to-be-announced $20b to save their sectors.

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The Council of Trade Unions, for example, said that funding should be used to create more environmental jobs.

Covid19.govt.nz: The Government's official Covid-19 advisory website