The Government won't move to pay down debt faster despite 'better-than-expected' books

An ebullient Grant Robertson addresses the Labour Party Conference in the Dunedin Town Hall.

The Government has no plans to pay down its debt early, despite "better-than-expected" economic outcomes across the board, says Finance Minister Grant Robertson.

Nor does it have any plans to majorly rein in spending or implement austerity measures, he told a business breakfast this morning.

As a result of Covid, the Government was forced to borrow billions of dollars to fund various different initiatives to help keep the economy afloat.

Although most of that has either been spent, or already allocated, there is still money left.

Robertson credited the Government's fiscal management and the resilience of New Zealand businesses for "better-than-expected" economic outcome.

And this morning, Robertson announced that $1 billion of the money that was never spent has been put back into his Covid fund to spend on new initiatives.

But Robertson said that money would not be used to pay down its debt – which is currently sitting at 22 per cent of GDP, roughly $71b.

That's up from around 19 per cent before the pandemic.

"If we were to try to return to those pre-Covid levels of debt more quickly, that would undermine our public services, it would undermine our recovery," Robertson told media this morning.

"And the reason we don't have to make those cuts is because we're not trying to get those levels of debt back within a budget cycle or even within this term."

In his speech, he was singing a similar tune: "Any attempt to hasten this [debt repayment] runs the risk of undermining the recovery."

"A turn to austerity measures will simply mean it takes longer for us to rebuild society in pursuit of numerical goals that ignore the real world we are living in."

He said the Government would move to reduce debt and return to surplus – "but not at the expense of our people or the hard-won stability and security from our Covid response."

Speaking to media this morning, Prime Minister Jacinda Ardern said it was important that the Government was spending money within the economy.

This helps ensure "we're getting the type of stimulus and growth in the economy that, in the long term, helps us pay down debt and also helps keep our people employed".

Although she said the Government has had a careful eye on debt, "I do not want a generation, like what we saw in the 1990s, who experienced austerity measures."