Covid 19 Delta outbreak: Finance Minister Grant Robertson faces Delta economic blow

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Finance Minister Grant Robertson told the finance and spending committee the economy is well positioned to deal with the Delta outbreak and lockdowns.

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Finance Minister Grant Robertson said an extended period at Alert Level 4 could trigger more support, including relief on residential or commercial rents or mortgage repayment holidays – but they were not necessary to this stage.

Robertson is the first in a series of ministers who are expected to face the opposition and other MPs in virtual select committees this week after the Prime Minister’s decision to suspend parliament.

Robertson told the finance and spending committee that the economy is well positioned, with an unemployment rate of 4% and lower than expected net debt.

He said 127,935 companies had already approved applications for wage subsidies, which had already paid companies $ 484.4 million.

Only one company with more than 500 full-time employees had applied for the wage subsidy, he said, indicating that many large companies were comfortable with their current financial situation.

“We have more than enough” to support New Zealanders during the lockdown, he said.

Budget 2021 left $ 5 billion in Covid’s response and recovery fund, and Robertson said there was likely an additional $ 2 billion due to under-spending of allocated funds, as with the small business treasury program.

There was also an additional $ 400 million left in the business finance guarantee program, he said, and “smaller cash funds in other parts of the Covid response fund as well.”

Asked about support for renters and students, Robertson said support from the Department of Social Development was available and noted the increase in student allowances from the 2021 budget.

The government had no plans for a rent freeze at this point, which happened for last year’s foreclosure, but “we will continue to monitor where we end up.”

He noted the changes the government had already made, including that only one rent increase can occur in 12 months.

Last year the government offered other help as well, including a mortgage repayment holiday and an extension of the winter energy payment, but Robertson said “at the moment we don’t think these things are necessary “.

Asked how government policy contributed to the explosion in house prices last year, Treasury Director General Caralee McLiesh said prices had not fallen as much as the Treasury had. expected in May, but are expected to slow further over time.

McLiesh told the committee that more construction, low population growth, RMA reforms and tax changes would all help house price growth “subside in the coming months.”

Robertson said there had been a significant rebound in economic activity after last year’s lockdown, which would likely happen again this time.

He noted Westpac’s forecast of a 6 percent drop in GDP in the September quarter of last year, followed by 9 percent growth in the December quarter.

This showed that the request had been postponed until after the lockdown, rather than disappearing altogether, he said.

“This is the experience we saw last time around. It shows New Zealand businesses are relatively resilient and adaptable, more now than before Covid.”

Law leader David Seymour asked Robertson about Covid fund spending of $ 62 billion, including $ 4 billion for housing and $ 500 million for school meals, and asked if further use of the funds could result in reduced spending in other areas.

“What I’m not going to do is cut basic services,” said Robertson. “We will make sure that the supports New Zealanders need are available.”

Asked about commercial rent support, Robertson said resurgence support payments – which can be as high as $ 21,500 – can be used for anything, including fixed costs such as rent.

Many commercial leases also included the “unable to occupy” clause in the contract, but Robertson admitted some did not, and the government could step in if Level 4 was maintained for an “extended period.”

“We will continue to examine our options in this regard.”

Those options included legislation to suspend rent payments or the facilitation of disagreements – although Robertson stressed the government was not leaning in any particular direction.

He urged businesses struggling with interim tax or GST payments to contact the IRD, as the IRD had discretion over payments and penalties.

Earlier this morning, Robertson announced that businesses can now apply for resurgence support payments during the lockdown: a one-time payment to help cover costs such as rent and fixed costs.

It will be available until all of New Zealand has returned to Alert Level 1 for at least a month.

It is available to businesses, organizations, and the self-employed who have at least a 30 percent drop in their earnings over a week due to foreclosure. It is a base rate of $ 1,500 per company plus $ 400 per employee – up to a maximum of $ 21,500.

The separate wage subsidy program also kicked into action shortly after the first lockdown began last Tuesday for those who expected incomes to drop at least 40%.

Both programs were developed during shutdowns last year.

However, yesterday Robertson told the Herald that there were no plans yet to revive measures to help households, such as freezes on rent increases or programs to defer mortgage payments.

Yesterday, Prime Minister Jacinda Ardern argued that having ministers before select committees was a suitable alternative during the suspension of Parliament, and would mean that more ministers would show up if there were only a single committee.

However, Collins and law leader David Seymour demanded more, saying leaving it to the committees to select meant the Prime Minister herself could not be questioned.

Seymour and Collins were also concerned about the government majority on select committees, saying it meant government MPs could take a long time with silly questions and easily block attempts to call others to the committee.

Covid

Seymour called for the reconvening of the special epidemic response committee that was set up last year and chaired by then-opposition leader Simon Bridges as Parliament’s deputy.

However, Parliament must meet to allow this committee to be re-established, albeit only in a very limited number.


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