Wednesday, 4 November 2020

Luck on Covid-19, massive stimulus can’t prevent jobless spike


“A Covid-19 response that relied on luck and massive fiscal and monetary stimulus haven’t prevented a big rise in unemployment,” says ACT Leader David Seymour.

“We now have 37,000 more unemployed people, an increase of 32.5 percent. That’s the largest quarterly rise since 1986 and is larger than the increase during the GFC. 151,000 is the highest number of unemployed people in eight years.

“We got lucky on Covid-19. Our success relied on the fact that New Zealand is a young, sparsely-populated island nation with a massive natural moat.

“The Government and the Reserve Bank have attempted to prop up the economy with massive fiscal and monetary stimulus.

“The Government’s COVID Response and Recovery Fund pumped $49 billion of borrowed money into the economy at a rate of $11.7 million an hour for six months.

“Our unemployment numbers will only get worse as the stimulus wears off.

“PREFU showed that the Government had pumped up the economy in the short-term by spending $11.7 million an hour, but growth and unemployment figures are set to get much worse.

“We need to stop the out-of-control spending, get on top of the debt, and get smarter on Covid-19.

“New Zealand’s historic debt levels demand serious political leadership. Our current fiscal track is totally unsustainable.

“It’s not good enough for us to kick the can down the road. We need an honest conversation now about our out-of-control spending and debt.

“Only ACT has a fully costed plan for lower debt, less tax and a faster recovery.

“Treasury’s alternative scenarios in PREFU showed that if we have a smarter health response to Covid-19, we can have higher growth, lower unemployment and less debt. Our roadmap to recovery ultimately depends how long we have restrictions in place.

“The new government must get smarter on Covid-19. Our plan is:

  • New Zealand Epidemic Response Unit: Based on Taiwan’s Central Epidemic Command Centre
  • Government as referee, not player: Allow alternative facilities for safe, electronically-monitored isolation, with strict punishment for rule-breakers
  • Risk-weighted: Treat different countries and travellers with different levels of caution
  • Technology-driven: Such as the Covid Card, ëlarm, rapid tests, temperature checks and thermal cameras
  • Continuous improvement: Constantly compare ourselves with the best and seek to strengthen our resistance.