Wednesday, 16 September 2020

PREFU reveals higher debt and unemployment, lower growth


“The Pre-Election Economic and Fiscal Update has revealed our position has got worse since the Budget,” says ACT Leader David Seymour.

“New forecasts show public debt, unemployment and economic growth will all be worse after the Government and Reserve Bank-funded sugar hit wears off.

“Grant Robertson is pointing to improved forecasts for the next three months, but the forecasts show a game of two halves: the sugar hit and the shutdown.

“The Government’s COVID Response and Recovery Fund pumped $49 billion of borrowed money into the economy from 17 March to 7 September. That’s a rate of $11.7 million, or one Green School, an hour for six months.

“All of this spending has been made possible by the Reserve Bank’s $100 billion Large Scale Asset Purchase program suppressing interest rates, but there is no such thing as a free lunch.

“PREFU shows higher debt and unemployment, and lower economic growth, as compared with May’s Budget.

• Forecast net core Crown debt in 2024 has increased to $201.1 billion and 55.3 percent of GDP
• Annual growth over the forecast period has fallen to an average of 2.8 percent
• In every quarter from Q2 2021, unemployment will be worse than forecast in May
• In every quarter from Q2 2021, economic growth will be worse than forecast in May.

“New Zealand’s historic debt levels demand serious political leadership. Our current fiscal track is totally unsustainable. Party leaders need to front up with plans for getting on top of out-of-control spending and debt.

“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.

“Every other political party is now in a race to spend even more taxpayer money. Every vote for ACT is a vote for lower debt, less tax and a faster recovery. Only ACT has a fully costed plan to get back to surplus and start repaying the debt now.

“When it comes to economic growth and unemployment, PREFU presents a game of two halves. The Government has pumped up the economy in the short-term by spending $11.7 million an hour, but growth and unemployment figures are now worse.

“When the Government says the situation has improved in the short term, it is cherry-picking. In every single quarter Q2 2021, economic growth and unemployment is forecast to be worse than it was in May.

“The Government will blame this on the international outlook, but, as ACT has been saying for some time, Treasury’s alternative scenarios show 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.

“Only a Party Vote for ACT is a vote to get smarter in dealing with 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.

“A Party Vote for ACT is a vote to tackle Covid-19 intelligently.”

ACT’s Covid response plan is here.

ACT’s fully-costed fiscal plan is here.

ACT’s Debt Destroyer is here.