This week we presented the audited Government accounts for the year to 30 June 2020. These always take a while to be audited and published. But this year, with all that's been happening they cover a time that seems long ago!
When we went into the COVID-19 lockdown back in March the predictions for the remainder of 2020 were dire. As a Government we could see the virus spreading overseas and moved quickly here to protect our people and their jobs.
Now, we can see that the Government’s accounts have held up much better than expected, due to a strong economy and careful management of Government spending. Our levels of debt, surplus and revenue are all far better than forecast at the Budget.
However, it’s not just the Government books that are doing better than expected. The economy as a whole is also performing much better than forecast.
Back in May, economists were predicting that the COVID-19 pandemic would drive unemployment to nearly 10%, with hundreds of thousands of Kiwis out of a job.
However, unemployment came in at just 5.3% last quarter - with 232,000 more people in employment in the September quarter than the Treasury expected in the Budget. This is largely because of the success of the Wage Subsidy Scheme, which kept 1.7 million Kiwis in work through lockdown. It also meant PAYE revenue was better than forecast, as salary and wage income for the period was supported because jobs were protected.
Similarly, retail card spending rose by a record 28% in the September quarter from June, and consumer and business confidence are holding up. This highlights that our approach to go hard and early to eliminate the virus and get the economy back to Level 1 quickly is the right strategy. It also shows that Kiwis are backing tourism at home and travelling domestically.
These better-than-expected results are undoubtedly due to a stronger-than-expected economy and careful management of Government spending. We were in a good economic position going into the crisis which helped, but it was also the decisions made during that time which have meant the economy has not collapsed as was predicted.
We know that COVID-19 is far from over. The resurgences in Europe and North America continue to cause concern. The economic impacts are being felt by many here at home, and we know will be with us for some time to come.
Now, we’re continuing to put in the work to further strengthen our economy and bounce back from COVID-19. That means continuing to invest heavily in infrastructure, including a number of shovel ready infrastructure projects nationwide. And it means continuing to carefully manage the books - to support New Zealand’s economic rebuild and build back better.
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