Finance Minister Grant Robertson has signalled it’s unlikely the Government will provide “helicopter money” before the election.
Speaking on a Bloomberg webinar, Robertson said handing out universal cash payments was not in his “immediate plan”, although all options remained on the table.
The Opposition has repeatedly attacked the Government for setting $20 billion aside in the May Budget for yet-to-be-determined COVID-19-related spending, arguing it would spend this on pre-election bribes.
However, Robertson reiterated his plan wasn’t to drain this fund, but rather use it to maintain a “buffer” that could be used “as is needed and as is required”.
In question time in Parliament on Tuesday he told National’s Paul Goldsmith, $17.6 billion of the fund remained unallocated.
Altogether, the Government has allocated $62 billion towards the COVID-19 recovery - the equivalent of 20% of gross domestic product (GDP).
Robertson said Treasury estimated $26 billion of this would be spent by June 30. The wage subsidy will account for a large portion of this.
Pressed by Goldsmith on what rules - if any - he has put around spending the unallocated $17.6 billion pre-election, Robertson said, “It is designed to ensure that New Zealand can continue to respond to COVID-19 in the way that we have…”
Goldsmith then asked, “Does he believe higher taxes will be necessary?”
Robertson responded: “The way that New Zealand will get through this is to grow our economy sustainably. The long-term projections show that debt will reduce as we do that.”
Asked by Goldsmith whether he could rule out income tax increases, Robertson didn’t provide an explicit answer, but said each party would take its own tax policy to the election.
Prime Minister Jacinda Ardern on Monday said Labour’s tax policy would look different to the wealth tax put forward by the Greens.
Robertson also repeated a line he’s used in the past, that his focus is on putting money in people’s pockets, not taking it out.
Treasury secretary and chief executive, Caralee McLiesh, in May said the Government had not asked it to model how tax hikes could help cover the cost of the COVID-19 response.
She did however say Treasury was looking at additional ways the Government could stimulate the economy, including through helicopter money.
And while the Reserve Bank on June 26 said the Government’s Budget spending plans were “slightly larger” than it expected, it reiterated: “The main support for the economy in this environment is appropriately being provided through increased fiscal spending. However, monetary policy will continue to provide significant support.”