The Government is allocating more money towards paying for the Covid-19 response.
It is topping up its Covid-19 Response and Recovery Fund by $7 billion, having already put aside $62 billion for the response since the start of the pandemic.
Finance Minister Grant Robertson said: “The extra funding will be targeted at further economic support as well as building resilience in our health system, supporting the vaccination rollout and border and MIQ provision.”
As at Monday, $2.3 billion had been paid to businesses in Wage Subsidies and Covid-19 Resurgence Support Payments for this outbreak.
Robertson said the Government is using its “greater fiscal headroom” to top up the Covid-19 fund, implying that at this stage he believes it's unlikely the Government will need to borrow more than it already is to fund the additional expenditure.
The Government’s tax take has been higher than expected, as the economy has been performing more strongly than expected.
What’s more, the Government has been borrowing at a faster rate than it’s been spending.
It had $40.3 billion in its Crown Settlement Account with the Reserve Bank at the end of August. It uses this account to deposit surplus funds. The average balance of this account pre-Covid was only $5 billion.
While much of the initial $62 billion set aside for Covid-19 is yet to physically go out the door on infrastructure projects and the like, at least $3 billion is yet to be allocated.