Economic Recovery

Govt puts $14 billion back in its wallet

The Government has shut the lid on the remaining $14 billion of its Covid-19 recovery and relief fund until projects deserving of the money can be found, Marc Daalder reports

Reports of an election slush fund may have been overhyped.

The Government's announcement in May that it would borrow $50 billion as part of a Covid-19 recovery and relief fund, $20 billion of which had yet to be allocated, led to accusations that the coalition had set itself up with a slush fund ahead of the September election.

Now, the Government has announced that the unspent $14 billion remaining in the fund will be "set aside in the event, for example, New Zealand experiences a second wave," Finance Minister Grant Robertson said in a statement.

The decision comes despite numerous sectors still asking for financial aid from the Government and calls from environmentalists that the money be used to fund a green recovery from the economic downturn.

"When we set up the COVID Response and Recovery Fund, the Government was clear that it was to be used for our response to keep New Zealanders safe and for immediate support to help the economic recovery," Robertson said.

"We are sticking to our word on this. We are investing money where it is needed to respond to Covid-19, and we are setting aside a significant sum of money to be used as needed in the future. This is the fiscally and socially responsible thing to do."

Robertson said the fund had $20.2 billion remaining after the May 14 Budget announcements. Further investments, including money for a new benefit for those who lost their jobs due to Covid-19, the wage subsidy extension and cash to fund the maintenance of the managed isolation and quarantine hotels, drained another $3 billion in the intervening months.

The remaining $3.2 billion will be spent in announcements to be made in the coming weeks, Robertson said. Already, $760 million of it has been allocated for three waters reform.

"We are doing everything we can to keep Covid-19 at our border – nobody wants a second wave. The responsible course of action is to make sure we are prepared for the worst – to give confidence to New Zealanders that we will be able to continue to act swiftly and decisively in our ongoing fight against this virus," Roberston said.

"The Fund is not there to be used for any old project in the never-never. It is to provide support and stimulus to recover and rebuild from Covid-19."

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