An economist says money can't be thrown around "like confetti" in this year's Budget if New Zealand's economy is to successfully recover from the COVID-19 pandemic.
Finance Minister Grant Robertson said last week that priorities announced in December will be "put on ice" as he prepares to announce the Government's annual budget on Thursday.
COVID-19 has turned the world economy on its head, with country after country going into lockdown in a bid to curb the disease. As of Monday morning (NZ time), it had killed more than 288,000 people including 21 Kiwis.
New Zealand's economy has taken a massive hit due to our lockdown and closed borders. Businesses can open on Thursday when New Zealand moves to alert level 2 and several restrictions are eased.
"The response needs to be microeconomic-based, not just built around a massive spend up," said economist Cameron Bagrie. "The temptation is going to be 'think big' as opposed to small and throw money around like confetti.
"I'm going to be looking at whether we can turbo-charge what I call those 'small things'. Small things are things that we overlook but they're pretty critical."
So far, the Government has spent over $10 billion to kickstart the economy. Ahead of Thursday's Budget announcement, Bagrie told the Epidemic Response Committee New Zealand will likely take a $3b hit every month - even in alert level one.
"We've been told borders are going to be up for a long time, so $3b month after month is going to add up," he said on Wednesday.
"It's [the Budget] going to be critical in regard to detailing a plan or a bit of hope going forward. Hope is not a strategy but New Zealand is going to need some.
"The focus will be on health and extending the support packages but the numbers are going to be absolutely terrible; deficits in excess of $30b next year, Government debt issuance of more than $40b next year. I think net Government debt is going to be in excess of $180b at the end of the projection period."
Another sector earmarked for support in the Budget is the dwindling tourism industry - effectively non-existent in an age of closed borders. Tourism Minister Kelvin Davis confirmed on Tuesday there would be a "response and recovery package".
Tourism operators have called for a South Pacific "bubble" instead of them having to rely on the domestic market - some of which will be possible under alert level 2. Prime Ministers Jacinda Ardern and Australia's Scott Morrison have discussed a trans-Tasman bubble - work for which is now underway.
Bagrie said shifting the school holiday periods for different regions to ensure there's not just a peak in the July break could be an option.
"Don't just think big - think small to stand tall."
He said he hopes the Budget shows New Zealand is prepared to make some "hard decisions".
"That includes spending being reprioritised, and some sacred cows need to be put on the table," Bagrie said, reiterating a point he made in an interview with The AM Show on Monday. One of those sacred cows was the retirement age going up, he said.
"KiwiBuild - that money needs [to be] redirected into Housing New Zealand. I want to see signs it will be a pragmatic, economic plan as opposed to an ideology-driven one."
And while New Zealand is aspiring to get to alert level one, Bagrie said further challenges can't be "sugar-coated".
"Technically, we're turning the corner and things are looking better - one of the big things I'm looking at is, 'how quickly is it going to be or take the economy to get back to levels we experienced pre-COVID?' And I think the answer to that is 'an incredibly long time'."
