Finance Minister Grant Robertson is being urged to spend the Government's COVID-19 fund on strictly coronavirus-related issues as it gets a $7 billion topup.
New Zealand's 2.8 percent quarterly economic growth is outperforming many of the countries we compare ourselves against, despite the COVID-19 pandemic, which has given the Government confidence to borrow more.
"The stronger economy has been reflected in the Government's books, with lower deficits and debt position than had been predicted, and well below that of other nations that we compare ourselves against," Robertson said on Thursday.
"Ministers have decided to use the greater fiscal headroom to top up the COVID-19 Response and Recovery Fund by an extra $7 billion."
Robertson said there is about $2 billion left in the COVID fund. There is also an additional $3 billion available from money previously allocated in the fund that has not been spent.
The $7 billion topup comes a week after Robertson was granted authority by Parliament to spend up to $41 billion over and above Budget 2021 as a contingency for "unexpected expenditure".
National and ACT were the only parties in Parliament to oppose it, because the additional spending would add to the Government's current debt pile of more than $100 billion.
"They are going to increase net Government debt by $140 billion over four years," ACT leader David Seymour said in Parliament.
The Opposition parties have been critical of Robertson for spending around $12 billion from the $50 billion COVID fund - established to pay for things related to the pandemic such as the wage subsidy and vaccinations - on projects with tenuous or no links to COVID-19.
"We know COVID-19 has created the need to support those affected by the various lockdowns," National MP Michael Woodhouse said.
"But funding for things like cameras on fishing boats and Papua New Guinea tattoo practice and revival should be put through normal Budget scrutiny, not slapped on the COVID fund tab."
Now that the COVID fund has been topped up with $7 billion, Seymour and Woodhouse are urging Robertson to only spend the money on coronavirus-related issues.
"COVID related spending would include things like the wage subsidy and Resurgence Payment. It would not include things like cameras on fishing boats, the Te Papa Spirit Collection and the ballet," Seymour said.
"This money comes from taxpayers and it needs to be paid back. Businesses who have been forced to shut and are operating under restricted conditions are crying out for support. It's time for Robertson to get his priorities straight."
Woodhouse said Robertson should be "responsible" with his greater fiscal headroom due to lower deficits and lower debt than forecast, as well as positive GDP growth.
"But, rather than doing what a responsible government would do and bank those gains as a buffer against further shocks, the Government would rather leave more debt for younger generations to repay than is necessary."
Robertson seems confident the economy will continue to be strong despite the uncertainty and disruption caused by the COVID-19 pandemic.
"Excluding the September 2020 quarter, this is the strongest quarterly growth that we have seen since 1999," Robertson said, highlighting "buoyant" household spending, a booming construction sector and promising investment levels.
"This bodes well as we come out of lockdown. It shows our science and health-led plan has continued to work for the economy."
New Zealand's 2.8 percent quarterly growth was better than almost all of our close allies, except for the UK which grew by more, up 4.8 percent, reversing recent falls in activity.
Australia rose by 0.7 percent, the United States by 1.6 percent and Japan by 0.5 percent, while Canada declined by 0.3 percent.
The latest Delta outbreak in New Zealand will deal a blow to the economy, especially with Auckland under strict lockdown for more than a month. But if all goes to plan and Delta is stamped out, the more prosperous alert level 1 will ease the blow.
And with vaccinations ramping up, the Government is looking at ways to slowly open up to the world again from next year.
