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Source: New Zealand Parliament – Hansard



Question No. 1—Finance

1. Dr DUNCAN WEBB (Labour—Christchurch Central) to the Minister of Finance: What do the latest reports on New Zealand’s GDP show about the strength of the New Zealand economy, and how does this support the response to the Delta COVID outbreak?

Hon GRANT ROBERTSON (Minister of Finance): Statistics New Zealand reported last week that GDP rose by 2.8 percent for the June 2021 quarter—the strongest quarterly growth since 1999, with the exception of the one-off bounce back in September 2020, and a significantly better result than even the most optimistic commentators had forecast. The economy in the June 2021 quarter was 4.3 percent above where it was in the pre-COVD December 2019 quarter. What this gives us room for is our quick and decisive response to the current outbreak, including providing cash flow and confidence through schemes such as the wage subsidy, which also in turn help the economy to rebound quickly again. We do know, however, that the impact of this outbreak has been uneven, and we are continuing to work with affected sectors to support them in these challenging times.

Dr Duncan Webb: How widespread was the growth in the June quarter?

Hon GRANT ROBERTSON: The expansion was broad-based, as our approach meant households and businesses have the confidence to move about and operate more freely than in many other countries during this period. The primary sector grew 5 percent in the June quarter compared with the March quarter, led by fishing and agriculture. The goods-producing industry was up by 1.3 percent, with solid activity in construction and manufacturing. The services sector, which makes up two-thirds of the economy, expanded by 2.8 percent in the quarter, with retail, accommodation, and restaurants benefiting from New Zealanders spending more time at the shops, eating out, and on holiday. Business confidence in the economy was also reflected in investment levels, which remained high and above pre-COVID levels. The ANZ noted that this broad momentum is what we want to see to be confident that the economy can keep going. Nevertheless, we know that some sectors and regions are doing it tough, and we will continue to monitor and assess that situation.

Dr Duncan Webb: How is this growth in the economy supporting the response to the current Delta COVID-19 outbreak?

Hon GRANT ROBERTSON: Economic growth has been reflected in the Government’s books, which shows that revenue is well ahead of forecasts, along with lower deficits and debt than had been forecast. This gives the Government greater fiscal headroom to combat the outbreak, which we have done by topping up the COVID-19 Response and Recovery Fund by an extra $7 billion. There is also an additional $3 billion available to spend from money previously allocated in the fund that had not been spent. We have already boosted support to business in this lockdown and the extra funding will be targeted at further economic support, as well as building further resilience in our health system and supporting initiatives such as the vaccination roll-out and border and managed isolation and quarantine provision.