The cost of COVID-19
In times of economic crisis a key role of Government is to stimulate the economy. The rise in unemployment is naturally accompanied by the fall in GDP and median incomes. As the economy begins to slow down, it’s important the government gets it moving.
It’s equally as important for governments to remember that financial stimulus should be treated in the same way as any big cash splurge - like an investment. Short term debt for long-term gain.
While short-term cash handouts solve the problem, they are enjoyed ephemerally whilst the economic issues stay as people remain jobless. Long-term cash injections like infrastructure projects employ a significant number of people for years on end.
This means an economic crisis isn’t all bad news. It can be treated as an opportunity to invest towards growing New Zealand’s assets whilst keeping the economy afloat. Today we can address the cracks in our infrastructure to build a healthy, more productive economy for tomorrow.
This brings us to the next step in the equation of New Zealand’s COVID economy. How do we pay back this debt?
If the money we are spending now is targeted to support the business environment and supplement economic growth we will have less of an issue paying it back. Thoughtless spending on the other hand will burden future generations. After all, the mark of a good investment is that it ends up paying for itself.
The economic fallout from the COVID-19 pandemic means debt is inevitable, but we shouldn’t lose sight of basic disciplines around the quality of spending and a focus on results, because the debt eventually has to be paid back, before the next crisis.