New Zealanders want payments from Government
Tuesday, 12 May 2020
More than two-thirds of New Zealanders think a lump sum cash payment paid to everyone will be an effective way of stimulating the economy – but economists are divided about whether such a proposal will, or should, appear in this week’s Budget.
The idea of a “helicopter payment” – a lump sum of money paid out to all New Zealanders to encourage them to spend – has been mooted as the country ponders its recovery from Covid-19 disruption.
Horizon research shows there is support for the idea – 67 per cent of those surveyed wanted a lump sum payment and only 23 per cent thought such a plan would not be effective.
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Ten per cent were unsure.
Most said they would spend the money on food and groceries, utility bills and other household living expenses.
Almost a quarter said they would save the money and another 17 per cent said they would spend at least some of it on taking a holiday in New Zealand.
Kerr said the Government was likely to spend $50 billion to $60b in responding to Covid-19 and a helicopter payment could be offered for between $2b and $6b depending on how generous it was. “It’s all about the psychological impact, the real silver lining effect is what I think they should try to achieve here.”
Cash payments were more likely to be spent than tax rebates or GST refunds he said.
Economist Tony Alexander said people like the idea of “seemingly free money”.
“But the intention of any government in addressing an economic crisis is not to make people feel happy, but to enact policies which will limit the decline in a cost-effective manner and set the scene for recovery to be driven by private enterprise on the other side.
'If it is retailers that the government wants to help then they would do better directly targeting assistance to them – perhaps via rent assistance – rather than giving money to people who may not spend it. If Government wants to assist those made unemployed by the recession then that is where money again needs to go rather than the other near 3.7 million people aged over 15 not unemployed.”
Economist Shamubeel Eaqub said the while “everyone wants free money”, Government had passed the stage where it was appropriate to distribute money out widely into the economy, through the wage subsidy.
Now it needed to focus on where it could have the most impact, he said, to preserve as many jobs and businesses as possible.
Tax increases were coming to repay the Government spending, he said, and it was likely that those who could would increase their savings if they were worried about their jobs.
Kerr said how targeted the payment needed to be would be up to the Government to work out.
It could be limited to people who has lost a job or earnt less than $100,000 a year, he said.