Covid economic success story not quite as shiny as it seems

The Government’s Covid economic success story might not be a sparkly for some as it seems for others.

Data released by the Government shows Māori and Pasifika have been the big losers since the Covid pandemic struck.

Both the Prime Minister Jacinda Adern and Finance Minister Grant Robertson are hinting Māori and Pasifika may be a core focus in this year’s Budget.

This year’s Budget Policy Statement, for instance, includes lifting Māori and Pacific incomes, skills and opportunities. Combatting the impacts of COVID-19 is one of the five core “wellbeing” priorities.

Other “wellbeing” priorities include:

Just Transition – Supporting the transition to a climate-resilient, sustainable and low-emissions economy while building back from COVID-19.

Future of Work – Enabling all New Zealanders and New Zealand businesses to benefit from new technologies and lift productivity and wages through innovation, and support those most affected by COVID-19, including women and young people, into employment.

Child Wellbeing – Reducing child poverty and improving child wellbeing.

Physical and Mental Wellbeing – Supporting improved health outcomes for all New Zealanders and keeping COVID-19 out of our communities.

Housing could impact on several of the wellbeing objectives, Adern and Robertson say.

To date neither Robertson nor Ardern have shared any proposals to deal with the housing crisis and the immediate challenges facing the Māori and Pasifika communities.

While Robertson is proud of December’s low unemployment figures, and last year’s Wage Subsidy scheme, which grew to support nearly 1.8 million jobs for New Zealanders, a Treasury study sees the success story differently.

It analysed incomes of all employees in March 2020, and how they had changed for the same people by August.

Māori and Pacific workers were more likely to have dropped into a low-income bracket (of between $200 and $300 per week). They increased by 85 percent and 69 percent respectively, while Europeans in the low-income bracket increased by 27 percent,” Treasury found.

Despite this data, the Budget Policy statement reports that researchers at Victoria University of Wellington found no overall changes in the wellbeing of families, levels of conflict or support among couples, or levels of parental satisfaction during the COVID-19 crisis.

The big issue in the statement, however, is the housing crisis.

The Reserve Bank yesterday reinstated Loan to Value Ratios back to where they were before the Covid crisis in a bid to try and restrain investor money overheating the market.

From May 1 investors will need a 40 per cent deposit.

Nevertheless, the requirement for a 20 per cent deposit for a first home buyer will be another obstacle in the way of getting a house.

The government is currently looking at ways to tilt the playing field towards first-time buyers, Adern says.

The Government also has a $400 million Progressive Home Ownership Fund which is intended to help between 1,500 and 4,000 families into home ownership – a program Ardern says could be scaled up.


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