Press release 21 May 2020
After doing so well managing the pandemic the Government has said it will borrow the $50 billion it needs for the Covid-19 package. It could however instruct the Reserve Bank to issue the money directly, cutting out the lenders as it did during the Great Depression in the 1930s.
At that time, when we were in a deeper financial hole than we are now, millions of pounds were injected into the economy by the Reserve Bank to build thousands of state houses. This kickstarted the economy and laid the foundation for the welfare state. We emerged from the Depression sooner and in better shape than most other nations.
With our latest budget, the opposite will happen. Borrowing from the commercial banks to fund the package will take decades to pay down and the interest and repayments will syphon off valuable tax dollars from social spending.
Covid-19 is not the only crisis we face. Our mental health system is in disarray, child poverty has yet to be addressed and the unemployment benefit may not be enough to support families through the recession. It is hard to understand how a Labour-led government would knowingly consign Kiwis to very hard times when a proven alternative is so close at hand.
Add to that the $30 billion stimulus provided to the financial markets and it seems that the government is favouring the banks and other financial institutions over Kiwis who are struggling to get by.
Our Prime Minister continues to tell us to be kind to each other but borrowing from the banks to pay for the financial package will cause harm and financial distress to a lot of Kiwis. It will also prolong the recession and will needlessly burden the current and next generation who will carry this debt.
About Positive Money
Positive Money NZ is an independent, non-profit group advocating for monetary reform in New Zealand. Our patron is Bryan Gould and we are part of a global movement of organisations, the International Movement for Monetary Reform, campaigning to change the way money is created so that money serves society.