Finance Minister Grant Robertson and the Director General of Health, Dr Ashley Bloomfield, on their way to yesterday's Covid media briefing

The Government is proposing to reduce the Alert Level Three education bubble size to ten which would mean most educational facilities would not be able to re-open until the country gets to Level Two.

POLITIK understand education leaders have been briefed that this is likely and have been asked to “plan accordingly”.

The country is currently at Alert Level Four which means, all early learning services, schools, kura and tertiary education facilities must close. 

Students must learn from home.

Under Alert Level Three classes were previously limited to 20 people, but the latest proposal will halve that.

It is just one of a series of sobering pieces of news that underline how this lockdown is different to last year.

And if last year the impression was that the Government had limitless funding available to finance relief measures like the wage subsidy, questioning at the Finance and Expenditure Committee yesterday indicated that funding might be finite.

What is clear is the Finance Minister Grant Robertson is having to juggle the funding that is available to keep paying the wage subsidy.

In part that is because the Government spent some of the $50 billion Covid Response Fund last year on items that were only peripherally associated directly with Covid.

National MP Michael Woodhouse at the Finance and Expenditure Committee yesterday pointed out that some of this money had been spent on “additional funding for libraries, animal wellbeing, horticultural export development, Radio New Zealand baseline funding, renewable energy projects.”

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“I don’t think with the longest bow being drawn, anybody could say that those are related to Covid response and recovery,” he said.

Woodhouse asked Robertson if he was going to come back to Parliament and ask for money to spend presumably to make up for the money that he claimed had been diverted to other uses.

But Robertson, a past master at political debate, was able to evade the question.

Because Woodhouse asked if he was going to need more money, he was able to dodge the question by replying it would not be unusual if there were to be a second Imprest Supply Bill.

There is a difference between an Imprest Supply Bill (which simply gives Parliament authority to spend particular money) and an Appropriation Bill which is the legislation that sets budgets for the Government.

But ultimately, Robertson did offer an answer.

“If you’re getting at the question of do we have the money to pay out the wage subsidy scheme, the answer to your question is yes, we have sufficient money to do that for some considerable time before we would even need to be going back to parliament to appropriate more money,” he said.

And he assured the Committee that if he did need extra funding, he would not cut into core services to get it.

However, he didn’t rule out having another look at other areas of Government expenditure.

“What I’m not going to do is tap into core services,” he said.

“As ever in the Government, we will look carefully at every item of expenditure we have.

“We’ve already gone back through the Covid (Response)Fund and reprioritised over a billion dollars, and we’ll continue to do that.

“We will make sure the supports that New Zealanders need are available because that’s what worked.

“The economy rebounded and has actually been working at a level better than most countries in the world.”

Robertson said that some money that had been appropriated from the Covid response fund had not been spent.

“In addition to the money that we set aside, which was about five billion dollars at the budget, we also have within the fund, underspends from other areas,” he said.

“So when we talk about the five billion, the remainder has been allocated but not necessarily spent.

“And a good example of that is the small business cash flow scheme where based on where we are now and likely uptake; there’s another two billion dollars there that hasn’t actually been used within the Covid Recovery and Response Fund.

“And then obviously, the economy is going significantly better than had been expected.

“And so fiscal headroom group is there.

“So while you can look at that five or so billion dollar that was put aside for a resurgence, the total amount of money available in the fund is higher.”

The unspoken subtext in the whole debate at the Select Committee was that such is the current uncertainty about the current Covid outbreak that this lockdown might be longer than those last year.

In that case, the funding demands on the Government’s Covid Fund could be substantial.

An hour and a half later, Robertson stood in for the Prime Minister at the daily Covid media briefing, and he was able to give some detail on Treasury’s projections.

“The estimate that we have from the Treasury is using the uptake of the previous wage subsidy scheme; we’re talking about a two billion dollar level for those fortnightly lump sum payments,” he said.

“But it’s likely to be less than that because, as I said before, those larger businesses are not at this stage applying for them.

“But I want to stress the five billion dollars is merely the amount that we’d set aside for resurgence.

“There are underspends and other parts of the fund that mean we have significant resources available.”

And then he said that not only did the Government have more money from taxation available but that Government debt was running lower than projected.

“So there is no shortage of funding here,” he said.

“The New Zealand economy has been incredibly resilient.

“That’s a result of the strong public health approach that we’ve taken, and we can reinforce that approach by continuing to obey those Alert level Four rules and also continue to support people to be able to stay attached to their jobs.”

Despite the Minister’s glossy optimism, it was hard not to conclude that this outbreak and lockdown are more challenging than anything we saw last year.