Labour Leader Chris Hipkins Dismisses Criticism Of Covid-19 Overspending As 'Treasury Spin'
Labour leader Chris Hipkins is dismissing what he calls "Treasury spin" after its analysts said the last government overspent during the Covid-19 pandemic against official advice.
Treasury's 2025 Long Term Insights Briefing, released this week, calculated the total cost of the pandemic at about $66 billion, or roughly 20.4 percent of GDP.
The report said Treasury advocated for more targeted support in late 2020 into 2021 and explicitly warned "against any further stimulus" by Budget 2022.
But responding to questions from RNZ on Friday, Hipkins was unapologetic about his party's economic response to Covid-19.
"We prioritised keeping people alive and keeping people in jobs," he said.
"I'm never going to claim that we got everything perfect... but prioritising jobs and prioritising lives was the right thing to do."
Hipkins claimed other countries also spent up large with the same objectives, but Treasury said New Zealand was near the top of the chart when considering spending as a percentage of GDP.
"If you listen to the Treasury spin, then you're going to get one view," Hipkins told RNZ. "If you speak to other economists, you'll get a different view.
"Our job was to support New Zealanders through the global pandemic, making sure that we saved lives and kept people's jobs, and we were very successful in doing that: one of the lowest death rates in the world, one of the lowest rates of unemployment in the world, and one of the fastest rates of economic growth in the world."
About half of the total Covid-19 response cost was directly tied to the pandemic, such as the wage subsidy scheme, or health initiatives like vaccination, contact tracing and quarantine.
The remainder went to a wide range of initiatives like: "tax changes, training schemes, housing construction, shovel-ready infrastructure projects, increases to welfare benefits, the Small Business Cashflow Scheme, Jobs for Nature, additional public housing places and school lunches".
Treasury said that had "a lagged impact on the economy and proved difficult to unwind in later years".
But Hipkins said Treasury had mischaracterised some of that spending, such as the provision of distance-learning for school students.
"Making sure that kids could keep learning while they were at home during lockdown was an essential Covid-19 expense," Hipkins said.
The report comes during a prolonged economic downturn, with both the government and opposition parties trading blame over its cause.
Finance Minister Nicola Willis was quick on Thursday to wield Treasury's findings as evidence that Labour had been undisciplined in its spending, driving up inflation, and fuelling a cost-of-living crisis.
"Treasury's language is spare and polite, but its conclusions are damning," she said. "New Zealanders are still paying the price of the previous government extending a big-spending approach initially intended for a pandemic response.
"The lesson from Labour's mishandling of the Covid response is that while there are times when governments have to increase spending in response to major events the fiscal guardrails should be restored as soon as possible."
To that, Hipkins scoffed: "By comparison to this government's track record, I'll take our one any day".
Hipkins said Willis should stop blaming others and instead accept the consequences of her government's spending cuts.
"The wreckage that she is leaving in her wake at the moment is obvious for all New Zealanders to see. Unemployment is going up," he said.
"Economic growth has collapsed. Essential services that the public rely on a daily basis are falling into disarray, and this is all on Nicola Willis' watch."
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