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New Zealand’s Robertson Warns Not to Expect Foreign Students in 2020

New Zealand’s road to economic recovery is unlikely to include the return of foreign students this year, Finance Minister said.

New Zealand’s Robertson Warns Not to Expect Foreign Students in 2020
Grant Robertson, New Zealand’s finance minister, speaks during an interview in Wellington, New Zealand. (Photographer: Mark Coote/Bloomberg)

New Zealand’s road to economic recovery is unlikely to include the return of foreign students this year, Finance Minister Grant Robertson said.

While the nation’s successful elimination of community transmission of Covid-19 should make it an attractive destination for international students, it will take some time to establish the quarantine facilities needed to let them back in, Robertson said in an interview aired Tuesday for Bloomberg’s Inside Track webinar. Existing quarantine capacity is already being stretched by a surge in the number of New Zealand citizens returning home, he said.

“Growing our capacity for quarantine that we have absolute confidence in requires facilities that will need to be very carefully designed and used,” he said. “Moving toward an international student market for that will take some time.”

New Zealand’s Robertson Warns Not to Expect Foreign Students in 2020

New Zealand faces a slow climb out of recession, not least because the closed border has stalled foreign tourism, which was worth NZ$16 billion ($10 billion) last year and had been the nation’s biggest export earner. While Robertson has spent heavily on wage subsidies and other support, restarting the NZ$5 billion international education industry would be one way of fanning demand.

Students are seen as more tolerant of a two-week quarantine than tourists because they will be in the country for several months to complete their courses. Robertson said it will be possible for the industry to resume when quarantine issues are resolved, but suggestions of a restart later this year are “obviously not going to happen.”

The government has committed NZ$62 billion to counter the impact of the pandemic and help the recovery, with NZ$20 billion of that yet to be allocated. Robertson is being urged to outline some of his intentions ahead of the Sept. 19 general election, particularly as the jobless rate climbs toward 10%.

Helicopter Money

“We believe that the size of the fiscal package that we put up is sufficient to meet our needs as we see them now, but obviously I am working in a very dynamic environment,” he said. “It is important that we make judicious decisions, leave money available for the government to come back in after the election and spend as is required.”

Robertson said the government continued to “keep options on the table as to whether fiscal stimulus is needed beyond what we’ve already done and what is the best timing to deliver that.” Asked whether that might include payments to consumers -- or so-called helicopter money -- he said: “It’s not in our immediate plan to do that, but we continue to keep all our options on the table.”

Robertson’s spending will see net debt rise to 54% of gross domestic product by 2023. He said he is comfortable with debt in the 50-60% range.

“New Zealand’s balance sheet can handle this,” he said. “The economy is in a position to be able to grow strongly again, and those levels of debt are therefore manageable. But we still have to be careful.”

With the prospect of the border being closed for many months, few industries seem capable of replacing the income and jobs created by foreign tourists, even as the government encourages New Zealanders to travel more domestically.

Hopes for the swift establishment of a trans-Tasman bubble -- a safe travel zone with Australia without quarantine requirements, which may have provided a near-term fillip for tourist providers -- have been dashed by the re-emergence of community transmission in some Australian states. The New Zealand government remains committed to the concept, Robertson said.

But there were already concerns that the huge volume of tourists coming to New Zealand was eroding their experience, and the pandemic may have accelerated a transformation that needed to happen anyway, he said.

“There were some people who were arguing that we were reaching the point where volume was starting to affect the value, so I think there was always going to be a re-set in the tourism sector,” Robertson said. “Certainly none of us would have wished for it to happen in the way that it is.”

There also needs to be a transformation in industries like agriculture-technology, the digital sector, advanced manufacturing and clean energy as New Zealand looks to add more value to its exports in the post-Covid era.

“Those industry transformation plans will be rolled out over the next couple of years and they do provide areas for us to be able to move in, but that immediate-term adjustment is a difficult one,” Robertson said.

©2020 Bloomberg L.P.