More than $900m allocated for the Covid Response and Recovery Fund was unspent, Minister Grant Robertson said in a pre-Budget speech.
Watch the speech here:
Robertson has given his annual pre-Budget speech to a business audience in Wellington.
"As part of Budget preparation I asked each Minister to look again at the areas of the Covid spending for which they were responsible to see if it was still required or still a priority, and whether underspends could be reprioritised," Robertson said.
"This exercise has yielded around $926 million worth of savings.
"We have committed to only spending what we need to in terms of our response and recovery. I am pleased that we have found these savings, and that they can be returned to the fund to aid our recovery from Covid-19 and targeted to where it is needed the most."
The Budget would outline details of the reprioritisation and how the Covid-19 Response and Recovery Fund was being managed, Robertson said.
Budget 2021 would be a "recovery Budget" and the government would strike a "careful balance" between continuing to invest in the recovery and beginning to reduce debt taken on during the pandemic.
Robertson said the prime minister had tasked him to lead a new implementation unit to ensure the government was tackling its core priorities; housing affordability, climate change and child wellbeing.
Minister of Finance Grant Robertson. Photo: RNZ / Samuel Rillstone
"The Unit will be funded through Budget 2021 and will monitor and support implementation of a small number of critical initiatives, particularly where multiple agencies are involved in the work.
The economy had proved resilient, and though sectors such as tourism, events, international education and hospitality had "done it tough", New Zealand was strongly positioned in terms of unemployment and GDP.
However, Robertson expected the unemployment rate to "bounce around" from its latest figure 4.9 percent. New data is due out this week.
"But for all of this resilience, we are still at a difficult period in the recovery from Covid-19," he said, with devastating impacts of the pandemic all too real in India and other nations around the world.
Most forecasts continued to emphasise the likelihood of continued volatility, and supply chain issues were set to affect the economy for much of the rest of this year and potentially into next year.
"No economy in the world can pretend that Covid's done and we can set the clock again and just carry on as we were," he told the audience.
"It cannot be a simple return to where we were."
There was an opportunity to reset the tourism industry, he said, while on immigration the government had asked the Productivity Commission to look into immigration policy in the long term.
In the short term Immigration Minister Kris Faafoi was seeking ways to open up and get more skilled workers in.
"Immigration has been a critical part of the NZ economy and it will continue to be so," Robertson said.
"What we don't want, however, is to see immigration play out in such a way that it depresses wages, or leads companies to not look towards productivity improvement measures that they could take."
Details of this year's Budget will be revealed on 20 May.
Official figures released last month showed a deficit of $4.5 billion for the eight months ended February - $3.7b less than forecast.
Treasury said the strength of consumer spending, company profits, and the labour market delivered an unexpected $2.2b extra tax revenue.