Cabinet has decided on an unspecified Business Continuity Support package for Covid-19-hit sectors, including wage subsidies for workers, possible working capital support for firms and possible income support for employers and households
Finance Minister Grant Robertson and Prime Minister Jacinda Ardern announced after their weekly Cabinet meeting that the Government had decided on a package of ‘Business Continuity Support’ measures to help small businesses and workers in sectors affected by the global Covid-19 outbreaks.
But they said they had not agreed on the specifics of the policies or the size of the package. That would have to wait until next week.
Robertson said Cabinet agreed on the outline of the package, which included a targeted wage subsidy for workers in the most adversely affected areas, possibly working capital support for businesses facing immediate cash-flow problems, possible temporary relief from IRD on tax payments by businesses, and the potential for more direct income support for employers and vulnerable households.
He said final decisions had yet to be made and would be considered by the special Covid-19 sub-committee on Wednesday, with the details expected to be released next week.
Robertson would not give a potential scale for the package.
The Finance Minister met with bank CEOs and the Reserve Bank Governor Adrian Orr earlier on Monday to discuss the situation and the economic outlook. He said he would give a speech on Thursday in Wellington with more detail.
“It is quite clear that global economic disruption caused by Covid-19 is going to have a serious impact on the New Zealand economy, but we are well placed to respond,” Robertson said.
“We have been running surpluses, our net debt is at 19.5 percent of GDP — well below what we inherited and well below other countries. On top of the work we’re already doing, I’m confident this package will help New Zealanders through this situation,” he said.
‘It’s different this time’
“The feedback I’ve received from industry representatives and the advice we’re getting from officials is that the rapidly changing situation we face is different from others that the economy has experienced in recent years,” Robertson said.
“It was clear in previous situations (such as the earthquakes) which businesses were impacted, where they were, why and how. It is different now. We are seeing different businesses in the same industries in the same regions impacted differently. This requires a tailor-made response. The fact that we haven’t seen this situation before means it is important to get the details right, in particular the criteria for support and the criteria we will use,” he said.
Cabinet had directed officials to work on longer term measures that may be required to support the economy, businesses and workers, Robertson said.
“While we are planning for this situation, we are not predicting it, and it is responsible to do that planning now,” he said.
“All of this comes on top of our already expansionary fiscal policy and the work we have done with the New Zealand Upgrade Programme to spend $12 billion on infrastructure.”
‘More urgency required’
Opposition Finance Spokesman Paul Goldsmith said more urgency was required and the announcement of an unspecified package was “startlingly flat footed”.
“The Government say they’re trying to get ahead of this but they’re getting bogged down by detail,” he said.
“Affected businesses are struggling and need tangible support now. They now have to wait another week before they see any sort of relief package.”
“Businesses need certainty and relief in the short term followed by broader economy-wide changes, like tax relief, so the economy can quickly bounce back from the downturn.”
