WATCH: Bernard Hickey talks with Kiwibank chief economist Jarrod Kerr about an idea for a one-off $1,500 cash payment from the Government to all New Zealanders to kickstart activity as the economy opens up after the Covid-19 lockdown.

Bernard Hickey talks to Jarrod Kerr in their ‘Zoom out for lunch’ video about Jarrod’s idea for a ‘breakthrough bonus’ payment of up to $1,500 per person to ignite economic growth as New Zealanders emerge from the Covid-19 lockdown.

“Bonus cash, tax breaks or rebates to taxpayers would offer a silver lining after lockdown,” Kerr wrote in a research note issued on Thursday afternoon.

“Embattled household balance sheets could be partially reflated, and our propensity to consume money for nothing would support retail and domestic tourism,” he wrote.

It would need to be broad to be politically acceptable, and could be targeted at lower income earners in particular, Kerr said.

“This is a silver lining, not a silver bullet. This is a fire starter, not a fuel cell. This is to kickstart momentum after purposely stalling activity. This is some relief after inflicting stress on many families.”

He estimated a cost of up to $5.8 billion if it was made to all taxpayers, with a further $0.5 billion if each child also received a $500 payment.

Bernard and Jarrod look at the pros and cons of such a direct one-off payment funded by borrowing, with much of it funded through government bond buying by the Reserve Bank.

Then then bring in fixed income manager at Fisher Funds, David McLeish, to talk about the risks and the need of such a direct payment, and the continuum of interventions ranging from Quantitative Easing right through Modern Monetary Theory to outright ‘helicopter money’ printing by the Reserve Bank.

They talk through the risks of inflation and that foreign investors may lose confidence and push the currency sharply lower.

This is part of a daily ‘Bernard and Jarrod Zoom out for Lunch’ webinar series during the lockdown. 

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