The Finance Minister has unveiled the Government's next phase for dealing with the economic impact of coronavirus, including a macroeconomic package that "could include tax and welfare changes".
Next week, details of the Government's 'Business Continuity Package' will be announced, which will include a wage subsidy scheme and training and redeployment options for affected workers.
Beyond that, the Government is working on the next phase of economic support for COVID-19-affected businesses should the economic impact worsen causing a sustained global downturn.
Finance Minister Grant Robertson said on Thursday he has instructed officials to develop "longer-term macroeconomic measures that may be required to support the economy, businesses and workers" in that situation.
Robertson, speaking to the Wellington Chamber of Commerce, said such measures "could include tax and welfare changes that support incomes and consumption, and help businesses stay afloat".
Wage subsidies have been used by the Government before, such as in 2011 following the Christchurch earthquake when then-PM John Key announced a subsidy for some employers.
The National-led Government at the time also handed out job loss cover, specifically $400 a week in hand for a period of six weeks paid to fulltime employees and $240 for part-time workers.
Speaking to Magic Talk, Robertson said he's told Health Minister Dr David Clark that "resources are not an issue here - we just need to do what we need to do to keep New Zealanders safe".
The Finance Minister said tax cuts are not off the table, but he said it's the Government's belief that targeted solutions is what's required to help specific industries struggling, such as tourism which received an $11 million boost in February.
Robertson said Treasury has not yet informed him of a projected recession, despite BNZ projecting it earlier this week. He said Treasury will publish their forward projections at the time of Budget 2020 on 14 May.
"We've got to remember what a recession actually is: it's a technical term for two consecutive quarters of negative growth," Robertson told Magic Talk.
"Growth will be hard to come by in the first half of the year in New Zealand because of the big hits we've seen on the tourism industry, international education and forestry and so on.
"We will wait and see, it's not the advice I'm getting now, but my primary economic focus at the moment is on making sure we get the help and support to workers and businesses of New Zealand and that we continue our strong public health response."
What happens beyond that?
Robertson said officials are also working on a 'recovery phase' for the economy, which includes plans to re-engage with China, after Chinese arrivals between 1 February and 9 March were down 80 percent compared to the same period in 2019.
"The final shape of this package will obviously depend on the ultimate economic shock we feel from COVID-19. It will include measures to help us diversify our export and import markets - one of many lessons we will no doubt learn from all this."
It comes as Australian Prime Minister Scott Morrison announced a $17.6 billion (NZ$18.2 billion) coronavirus stimulus package, with more than six million Australians set to receive a one-off payment of AU$750 (NZ$775).
Robertson said New Zealand is in a different position than Australia, having already announced a $12 billion infrastructure package.
"As our friends in Australia look to boost infrastructure, we have already got ahead of the curve with the announcement of our $12 billion investment in infrastructure through the New Zealand Upgrade Programme."
The Finance Minister also compared New Zealand's 4 percent unemployment rate to Australia's 5.3 percent, and commented on New Zealand's debit position being "significantly lower than other countries".
Robertson is visiting Canberra on Friday to hold talks with his Australian counterpart Josh Frydenberg to discuss the actions both Governments are taking on the economic impacts of COVID-19.
He also pushed back against calls to delay the scheduled April minimum wage boost, despite ANZ Bank recommending it, telling Magic Talk: "What's needed right now are targeted responses that go into the industries that need support."
Robertson did acknowledge the global impact, however, and how factors such as the hospitality and tourism industries drying up "are all starting to flow through to economic confidence".
"Global stock markets are well down on the start of the year and remain volatile... So, that is a brief summary of where we are at. Of course this situation is rapidly evolving and we are constantly seeing new developments."
Robertson wrapped up with a warning: "Scaremongering and knee jerk reactions are not what we need right now."
