Finance Minister Grant Robertson has hinted that the Government may offer help to a group of "very large" New Zealand companies, as he unveiled a $6.25 billion scheme to guarantee loans to small and medium sized businesses.
Yesterday Robertson revealed that the Government would underwrite loans of up to $500,000 for businesses with turnover of between $250,000 and $80 million a year.
"The scheme leverages the Crown's financial strength, allowing banks to lend to ease the financial stress on solvent firms affected by the Covid-19 pandemic," Robertson said, adding that the scheme could change.
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"We have committed to monitoring this scheme and we are prepared to evolve this scheme over time if necessary."
The loans, on a term of no more than three years, would be at usual commercial rates, Robertson said, with the banks determining whether to extend the credit.
"These are significant moves that will help a range of businesses," he said, adding that the revenue cap would preclude very large companies from taking part.
But Robertson hinted that rescue deals for companies which were too large to fit into his loan guarantee scheme could be coming.
"We are continuing to work one on one with very large businesses to see what might be possible there as well," Robertson told reporters in Parliament, without giving details.
On Monday Robertson said Ministers "certainly are aware that some large companies are concerned" about their financial position.
Treasury, the Reserve Bank and the Government "continue to work on further tailor-made support for larger, more complex businesses", Robertson said.
On Friday the Government announced it had promised a loan of up to $900m to Air New Zealand, in which it owns a 52 per cent stake, with Robertson acknowledging there was a risk the company may become insolvent without help.
The sudden plunge in visitor numbers as a result of the Government closing the borders to international travellers has also had an immediate impact on New Zealand's major airports.
Both Auckland and Wellington Airports have warned Covid-19 would have major impacts on their finances, with both deferring capital spending, while Auckland has suspended dividend payments.
Tuesday was the second day in a row when the Government escalated its response to the economic impact of Covid-19, following Monday's announcement that it was extending a wage subsidy scheme to almost all workers affected by the lockdown, adding billions to the cost of the scheme.
"We are in extraordinary times here, and we need to make sure that this lending is getting to the people who need it," Robertson said.
While New Zealand's scheme is broadly similar to that announced in Australia on Sunday, in which Australian taxpayers share equally with banks in an A$20b ($20.4b) scheme, New Zealand taxpayers will shoulder 80 per cent of the risk.
Robertson said he was comfortable with the higher level of risk.
"We felt on the balance of the discussions that a higher level of Crown guarantee would encourage the banks to lend to businesses that are solvent but ones that have encountered significant difficulty."
National has continued to support the Government's economic stimulus package.
"During this period of massive disruption it is critical that businesses have access to working capital so they have the liquidity to stay in business and can, in turn, keep New Zealanders in jobs," Opposition finance spokesman Paul Goldsmith said.
The Government cautioned again that while it was attempting to "cushion the blow" it could not support everyone.
"We're not promising to save every job and we're not promising to save every business."