The government will unveil a suite of initiatives including wage subsidies and tax support to support firms hit hard by the covid-19 outbreak next week.
Cabinet today approved a package to support business continuity in to the outbreak, with the details now being worked through, said Finance Minister Grant Robertson. Those matters will be discussed at the special cabinet subcommittee when it meets on Wednesday, and Robertson said there will be detailed announcements on the package next week.
At a general level, Robertson said the package will include a target wage subsidy scheme for workers in the most affected sectors, training and redeployment opportunities for affected employees, and working with banks on potential support that can be offered to firms.
Treasury and the Inland Revenue Department have also been tasked with developing tax policy options to ease the impact on affected businesses to help them meet their obligations and maintain employment, while Treasury and the Ministry of Social Development were told to come up with options to support households.
"This requires a tailor-made response. It's important to get the details of this package right. In particular, the timing of the support and the criteria we will use. We have to keep in mind this is a rapidly changing situation," Robertson said.
Robertson also said the government has directed officials to investigate longer-term issues that may be needed to support the economy, businesses and workers.
"While we're planning, we're not predicting. It's responsible to do that planning now," he said.
"It's quite clear the global economic disruption is going to have a serious impact on the New Zealand economy."
Robertson accompanied Prime Minister Jacinda Ardern to her weekly post-Cabinet press conference. Ardern updated the health response to the virus, saying medical officers were now being granted the power to quarantine entire vessels. Previously, they could only quarantine individuals.
Ardern said the government also brought forward the prompt payment schedule for government departments to pay their bills within 10 working days. That was at the request of Business New Zealand chief executive Kirk Hope, she said.
"Our health response will ultimately serve our economic recovery in the face of global economic impact of the virus," Ardern said.
Tourism and hospitality operators were very mindful of our ability to manage from a public health perspective, which Ardern said will help them rebuild once the outbreak is over.
Robertson said met with chief executives of the major banks today as part of his engagement with business.
Separately today, the Reserve Bank and the New Zealand Bankers' Association said the sector is prepared to respond should the virus have a greater impact.
Reserve Bank Governor Adrian Orr said its dealings with the country's banks showed they are prepared.
"Much of the banks' focus has been on staff health and safety, and their ability to sustain their operations should the outbreak expand significantly. However, the banks are also well attuned to any impacts on their customers' businesses, employment, and incomes."
Orr said that, while no significant pressures have been seen on the financial sector yet, the Reserve Bank was ready in its business continuity role to ensure a well-functioning financial system. That included enabling access to cash, ensuring sufficient liquidity in the banking system, and managing a stable payments and settlements system.
"All businesses should be preparing for possible disruptions from covid-19," he said in a statement. "Think about how best to operate if staff are temporarily unavailable, or if suppliers have restricted stock, cash-flows are interrupted, and sales decline in some sectors."
Bankers' Association chief executive Roger Beaumont said customers financially affected by the virus, particularly small- to medium-sized businesses, should contact their bank.
Depending on their circumstances, support options could include reducing or suspending principal payments on loans, help with restructuring business loans, and providing access to short-term funding.
"Each bank will have their own credit policies and approach to providing assistance. It's important for affected customers to talk to their bank as soon as possible," he said.