KEY POINTS:
Prime Minister John Key says the Government is working on a plan to help small and medium businesses cope with the recession.
Any further steps to relieve the strain of the economic downturn were likely to focus on small and medium businesses, he said yesterday.
A holiday from
provisional tax was a possibility for some businesses.
Mr Key said the Treasury had indicated it would reduce its growth estimates and increase its unemployment estimates when it gave its half-yearly fiscal update before Christmas.
"It's fair to assume the growth number will be close to zero for the next financial year."
Mr Key said New Zealand's banks were holding up better than its international counterparts against the pressures.
But small and medium-sized business were "obviously a sector we would be worried about".
They were at the heart of New Zealand's economy, so the Government was monitoring the stresses and strains they were under.
Mr Key said it was not considering cutting company tax from its current 30 per cent level, but giving some businesses a temporary holiday from paying provisional tax was on the table.
The proposal was made by NZX boss Mark Weldon and NZ Institute chief executive Dave Skilling before the election as part of their recipe for boosting productivity.
Mr Key said no decisions had been made, but he had discussed the issue with Mr Weldon and Mr Skilling.
He discounted the possibility of bringing forward personal tax cuts proposed for 2010 and 2011 to give a quick stimulus to the economy.
He said cuts to take effect from April would give a "reasonably significant" stimulus of about $1.8 billion, or 0.8 per cent of GDP.
The Reserve Bank is widely expected to make a big cut to its official cash rate on Thursday, which will take further pressure off mortgage holders.
The Labour Government's tax cuts in October and National's cuts next April as well as other measures such as the redundancy package are predicted to boost the economy by about $7 billion - about 4 per cent of GDP.
Mr Key said much of the Government's immediate attention was focused on its 100-day plan, which included legislation for its tax cuts and law and order policies.
It was getting advice on whether legislation was required to introduce its short-term relief plan for some workers made redundant.
He expected Parliament would go into urgency when it returned next Tuesday and would stay that way until it rose for Christmas.
