The Government's unprecedented $12.1 billion Covid-19 spending package –"the most significant peace-time economic plan in modern New Zealand history" – has been almost universally welcomed.
LISTEN TO GRANT ROBERTSON TALK TO MIKE HOSKING ON NEWSTALK ZB ABOUT THE SPENDING PLAN:
It came on the same day as New Zealand reported the most number of new cases of the virus - up four to a total of 12, including a Dunedin school student.
The scale of the spending has been described as bold, strong and "suitably aggressive" and comes as Finance Minister Grant Robertson admits that a recession in New Zealand "is almost certain".
• $5.1 billion in wage subsidies for Covid-19 affected businesses
•$2.8 billion income support package increased benefits and the doubling of the Winter Energy Payment
•$2.8 billion in business tax changes to free up cashflow
• An initial $600 million aviation support package
• An Initial $500 million boost for health
• $126 million in Covid-19 leave and self-isolation support
•A $100 million redeployment package
Almost half of the cash will be spent on a wage subsidy package for all Covid-19-impacted businesses.
Full-time workers eligible for the package will receive $585 per week from the Government, paid in a lump sum package of just over $7000 covering a 12-week period.
Part-time workers, people working fewer than 20 hours a week, would receive $350 a week.
Businesses which have suffered, or are projected to suffer, a 30 per cent decline in revenue compared to any months between January and June the year prior will be eligible for the subsidy.
That is as long as they have taken steps to mitigate Covid-19's impact and promise to pay affected employees at a minimum of 80 per cent of their income over the 12 months period.
Employers can already apply for the subsidy and Ardern said money could be with them in as soon as five or six days.
The maximum amount any one employer can receive is $150,000.
The Government is also spending $2.8 billion on raising benefits by $25 a week, starting April 1, as well as doubling the Winter Energy Payment.
This, according to Ardern, would keep job losses to a minimum and keep the health sector from being overwhelmed.
It will also go towards more spending on extra virus testing, more medicines, face masks, extra intensive-care capacity and equipment at hospitals, and more money for GPs.
Speaking to media yesterday, Robertson was at pains to point out how sizable the package was.
It represents roughly 4 per cent of New Zealand's overall GDP and is comparatively larger than similar packages rolled out by the Governments of Australia, the UK and the US.
But it is at big cost to the Government's books.
Robertson confirmed the Government would be going into deficit for the foreseeable future and its level of borrowing will need to increase by billions of dollars.
Its self-imposed Budget Responsibly Rules will be broken but, as Ardern pointed out in the House, they were made to be broken for situations just as these.
"We have always been prepared for the fact that a rainy day could befall us – that rainy day is here."
Speaking to Newstalk ZB last night, Ardern said although the spending would help save some jobs, many would still be lost.
She did not have figures to suggest how many people would be out of work but she said it would be worse than the global financial crisis, were unemployment rose to 6.7 per cent.
That is a 2.7 per cent increase on current levels.
National Party leader Simon Bridges slammed the package and said it focused on "ideologically" driven benefit increases over helping medium-sized New Zealand businesses.
"This package has confused priorities that do not deal, non-ideologically, with the issues we face in New Zealand right now."
Although economists have welcomed the Government's package, some say more spending is needed.
"The New Zealand Government's Covid-19 support package is suitably aggressive and will cushion the blow to parts of the economy, but it is only the start of what is required," Westpac chief economist Dominick Stephens said.
"This is a bold package, with more to come, in response to a shock that is expected to be greater than the global financial crisis," ANZ chief economist Sharon Zollner said.
And unions are happy too.
CTU president Richard Wagstaff said the package provides an immediate boost to get workers through these challenging times.
