Coronavirus: Jacinda Ardern goes hard on bailout

The Ardern government has splashed the cash in a bid to lessen an expected coronavirus-induced recession.

Jacinda Ardern at a press conference in Wellington. Picture: Getty Images

The Ardern government has splashed the cash in a bid to lessen an expected coronavirus-induced recession, unveiling a $NZ12.1bn ($11.97bn) support package.

A wage guarantee, welfare increases, aviation industry bailout, tax relief and new health spending feature in the package, equivalent to 4 per cent of GDP — double Australia’s spending per capita.

Finance Minister Grant Robertson was brutally honest about the economic turmoil to come, unveiling a Treasury forecast that sees New Zealand slide into negative growth. “A recession in New Zealand is now almost certain with the advice we are receiving that the shock will be larger than the global financial crisis,” he said.

“This will affect every part of our economy now and for some time to come. We are going to see New Zealanders lose their jobs and some businesses fail. We will have an extended period of deficits and our debt as a country will have to substantially increase.”

Mr Robertson said New Zealand was heading towards a 3 per cent hit to GDP without the package, and a 1 per cent hit with it. The stimulus is designed to improve cashflow and confidence, with three key goals — to fight the virus, to cushion the blow for businesses and workers, and to position for recovery.

About $NZ5bn is earmarked for businesses, guaranteeing a proportion of wages if the business agrees to retain staff. Tax relief will come in deductions for new and existing commercial buildings and new assets under $NZ5000.

Baseline welfare benefits will permanently increase by $NZ25 a week, with extra support to be supplied through the winter.

Mr Robertson said he expected the government’s budget to be in deficit for “a number of years” owing to the spending, foreshadowing additional investment in the months to come.

AAP