An enormous wage subsidy to keep Kiwis in work is at the centre of the huge $12.1b economic response to the coronavirus pandemic, the biggest peacetime government spend in history.
The government will pay people to stay home from work and self-isolate if needed and the $5.1b wage subsidy means that any business losing serious income because of the pandemic will be able to pay fulltime workers.
The government will also pump $500m into the health system.
“We hope to save some jobs with this package, but we will not be able to save all jobs,” warned Finance Minister Grant Robertson.
The recovery package is larger than all the operating spend introduced by the Labour-led government so far this term and relative to the size of New Zealand’s economy it is larger than the recovery packages introduced in Australia, the United Kingdom and Singapore.
The wage subsidy scheme will see the Government pay employers up to $150,000 per business over the next 12 weeks to keep employees on. Robertson expected about half of all businesses to take up the scheme, with money able to be paid out within five days.
A new sick leave scheme will pay out the entire sickness period for anyone infected with coronavirus, it will also make cash available for any workers or contractors who need to self-isolate for the required 14 days. The new sick leave scheme will not be available for those who are able to work from home and employers are still expected to meet normal sick leave and employment law obligations.
A $2.8b package of tax changes will also be introduced for business with interest waived for some late tax payments, more deductions for low-value assets, and a higher provisional tax threshold.
Robertson emphasised that this package was just the start of the Government’s response, with this year’s Budget being recast as a recovery Budget.
As tourist numbers dry up because of the sweeping travel restrictions, the government is keen to keep the slowdown from becoming a shutdown.