Economic package welcomed
by Andy Bryenton
Last week the government released a $12.1 billion support package for the New Zealand economy during the Covid-19 pandemic, with roughly 50% of the revenue to be allocated to a wage subsidy package for all coronavirus-impacted businesses.
Full-time workers eligible for the package will receive $585 a week from the government. Welfare benefits are increased by $25 a week, and $2.8 billion will be spent on tax changes to support businesses.
Government economists are calling it “The most significant peace-time economic plan in modern New Zealand history.”
Prime Minister Jacinda Ardern said: “The government is pulling out all the stops to protect the health of New Zealanders and the health of our economy.”
However, what does it mean for the average person and the average small business locally, and what can they expect?
First up, companies will be eligible for wage subsidies to keep people in work. A large part of the response has gone toward ensuring that jobs are not lost, and business can continue as usual. While there’s half a billion in the package for health, the remaining billions are all to keep people working and economically safe.
Even the welfare rise is designed as an economic stimulus; extra money, which will inevitably be spent by recipients on goods and services, boosting local commerce.
The core of the package is for any employer, which has suffered, or is projected to suffer, a 30 per cent decline in revenue compared to any months between January and June the year prior. However, employers must be able to show they have taken measures to offset the impact of Covid-19, and also must declare that they will continue to employ affected employees at a minimum of 80 per cent of their income for the following 12 months.
Up to $585.80 a week will be available for full-time workers or $350 a week for part-time workers. Those who are off sick or in self-isolation with the disease will be subsidised. Business taxes will be changed to relieve the stress on companies dealing with a downturn due to the virus as well.
The measures have been met with enthusiasm by business leaders. A good example is a response from the chief executive of Property Council New Zealand, Leonie Freeman.
“We applaud the government for moving swiftly to develop the $12.1 billion Covid-19 economic support package,” says Freeman.
“Our members are very pleased to see depreciation deductions for commercial and industrial buildings reinstated. A policy change that we have called for since depreciation was first removed in 2010. Yesterday’s announcement was a great start, but New Zealand will need further financial support to deal with the crisis period, to foster a strong recovery and to help our economy grow.”
Finance Minister Grant Robertson says the package is one of the largest in the world for each head of population. It represents more than the total sum of new spending in all three of the coalition’s budgets put together.
Robertson indicated that this initial package is just the beginning. The second round of measures will be released with the budget in May.
“The global economic impact of Covid-19 on New Zealand’s economy is going to be significant, so we are acting now to soften the impact.”