What our economic response to coronavirus should look like
The economic consequences of the Covid-19 outbreak are already significant.
In a short period of time, we've seen a sharp down turn in tourism and hospitality, forestry and international education which has resulted in people losing their jobs, having hours reduced and lost income. Some struggling businesses will fall over.
There is no longer a sense that the impact will be short and sharp – the only question is how damaging it will be.
The latest business confidence figures from ANZ are at their lowest since 2009.
From Opposition, National supports the initiatives the Government has announced so far, such as support for the tourism and seafood industries and faster payments from Government departments. We support the efforts of IRD and MSD to help with provisional tax, adjustments and late payments.
We agree businesses in distress should be talking with their banks.
We acknowledge the government is putting together its Business Continuity Package – including a targeted wage subsidy scheme for workers in the most adversely affected areas and industries.
However, we remain disappointed the details still aren't available.
This has been going on for several weeks now and more urgency is required.
Yes, it's complicated, yes the boundaries have to be clearly defined, but we worry that the window to save jobs is beginning to close.
A good place to start would be to look at the subsidy the previous National Government offered to businesses in the aftermath of the Kaikoura and Canterbury earthquakes were we offered cover for a limited time at a rate of $500 gross per week for a full time employee and $300 gross per week for a part time employee.
We have also asked the Government to reconsider its plan to lift the minimum wage again on 1 April.
The Ardern-Peters Government announced several substantial increases to the minimum wage back in 2017 when the economy was growing strongly, equating to a 27 per cent increase over three years.
But the situation has changed dramatically in the past few months. It doesn't make sense to be proposing relief to businesses at the same time as significantly adding to their costs.
The economic challenge before us is serious. The Government needs to shift its mind-set from adding costs to business to taking pressure off those enterprises so they can survive and continue to employ New Zealanders.
We urge the Government to postpone the 1 April rise for six months while we assess the situation.
Nobody knows how widespread and deep the international slowdown will be and we need to be prepared.
Thanks to the discipline of successive governments the country has relatively low debt and the ability to provide stimulus, if required.
The ability to borrow, however, should not stop the Minister from taking a hard look at wasteful spending, such as with elements of the Provincial Growth Fund. Some of Shane Jones' money would be far better used in a business continuity package than it is being used now.
We also need to recognise the longer term economic challenges haven't gone away.
Grant Robertson has been wrong to say the New Zealand economy entered this crisis with 'strong momentum'. The latest estimate from the Reserve Bank is that New Zealand grew at a mere 1.6 per cent in 2019. That is very slow; around the same speed as population growth.
What we need now is a clear, coherent growth plan.
This should include tax relief, a substantial infrastructure plan that is actually delivered, relief for small businesses, regulatory reduction – such as Simon Bridges outlined this week – and policies focused on putting more money in the hands of families.
National stands ready to work constructively with the Government to suggest ways forward as we confront this economic challenge together.
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