NZ government announces $NZ12bn stimulus

The New Zealand government has showered cash on ailing businesses to lessen an expected coronavirus-induced recession, unveiling a $NZ12.1 billion ($A11.9 billion) support package.

A wage guarantee, welfare increases, an aviation industry bail-out and tax relief all feature in the bumper package.

The biggest peacetime government spend in New Zealand's history is worth 4 per cent of GDP; making it twice Australia's stimulus spend by the same measure.

There's $NZ126 million to pay Kiwis to stay home if they're self-isolating, along with $NZ500 million in new health spending.

New Zealand has just 11 confirmed cases of the disease and is yet to record community transmission of COVID-19.

Announcing the measures in a live-broadcast address in parliament, Finance Minister Grant Robertson was brutally honest about the economic turmoil to come.

"A recession in New Zealand is now almost certain ... the advice that we are receiving (is) the shock will be larger than that seen during 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 Treasury's forecast was that New Zealand was heading towards a 3 per cent negative GDP growth next year without the stimulus measures.

Treasury believes the new measures, designed to improve cashflow and confidence, won't prevent a downturn, forecasting a 1 per cent contraction.

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.

Around $NZ5 billion of the spending is earmarked for suffering businesses.

The government will stump up a proportion of staff wages, 12 weeks in advance, worth up to $150,000, if that business agrees to retain its employees.

A similar measure in Australia is capped at $A25,000 per business.

Showing the scale of the stimulus, this support could encompass a quarter of New Zealand's workforce.

The government will also pay Kiwis $NZ585 ($A576) a week, for up to eight weeks, to stay home should they catch COVID-19, need to self-isolate or care for a dependent.

Baseline welfare benefits will permanently increase by $25 a week, with extra support to be supplied through the winter.

A new major public health campaign will be funded within new health spending, including new vaccines, protective equipment and community care.

Tuesday's new spending outstrips every new budget initiative previously announced during Jacinda Ardern's term in office - and will hit the government's bottom line hard.

Mr Robertson said he expected a budget deficit for "a number of years" owing to the spending, and foreshadowed future stimulus in coming months.

The package has the support of all three government coalition partners - Labour, New Zealand First and the Greens.

Opposition leader Simon Bridges said the package "should go harder and faster".

Mr Robertson appealed for unity from New Zealanders as he attempts to weather an almighty economic storm.

"He Waka Eke Noa. We are all in this together," he said.

Austrlaian Associated PressBack to Breaking News

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