Modifications to the wage subsidy scheme

Beehive: Further steps to protect New Zealanders’ jobs

The Government has made modifications to the wage subsidy scheme to ensure people don’t lose their jobs during the national lockdown.

These changes will soften the impact of COVID-19 on workers, families and businesses, and position them to exit the lockdown and look to recovery, Finance Minister Grant Robertson says.

The modifications focus on keeping businesses and workers connected during this unprecedented time. They apply from 4pm today, and include:

  • Businesses accessing the scheme must still undertake best endeavours to pay employees 80% of their pre-COVID income. Where that is not possible – in particular where a business has no activity whatsoever due to the shutdown and workers are not working any hours – they must pass on at least the whole value of the wage subsidy to each affected worker.
  • Businesses must undertake to keep employees in employment for the period of the subsidy.
  • We are folding the previous sick leave scheme into this scheme to prevent double-dipping. The original sick leave scheme was designed when few people were in self-isolation, and it is no longer fit for purpose. We are working on arrangements for those in essential work who require sick leave due to COVID-19.

The Treasury now estimates the financial cost of the scheme will be between $8 billion and $12 billion depending on uptake by businesses.

“These modifications are about keeping New Zealanders currently at home in lockdown connected to the job they were in on Wednesday before it started,” Grant Robertson said.

“This ensures businesses not able to operate do not need to lay off staff. Even if this requires businesses to operate with no activity, the subsidy allows them to keep their workers on the books, particularly during Alert Level 4.”

The wage subsidy is a Government payment to help employers pay wages. It does not change any other employment law obligations, meaning employees must be paid appropriately under their employment agreements for the hours they do if they work during the lockdown.

“We are running this scheme on a high-trust model in order to get money out the door and support the workers, families and businesses who are affected by COVID-19. We are also preparing an appropriate audit process that will act as a backstop for this high-trust model,” Grant Robertson said.

The wage subsidy is $585.80 a week for full-time workers (who worked 20 or more hours per week before COVID-19) and $350 a week for part-time workers (fewer than 20 hours). It will continue to be paid out in a lump sum covering the 12 weeks, meaning a $7,029.60 payment per full time worker.

“Demand for the scheme is high, with $2.7 billion already paid out for 428,768 workers. I want to place on record my appreciation for the Minister of Social Development, Hon. Carmel Sepuloni, MSD CEO Debbie Power and all their team for the incredible work that has made this happen.

“People are working hard to respond and process applications as fast as they can under challenging conditions. Please be patient when applying, and please be kind to each other,” Grant Robertson said.

Expansion of the wage subsidy scheme comes on top of a range of support measures for Kiwis during this global pandemic, including:

  • The $500 million increase to public health funding for the immediate response.
  • A six-month deferred mortgage scheme for home-owners affected by the virus, so people don’t lose their homes due to COVID-19.
  • The $6.25 billion Business Finance Guarantee, and business tax measures to support cashflow, and help businesses continue to operate.
  • A doubling of the Winter Energy Payment so older New Zealanders can stay warm during winter.
  • Main benefit increases, and
  • Rent freezes and a ban on terminations of tenancies/evictions other than in exceptional circumstances.

Economic decisions as NZ readies for Alert Level 4 in COVID-19 fight

From the Ministers of Finance and Social Development:


The Government is announcing significant further support for the economy, workers and businesses as the country unites to prepare for Alert Level 4 in the fight against COVID-19.

Cabinet today agreed to remove the cap on the Government’s wage subsidy scheme, which will inject a further $4 billion into the economy over the next eleven weeks.

In addition:

  • The Government is expediting urgent work on new income support measures for all workers above and beyond the wage subsidy scheme, to be appropriate for how the economy will operate under Alert Level 4.
  • The Government, Reserve Bank and retail banks have agreed in principle to significant temporary support for mortgage holders and a business finance guarantee scheme for those impacted by COVID-19 as the country moves towards Alert Level 4. The details of this will be announced in the next few days.
  • Cabinet has agreed to freeze all rent increases and to look to extend no-cause terminations to protect people during this difficult time.

“We have a chance to beat this virus as we step up our public health response. We know this will have significant impacts on the economy, and we are doing what it takes in response to this rapidly changing situation,” Finance Minister Grant Robertson says.

“These significant measures – along with previous moves to raise benefits and tax changes to support cashflow – are focussed on cushioning the blow for workers and businesses as we respond to this unprecedented global crisis. As we have said before, we cannot guarantee to stop all job losses, but we are doing our best to cushion the blow.”

As this crisis evolves, we are moving rapidly to support New Zealanders.

Now that many New Zealanders may not be able to go in to work for the next few weeks, our priority is ensuring they continue to receive some form of income through this period.

All employers affected by COVID-19 will now be able to apply for the existing subsidy to support the wages of all of their workers.

The changes mean the forecast cost of the wage subsidy scheme is being lifted from $5.1 billion to $9.3 billion. This assumes 50% of businesses access the 12-week scheme.

“The $9.3 billion is an estimate, not a cap or a floor. This means the support will be there to meet the demand. We are doing what it takes to put support in place for workers and businesses.

“We can do this because New Zealand is one of the best-placed economies in the world to deal with COVID-19, due to our low Government debt and strong economic fundamentals going into this global crisis,” Grant Robertson said.

MSD will do its best to get payments out the door as quickly as possible, Minister for Social Development Carmel Sepuloni said.

“But we ask that people have patience and show a little kindness to staff there who are working as quickly as they possibly can. A payment system of this magnitude is unprecedented in New Zealand.”

Wage subsidy scheme – Cabinet decisions on 23 March:

A number of other important changes are being made to the scheme:

  • The previous $150,000 cap is being lifted, so that all employers can access the full payments to subsidise each of their workers’ salaries.
  • New businesses (eg. that are less than a year old) and high growth firms (eg. firms that have had significant increase in revenue) are also eligible. They need to demonstrate the revenue loss assessment against a similar time period, for example a 30% loss of income, attributable to COVID-19, in March 2020 compared to January 2020.
  • Self-employed people with variable monthly incomes are eligible if can demonstrate the revenue loss assessment against the previous year’s monthly average (eg. 30% loss of income attributable to COVID-19 comparing March 2020 to the average monthly income in the period March 2019 to March 2020).
  • The scheme does cover registered charities, non-governmental organisations, incorporated societies and post-settlement governance entities.

Other criteria still apply, including the 30% revenue reduction and for businesses, on their best endeavours, to maintain their named employees at 80% of their pre-COVID income. The same twelve-week period applies to the wage subsidy scheme. The new criteria will apply from midnight tonight.

Ardern and Government deserve praise for handling of Covid-19

We, New Zealand and the World, are facing unprecedented health and financial crises. There will be valid criticisms of the way things are handled in a rapidly changing situation, with over 10,000 deaths so far but potentially millions of fatalities from the Covid-19 coronavirus.

Leaders and Governments are having to do their best in a very challenging environment.

People are uncertain and uneasy, understandably. There are valid fears for lives, for livelihoods, for life savings and for ways of life. Some New Zealanders will die, many will lose jobs lose earnings, lose part or all of their life savings. All of us will have to change the way we live, for months at least and probably for years.

Prime Minister Jacinda Ardern can be a very good communicator when she is well informed and not doing politics, and as she did dealing with last year’s mosque massacre and the Whakaari/White Island eruption, she has again risen to the occasion and I think is doing a very good job keeping us informed in an assuring manner. She excels at fronting crises.

It is hugely challenging getting the balance right between timely and appropriate actions, and over-reactions. I think the Government is largely getting things about right with it’s response to the virus, with the initial financial package, and with it’s messaging.

There were one or two communication missteps early on but they seem to have been resolved.

Deputy Prime Minister Winston Peters has done ok in a support role.

Minister of Finance Grant Robertson has managed finances prudently to date and seems well advised and is acting appropriately in the evolving crisis.

Minister of Health David Clark is not as good a communicator, seems to lack confidence (in a very difficult role) and can seem out of his depth a bit, but he is being covered by others.

Director-general of health Dr Ashley Bloomfield is doing an extraordinary job with daily media conferences, calmly keeping us well informed. He is a huge asset.

I think if National were in Government they would be doing much the same things as our Labour-led Government are.  New Zealand is taking very similar measures to the right wing Australian Government. Times like this need expert advice and common sense, not political idealism.

Leader of the Opposition Simon Bridges has tried to get holding to account balanced with support of the Government in a crisis, but his communication skills and manner aren’t great (unfortunately grate would be closer to the mark). He has been overshadowed by finance spokesperson Paul Goldsmith, who yesterday backed the Ait New Zealand support package announced by the Government, and also to an extent health spokesperson Michael Woodhouse.

Greens are doing their thing but are more working with their own constituencies and from the sidelines, publicly at least.

There are some in media and social media who haven’t been able to put politics and prejudices aside, and there are some who seem to think they have better information than the Government and are giving advice and demanding different actions. I trust our Government to be largely on top of things, and have confidence we are being well enough informed. I am resisting criticising and naming the petty and the pissy.

The Government won’t get everything exactly right (in retrospect at least), but I have confidence we have our Government and MPs are doing everything they can to deal with the huge challenges currently facing us. There is scope for valid and reasonable criticisms, but petty politics should be set aside.

We should trust our Prime Minister and our Government and our Opposition to inform us and do what they can for us. I think we have to.

I’m doing quite a bit of research and am following things closely, and I am confident we are being well informed and reasonably warned about what is likely to happen. There are many unknowns, but we have to trust our leaders and Government on this, while doing things for ourselves as well.

We have to work together in families and communities to support each other through this. More on that in the next post.

New Zealand is gradually shutting down

The momentum of change as a result of Covid-19 continues as the country seems to be gradually shutting down.

Many team sports including rugby, netball, league and football have been put on hold until the end of May, including practices. Major events like the rowing Madi Cup have been cancelled.

One school (Logan Park High School in Dunedin has been shut until the weekend, although 150 virus tests after one student tested positive have come back negative. But it seems only time until more schools if not all of them have to shut down.

All ANZAC events have been cancelled, which is a no-brainer, many of those who attend ANZAC events are in the older age group which is at higher risk from Covid-19.

Gatherings of more than 100 people have been banned, and anyone breaking this ban could face a penalty up to 6 months in prison.

New Zealanders are being encouraged not to travel overseas, and last night the New Zealand border was closed to nearly all non-New Zealand citizens and permanent residents. Humanitarian movements from the pacific and people involved in sea and air freight are exempted.

Airlines are not quite grounded but have had their wings and revenues severely clipped. Virgin and Qantas has already announced they were stopping all international flights, and Air new Zealand have reduced theirs by 85%. Internal flights are also both reduced and not required – many people are not keen on travelling.

The tourism industry is just about totally stalled, with cruise ships already banned. This impacts on accommodation, transport (buses, rentals), cafes and restaurants and many associated businesses.

Many businesses are either implementing or setting up work from home for employees – I have been assisting companies do this all week, but normal work has slowed down.

Some things are busy, especially supermarkets. There has been a surge in sales for things like freezers and IT equipment for working from home.

But most of New Zealand is shutting down to various extents.

It could go further yet, with the possibility the country will be locked down like some other countries have, with only essential travel allowed (for food or medical reasons).

And how long will this go on for? No one knows, but there are numbers of months being suggested, commonly 6 months and up to 18 months or 2 years. Some of the measures are likely to be relaxed in time, but get prepared for the long haul.

I think it is very likely there will be an enforced major change of lifestyle for 3 months minimum, probably at least 6 months, and likely into next year.


Govt steps in to protect Air New Zealand

The Government and Air New Zealand have agreed a debt funding agreement through commercial 24-month loan facilities of up to $900 million*. The agreement also allows for the conversion of the loan to equity at the request of the Crown.

“Without this intervention, New Zealand was at risk of not having a national airline,” Finance Minister Grant Robertson says.

“Air New Zealand has a unique and critical role in our economy and society. Also, the Government owns 52% of the company, which means we have a responsibility towards it. We have acted swiftly to put this loan agreement in place and support our national carrier.

“This agreement means that Air New Zealand is in a position to play its part in making sure Kiwis can return home from overseas and that essential flights and freight lines for goods like pharmaceuticals remain open by ensuring flights continue to and from key international destinations. The agreement also safeguards the domestic network, with flights assured to all current destinations.

Grant Robertson this morning:  “Making predictions as you’re all aware, I think, at the moment, about what is going to happen in three, six or nine months time is very hard, let alone what might happen in a week’s time.”


Kiwis in Australia face Coronavirus-created unemployment with no govt help

New Zealanders in Australia who face months of unemployment or dramatically-reduced working hours because of Covid-19 may get no financial assistance. Of the 634,000 New Zealanders living in Australia, about half are not eligible for welfare payments there, because they arrived after February 2001 and are considered ‘non-protected special category visa-holders’.

Many people are suddenly in very difficult situations.


Why schools aren’t closing yet:

While we are seeing mass school shutdowns elsewhere in the world, in New Zealand we don’t yet have community transmission of COVID-19 – so there isn’t currently a public health reason to do so here.

Pre-emptive school closures may have unintended consequences – for example, children may need to be cared for by vulnerable grandparents, or they may be put in other social settings that could make things worse.

Medical Officers of Health have the authority to close a school. They will only do so if there is a medical reason for this or after a confirmed case in the school. In that instance, they will need to close it for a short period of time while they determine if there is any risk to others.

We are, however, planning for temporary closures. Our decisions are based on evidence and very robust health advice – the World Health Organisation has confirmed that the risk to children remains low and parents should continue to send their kids to schools and early learning centres.

More: https://bit.ly/2IZ1gR5


NZ border restrictions to stay until evidence changes

Health Minister David Clark says the restrictions at the border will remain in place for the foreseeable future.

Dr Clark told Morning Report the ban would not be lifted until evidence showed that the coronavirus pandemic overseas was diminishing.

“[We] aren’t expecting advice to lift restrictions in the next wee while.”

He said people were going to have to get used to a new norm, including social distancing, self-isolation, washing hands routinely, and other hygienic habits.

https://www.rnz.co.nz/news/national/412195/coronavirus-nz-border-restrictions-to-stay-until-evidence-changes


The University of Auckland has just announced it will be suspending teaching across the University next week due to the Covid-19 outbreak. It is calling it a Teaching Free Week.



Image

And I’ve just been talking to someone in the Anglican church – there will be services this Sunday as long as social distancing is observed, but no more services after that until further notice.


From today’s Ministry  of Health Covid-19 media conference there are 11 new cases of Covid-19 (all self isolating at home), bringing the total to 39.

There were 1000 Covid-19 tests done yesterday, up from 720 and about 600 for the previous two days.

And supermarkets are running a ‘shop normal’ campaign, assuring supplies are not a problem, they are just struggling to restock shelves at times.

Government and National may cooperate on Covid-19 economic response

Much of what makes the news from Parliament is combative, controversial or the worst of MP behaviour. Here’s an example of how speeches (by Grant Robertson and Paul Goldsmith) can be reasoned and reasonable, with offers of cooperation between the Government and the National opposition.

It’s good to see and important that they actually follow through with their cooperation on dealing with Covid-19.

MINISTERIAL STATEMENTS

COVID-19—Government’s Response to Economic Effects

Hon GRANT ROBERTSON (Minister of Finance):

I wish to make a ministerial statement on the Government’s response to the economic effects of COVID-19. While there is much uncertainty about the COVID-19 outbreak, it is clear that it is going to impact the world economy, and therefore New Zealand’s economy, for much of 2020. As we know from events like the global financial crisis, New Zealand is not immune to economic shocks that occur offshore and that are beyond our control, but what we can do, alongside our public health response, is to support confidence with a plan to address domestic economic impacts.

Our first responsibility as a Government is the health and wellbeing of our citizens; that is why our response continues to be led by our public health response. This strong public health response will also ultimately be critical to ensuring our economy and our people come through this outbreak in good shape. We have committed to providing the necessary resources to support our health system to protect New Zealanders’ health and wellbeing.

From an economic perspective, the Government has already made a number of immediate interventions, including support for the tourism and seafood industries, funding to increase regional business support programmes, and directing Government departments to pay businesses faster to support cash flow. Inland Revenue and the Ministry of Social Development (MSD) are supporting businesses and workers on issues like provisional tax readjustments, late payment and filing fees, wage instalment plans, and income support.

MSD’s rapid response teams are in place in regions like Tai Rāwhiti, and we have removed the stand-down period. I met yesterday with the chief executives of New Zealand’s major banks, who told me that they are well-prepared, both in terms of their own operations and in their ability to work with their customers, to get through this. The options they highlighted for customers are reducing or suspending principal payments on loans and temporarily moving to interest-only repayments, helping with restructuring business loans, consolidating loans to help make repayments more manageable, providing access to short-term funding, and referring individual customers to budgeting services. I strongly encourage businesses and banks to talk now and make a plan to get through this challenging situation.

Yesterday, the Government signalled its further steps as the impacts spread across the economy. Decisions on these measures need to balance the risks of poorly targeted spending and moving in time to support affected firms and individuals when they need it. Our business continuity package includes a targeted wage subsidy scheme for workers in the most adversely affected sectors, training and redeployment options for affected employees, and working with banks on the potential for future working capital support for companies that face temporary credit constraints. We will not be able to provide a wage subsidy for all affected firms during the duration of COVID-19. It will have to be temporary. It will also have to be tailor-made. We want to target the subsidies to those who are most affected and least able to adjust. Further details of this package will be announced next week.

These initiatives do not stop us from providing other forms of assistance to people and firms, but they are a sensible place to begin. We have also directed officials to develop longer-term macroeconomic measures that may be required to support the economy, businesses, and workers if there is a major, sustained global downturn. I reiterate that while we are planning for that situation, we are not predicting it, but planning for it is the responsible thing to do.

I want to be clear that this situation is very different to other challenges the New Zealand economy has faced in the past decade. The Canterbury and Kaikōura earthquakes were events that impacted defined areas, where it was clear which businesses were affected, why, and how. With COVID-19, which is an evolving, global health crisis, we are seeing different businesses in the same industries and in the same regions impacted differently. That is why a tailor-made response is required.

The global financial crisis was caused by the concerns about what financial institutions like banks were experiencing, but that’s not what is happening here. We have a very sound and stable banking system and a sound underlying economy. We have been running surpluses. Our net debt position, at 19.5 percent of GDP, is well below what we inherited and well below other countries. We are already ahead of the curve with the $12 billion New Zealand Upgrade Programme, which is supporting the economy.

This is a global problem that New Zealand is well positioned to deal with, and because this Government has the interests of all New Zealanders at heart, if we all work together—Government, businesses, and workers—we will get through this.

Hon PAUL GOLDSMITH (National):

Video “available shortly”

Thank you, Mr Speaker. The National Party shares the Government’s concern about the economic consequences of the COVID-19 outbreak. Already, these have been significant for the businesses affected. People have lost their jobs, they’ve had their hours reduced, they’ve lost income, and they’ve closed their restaurants without knowing when they’ll open again. Some struggling businesses will fall over, and there’s no longer a sense that the impact will be short and sharp, but only a question of how damaging it will be, and we have seen today that the latest business confidence figures are at their lowest levels since 2009.

We support the initiatives announced so far. We support the tourism and seafood industries, and faster payments from Government departments. We support the efforts of IRD and the Ministry of Social Development to help with provisional tax adjustments and late payments, we agree that businesses in distress should be talking with their banks, and we acknowledge that 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. We were disappointed that the details weren’t available yesterday. This has been going on for several weeks now, and it’s our belief more urgency is required. Yes, it’s complicated, and, yes, the boundaries have to be clearly defined, but we worry that the window to save jobs may be beginning to close.

We also ask the Government to reconsider its plan to lift the minimum wage again on 1 April. The Government announced several very substantial increases to the minimum wage back in 2017, when the economy was growing strongly—a 27 percent increase over three years. The situation has changed dramatically since then in the past few months. The April change will mean the minimum wage has lifted 20 percent in two years.

It doesn’t make sense to be proposing relief to businesses at the same time as significantly adding to their costs. Saving jobs should be the focus. The economic challenge before us is serious. The Government needs to shift its mind-set from adding costs to business to taking pressure off small and medium sized enterprises so that they can survive and continue to employ New Zealanders. So I urge the Minister to reconsider and postpone the 1 April rise for six months while we assess the situation. Nobody knows how widespread and deep the international slow-down will be. We need to hope for the best but prepare for the worst.

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 the 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. The Minister is wrong when he says that New Zealand entered this crisis with strong momentum. That’s not correct. The latest estimate from the Reserve Bank is that New Zealand grew at 1.6 percent in 2019. So a clear, coherent growth plan is outlined. We believe it should include tax relief, a substantial infrastructure plan that is delivered, relief for small businesses, regulatory reduction such as we outlined yesterday, and policies focused on putting more money in the hands of New Zealand families.

Finally, we thank the Minister for his offer of briefings from Treasury, and we undertake to work constructively to suggest ways forward as we confront this economic challenge together.

Hon GRANT ROBERTSON (Minister of Finance):

I thank the member the Hon Paul Goldsmith for that contribution—in particular his offer to work together. I’m sure he’ll appreciate the briefing that he’s getting—I think this afternoon—from Treasury.

Three quick points in response. The first of those is that this package and the work we have been doing has all been undertaken in consultation with the business community and, indeed, with the union movement. It is important that we continue to work with them. They are the people who are telling us that this package needs to be targeted and needs to ensure that it reaches the people who need it.

I also note in that regard, with reference to the member’s comment about the minimum wage, that is precisely the across-the-board, sweeping, knee-jerk reaction that is not useful at this point. What is useful at this point is ensuring that support gets to businesses who need it via a targeted approach while also ensuring that our lowest income New Zealanders get a fair go. We know that those on the minimum wage tend to spend the increases that they get because that is the nature of being on a low income, and we continue to support those New Zealanders to be able to move forward in that way.

Thirdly, I just want to make reference to the member’s comment about the timeliness of this package. All countries around the world are grappling with an evolving situation. He will not be able to find countries other than those directly in the eye of the storm who have taken actions beyond what this Government has done. In fact, this Government is well ahead of the curve, in part because of a fully funded infrastructure package that we announced at the end of January. The New Zealand Government has ensured that we are in a good position to deal with what is a serious situation, and we will continue to take a measured and active approach.

Government , National both announce hot air on dealing with Covid-19 effects on the economy

Two economic announcements today, one from the Government, one from the National Party, are dripping with political campaigning.

The Government has announced they will be making announcements this week, and are assuring media they have already done some things to help businesses adversely affected by the Covid-19 virus.

Beehive: Next steps of Govt and business COVID-19 response

This week the Government will roll out the next steps of its plans to support businesses and workers as part of New Zealand’s ongoing response to COVID-19.

These initiatives will be on top of the immediate measures already in place, including support for the tourism and fisheries industries, an increase in business support funding, and tax and income assistance through IRD and MSD.

“Ministers are actively considering a range of options in response to the impact of COVID-19, and Cabinet will discuss these tomorrow,” Finance Minister Grant Robertson said.

So Robertson has given assurances the Government is doing something, and says that Cabinet will consider doing more tomorrow.  he follows with general political palaver, and then explains what they have been doing.

Last week, the Ministers of Finance and Revenue met with the Prime Minister’s Business Advisory Council, the Tourism Industry Association and Xero to discuss the situation.

Grant Robertson also met with the Secretary of the Treasury and the Reserve Bank Governor to discuss macro-economic impacts as a result of the coronavirus.

“We’re taking the time now to work with industries to plan for how we kick-start activity again as we exit out the other side of COVID-19. What we do know is that this will pass.”

So more talking, but nothing really to announce yet.

Note to editors: The Government is already taking the following actions:

Trying to get editors and media to say how well they have already been doing things.

  • Continuing to work closely with banks to ensure they are being proactive with their clients
  • Improving cashflow for small businesses by signalling action on prompt payment terms and times
  • Inland Revenue is entering into instalment arrangements and waiving penalties on a case by case basis where individuals and businesses have had their income and cashflow affected
  • An extra $4 million invested in the Regional Business Partner Programme to allow for extra advisors and give them more time on the ground supporting businesses
  • Working with Xero to get real-time information about the impacts on business, particularly SMEs.

Not much there considering the virus impact on business activity. We will have to see what they come out with later this week.

Aimed directly at the Government announcement, National have also made an economic policy announcement today, aimed at concerns over the current virus induced slowdown.

Paul Goldsmith: Relief package needed as NZ nears recession

With four banks now forecasting negative growth it’s past time for the Government to announce a relief package to help people stay in their jobs, National’s Finance spokesperson Paul Goldsmith says.

“When Cabinet meets tomorrow, this should be at the top of its agenda. This needs to be a detailed package to support businesses and workers directly affected by the coronavirus outbreak.

Political palaver edited out.

“It now seems quite likely New Zealand will go into a recession this year.

It’s not good for a major party to be talking up an economic recession.

“Businesses need clear and urgent action from the Government to help them through this period of uncertainty, not just tinkering around the edges and ad-hoc announcements that lack detail.”

So this announcement doesn’t say anything of importance.

Simon Bridges was just on RNZ saying National were announcing part one (of five) of their economic policy, but it was mostly about a promise to cut red tape, cutting two bits of red tape for every bit they introduce, or something. Bridges mentioned a few things that annoy businesses, but this really sounded like opportunist tinkering around the edges.

RNZ: National wants ‘common-sense test’ on health and safety regulations

National says it would introduce a “health and safety common-sense test” if elected, as part of its plan to slash red-tape burdening small businesses.

The Government is at risk of being seen to as slow to react to the developing economic problems, on to of their reputation for talking more than doing. They have to come up with substantial and urgent plans this week to address things.

It will unveil the “first plank” in its five-point economic growth plan this morning, outlining how it will reduce regulation.

Leader Simon Bridges said the programme was about giving small businesses confidence and creating an economy “where it’s not just burden and cost”.

If elected, National said it would commit to a “bonfire on regulations”, doing away with two regulations for every new one introduced.

It would also scrap 100 regulations within the first six months.

So this doesn’t address the Covid-19 effects at all. Ironically the virus requires increased regulations or restrictions.

National are risking putting more negative pressure on the economy, not a good look for a party that claims to be better at managing the economy. At times when the country (and the world) faces potentially major economic difficulties a responsible party would put the good of the nation ahead of their own election campaign. There will be plenty of time for them to bicker and propose their own ideas that can’t be implemented until later in the year at the earliest.

Both Labour and National have started the week doing little but grandstanding. Struggling businesses deserve better than that.


UPDATE: Jacinda Ardern has just been interviewed on RNZ and was asked if the Government would include National in their talks. Ardern said that National were being kept informed and any suggestions from National on what could be done better would be welcome as it was a global and national problem. Sounds good, but whether there’s any substance to cross-party cooperation on this it is yet to be seen.

I’ll post a link when it becomes available

Crown accounts surplus, more pressure on spending booost

From the Beehive (Minister of Finance Grant Robertson): Govt accounts in surplus, debt remains low

The Government’s books are in good shape with the accounts in surplus and expenses close to forecast, Finance Minister Grant Robertson says.

The Treasury today released the Crown accounts for the five months to November.

The operating balance before gains and losses (OBEGAL) was above forecast by $0.7 billion resulting in a surplus of $100 million.

The variance is due to lower than forecast Core Crown expenses and higher than forecast revenue.

“While the month by month results do tend to fluctuate due to tax timing changes, it is pleasing to see this positive result,” Grant Robertson says.

“The surplus and low levels of debt show the fundamentals of the New Zealand economy remain strong.”

Net debt remains low at 20.1% of GDP, while expenses were within 0.6% of forecast.

Net investments gains of $3.6 billion were $1.3 billion above forecast, largely because of favourable changes in market prices.

“Our careful fiscal management has resulted in low government debt, which alongside record low borrowing costs has given us room to invest an extra $12 billion to future-proof New Zealand,” Grant Robertson says.

“This package of infrastructure projects will provide further support to boost the New Zealand economy in the face of slowing international growth and global headwinds.

“It will also give certainty to the construction industry about upcoming infrastructure projects and will create more opportunities for Kiwis.

“We’ll be announcing the specific projects in the near future,” Grant Robertson says.

I think we can expect some election year spending announcements on top of the proposed large spend on more infrastructure.

It will be interesting to see if they adjust the personal tax rates – part of the reason for rising revenue is tax bracket creep.

Grant Robertson has been a relatively low profile and uncontroversial finance minister, with most criticism coming from the left who want a lot more Government spending.

Like: Borrow, build, hold says Green co-leader

Government should hold onto the houses it has pledged to put out on the open market, Greens co-leader Marama Davidson says.

The Government taking on more debt for public housing would open up more opportunities than fully funding existing programmes like the Auckland Housing programme.

Davidson said a reluctance to ditch the Budget Responsibility Rules and take on debt is the reason those houses aren’t being provided to low-income tenants as part of a mixed tenure development scheme.

“We’ve got low borrowing rates, we’ve got expensive land, the Crown can borrow money. It can hold onto more of the houses it is building right now.”

Stuff:  Green Party scrap Budget Responsibility Rules

The Green Party is ditching its commitment to the restrictive Budget Responsibility Rules, which set targets for lowering government debt and spending.

The Greens first signed up to the rules ahead of the 2017 election while teaming up with Labour.

Labour retained a commitment to the rules, while signalling it wanted to somewhat loosen them next term.

So they may not move much on this until after this year’s election, if Labour and Greens get back into government, and NZ First don’t demand most of the extra spending.

Government announces $12b infrastructure spending,

The Government has announced $12 billion in infrastructure spending, but haven’t given a lot of details yet. Specifics won’t be revealed until next year.

$12 billion in extra infrastructure investment

The Government is lifting capital investment to the highest level in more than 20 years as it takes the next step to future-proof New Zealand.

Finance Minister Grant Robertson has announced $12 billion of new investment, with $8 billion for specific capital projects and $4 billion to be added to the multi-year capital allowance.

The $8 billion includes:

  • $6.8 billion for new transport projects, with a significant portion for roads and rail.
  • $400 million one-off increase to schools’ capital funding
  • $300 million for regional investment opportunities
  • $300 million for District Health Board asset renewal
  • $200 million for public estate decarbonisation

The specific projects will be announced in early 2020.

The extra $4 billion to be added to the multi-year capital allowance takes it to $8.4 billion, with allocation of that money to be announced over coming Budgets.

“The new investment is forecast to increase the size of the economy by a further $10 billion over five years, with further positive impacts on GDP beyond that period,” Grant Robertson says.

With debt low and borrowing costs at record lows, the conditions are right for the Government to invest to future-proof New Zealand.

So they intend borrowing to spend on infrastructure, but at the same time have announced a surplus of the same amount over the next four years.

Strong economy, careful spending gives $12bn of surpluses

The Government is forecast to run $12 billion worth of surpluses across the four years to 2023/24 as the economy continues to grow.

The surpluses will help fund day-to-day capital requirements each year. These include fixing leaky hospitals, building new classrooms to cover population growth and take pressure off class sizes, and putting aside savings in the Super Fund for future retirement costs.

The new forecasts are in the Treasury’s 2019 Half Year Economic and Fiscal Update. This was released alongside the Government’s $12 billion plan for new infrastructure investment to future-proof the economy, and the 2020 Budget priorities.

Across the four years from 2020/21 to 2023/24, the annual surplus is forecast to rise to 1.5% of GDP. This delivers a total of nearly $12 billion of surpluses.

“The Government has committed to running a sustainable surplus across an economic cycle, and today’s forecasts show we are delivering on that,” Finance Minister Grant Robertson says.

The Government inherited net debt at 22.9% of GDP. The forecasts show net debt of 21.5% of GDP in 2021/22, falling to 19.6% in 2023/24 – within the new 15%-25% range. This includes the impacts of the additional $12 billion infrastructure investment that the Government announced today to future-proof the economy through a package of new transport, education and health infrastructure.

But they are actually going to borrow $19 billion.

I guess the additional $7 billion will be for more election year spending.

But bragging about surpluses while announcing borrowing much more seems like a bit of a PR job.

Government to borrow more, boosting spending on ‘infrastructure’

Minister of Finance Grant Robertson has announced that the Government will take advantage of low interest rates and borrow more so they can increase spending in infrastructure. Details will come later.

RNZ: Government signals big new infrastructure spend, looser purse strings

Finance Minister Grant Robertson flagged extra spending in his speech to the Labour Party’s annual conference in Whanganui.

He said Cabinet had committed to a boost to infrastructure as part of the short to medium term spending plan.

“We are currently finalising the specific projects that the package will fund but I can tell you this – it will be significant.”

The government had heeded the calls from the construction industry for “greater certainty” about the pipeline of transport projects from 18 months’ time, he said.

“We will give that certainty”.

It made sense to take advantage of low government debt and the very low cost of borrowing, said Mr Robertson.

“Right now, we can borrow at an interest rate of 1.3 percent for ten years. Just think about that for a minute – when we came in to office, this was up at 3 percent,” he told delegates.

“We have the lowest borrowing costs in New Zealand’s history, so it is time to invest.”

There will be no details until the next update on the government books – the Half Year Economic and Fiscal Update on December 11 – when Mr Robertson will release more details about the areas of spending, and the price tag.

Greens are keen (they have been wanting this for some time):

It should give the economy a good boost for election year. A first term Government overseeing and stimulating a thriving economy will be hard to defeat.

Ardern, Robertson in precarious positions

Labour Party president Nigel Haworth resigned yesterday over the mishandling of bullying and sexual assault allegations, but pressure continues to build on Jacinda Ardern and the spotlight is now also shining on Grant Robertson.

In his brief resignation statement Haworth didn’t take any responsibility for his mishandling of two serious issues (the summer camp assaults and the staffer allegations, and there was no apology either.

Ardern did apologise in her statement and in standup interviews. From Jacinda Ardern accepts Labour Party President resignation:

“In the last 48 hours I have read incredibly distressing reports of an alleged sexual assault involving members of the Labour Party,” Jacinda Ardern said.

“This morning I was provided some of the correspondence from complainants written to the party several months ago. It confirms that the allegations made were extremely serious, that the process caused complainants additional distress, and that ultimately, in my view, the party was never equipped to appropriately deal with the issue.

“I discussed the correspondence with the Labour Party President this morning. Whilst he stands by the statements he has made on this matter I believe mistakes were made.

“Raising an allegation of sexual assault is an incredibly difficult thing to do; for additional distress to be caused through the way those allegations are handled is incredibly upsetting. On behalf of the Labour Party I apologise to the complainants for the way this matter has been dealt with.

But this must just be a beginning in properly dealing with this.

In question time in Parliament yesterday Paula Bennett had a short exchange with Ardern, which concluded with this question and answer:

Hon Paula Bennett: Does she stand by her previous statements that victims should go to one of their line managers and that no senior people in her office had received a complaint?

Rt Hon JACINDA ARDERN: At the time that I made the statement, yes.

That seems to have been a setup that could be a problem for Ardern. Bennett seems to have used a common trap

Shortly after in a speech in General Debate Bennett said:

I have been told by the complainants that Jacinda Ardern’s former chief of staff Mike Monroe knew about the allegations, her chief press secretary, Andrew Campbell, knew about the allegations, and the director of her leader’s office, Rob Salmond, knew about the allegations. I have been told by two victims who work in Parliament that they went to Rob Salmond around Christmas time and made a complaint about the alleged perpetrator.

The Prime Minister has constantly said her office did not receive complaints and, in fact, encouraged the victims to speak to their line managers. They did. They have told me they went to Rob Salmond and nothing was done, and we are expected to believe that none of these men in her own office told the Prime Minister about the allegations—all of this in the aftermath of the Labour summer camp scandal, when the Prime Minister made it very clear she expected to have been told.

And are we really expected to believe that she didn’t know that her chief press secretary, Andrew Campbell, embarked on a witch-hunt to try and find out who in the Beehive was talking to the media about the allegations? The complainants certainly felt hunted and scared that he was trying to shut them up and stop them from talking to the media—classic bullying of victims, and hardly a victim-led response.

Ardern doesn’t usually attend Parliament on Thursdays but may be advised to amend her answer, or claim she misinterpreted the question. Otherwise this is likely to come up next week in Parliament.

And Ardern has more questions to answer about what she knew, and when.

Newsroom: More answers needed as Labour president departs

This is far from the end of the matter, however. Using the protection of parliamentary privilege, Bennett named several senior members of Ardern’s office who she says knew about the nature of the allegations as far back as last Christmas.

We do not yet know whether that is true (a spokeswoman for Ardern said her office had no comment to make) but it is clear that the review of Labour’s processes will almost certainly uncover a few more skeletons.

Some potential findings – that some of Ardern’s staff did know but deliberately kept her out of the loop in the interests of plausible deniability, or that Ardern did know and has been economical with the truth – would almost certainly lead to more resignations.

Even if Ardern did not know that sexual assault claims had been made, some may question why she did not more forcefully ask her party to look back over its records, given the repeated claims made by complainants through the media.

And Bennett also named Grant Robertson as complicit.

A victim has told me that the alleged perpetrator has deep alliances to Grant Robertson, that he was involved in his campaign for the Labour Party leadership, and that Grant Robertson has known the seriousness of these allegations. It is unbelievable that he hasn’t discussed this with his close friend and his leader.

Robertson is not answering questions, claiming he needs to wait for the outcome of the QC inquiry that hasn’t begun yet. Burying difficult issues in an inquiry is a well worn political tactic, but I think in this case it could be more damaging rather than burying. Things will keep coming out. And they are today.

Andrea Vance (Stuff): Labour Party president Nigel Haworth has resigned – but it’s not over

Labour will be hoping party president Nigel Haworth’s exit will cauterise the wounds. It’s political management 101: feed the media a scalp and they will move on.

But it is not yet time to draw a line under the bullying, intimidation and assault allegations that currently shame the party. There are too many unanswered questions.

Ardern and the party must now be upfront about how much they knew about these allegations, and exactly when.

It’s important for a few reasons. Firstly, so that the public can be sure that senior figures did not shield this staffer.

His identity cannot be disclosed, but he held positions of influence within the party and then through his job, with the Labour Leader’s Office at Parliament.

There are other connections – which cannot be detailed for legal reasons – but mean he held more sway than an average volunteer or apparatchik.

It is one of the reasons why the complainants were so reluctant to come forward with their stories in the first place.

One of them told Stuff:  “Abuse only happens in a vacuum, it thrives in silence. And that’s the case here. For years he was able to bully and intimidate women and have relationships with women where he was abusive.

“That was reasonably well known and yet he was still given opportunities within the party. Despite his reputation, he kept on going up the ladder.”

The party needs to explain how that perception was allowed to take root among those young people.

We need to know precisely when senior ministers – including Grant Robertson and Jacinda Ardern (or their staff, because they are one in the same) were informed of the allegations. And what they did about it.

Did Ardern ever ask for a copy of Labour’s internal investigation, or the subsequent review? Why not?

Ardern says she didn’t know the allegations were sexual until this week. That’s hard to swallow.

An email sent to media outlets and others on July 12 very explicitly references allegations of extreme sexual violence. The first media reporting of the scandal, on August 5, details that some of the complaints were of sexual harassment and sexual assault. Is she saying that she wasn’t aware of these?

For the same reasons, it’s hard to accept that senior figures within the Labour party machinery had no inkling of concern about this man’s behaviour. The complainants say they flagged it with a number of senior figures going back as far as 2017 (one woman counted that she had raised concerns on eight separate occasions).

The branch that he was involved with is one of the party’s more influential, and its members certainly hold more access and sway with MPs and officials than others.

Was the party really blind to these allegations?

And then there is the shambolic internal investigation. Haworth has carried the can, but the decisions were not his alone.

The party’s ruling council decided the process. Why did they believe an internal inquiry, with no expert guidance, was appropriate?

Did the investigation panel ignore the more serious allegations of sexual assault, or not take them seriously?

Who decided the Labour staffer could bring his lawyer, when the complainants were denied legal representation?

And why were the complainants denied the right to see the final report? They have never had an explanation as to why their stories weren’t believed.

Ardern said on Wednesday: “It is my job to make that right.”

She and the party can start by being absolutely transparent with the public about these shocking events. Otherwise, abuse continues to thrive in silence.

Ardern has a big and urgent job to be seen to make this right. And I don’t think Robertson can keep hiding his involvement behind the next inquiry.