Finance Minister Grant Robertson has indicated targeted tax relief and wage subsidies are likely to be the first support measures off the block in the Government’s coronavirus Business Continuity Package.
Details around the package will be unveiled next week and Robertson can’t yet say when assistance will be rolled out.
Yet he stressed his focus was on getting cash out the door quickly.
'We must further diversify'
Speaking at a Wellington Chamber of Commerce event on Thursday morning, Robertson also came out strongly emphasising the need for New Zealand to diversify its export and import markets.
Robertson acknowledged to media New Zealand has been too reliant on China in “some industries”.
He said diversifying markets and products has been part of the Coalition Government’s agenda from day one - hence its focus on securing new free trade agreements, as well as upgrading the NZ-China Free Trade Agreement.
He said reliance on China was “in some ways understandable” given China has a large market that opened up to New Zealand after the agreement was signed in 2008.
“But we must further diversify,” Robertson said.
As well as creating a Business Continuity Package, and preparing a macroeconomic package - including more broad-brush tax and welfare changes that could be made should coronavirus have a much worse impact on the economy - the Government has also directed officials to consider what the recovery phase will look like.
“Already, plans are under way to adopt a NZ Inc. approach to re-engaging with China,” Robertson said.
“I would like to see this approach for other markets, and in other sectors.”
Robertson heads to Australia on Friday for a scheduled day-long visit, where he will meet with his Australian counterpart, Josh Frydenberg, and other political and business leaders.
“We will compare notes on how our two economies are reacting to the uncertain situation presented by the global spread of COVID-19 and discuss our plans to get our people through the outbreak,” he said.
“As Australia looks to boost infrastructure spending, we have already got ahead of the curve with the announcement of our $12 billion infrastructure investment through the New Zealand Upgrade Programme.”
Working capital arrangements could come later
Coming back to the immediate situation and the focus on the Business Continuity Package, officials are looking at how after the Kaikoura earthquakes, affected businesses were given $500 a week to pay full-time employees and $300 a week to pay part-timers for up to eight weeks.
And they’re considering how businesses affected by Havelock North’s water crisis were given tax assistance.
Robertson has said tax policy options are aimed at helping businesses keep operating. Officials are also considering ways to “support households to maintain incomes and labour market attachment”.
Included in the Business Continuity Package will be training and redeployment options for affected employees.
Work is also underway with banks on the potential for future working capital support for companies that face temporary credit constraints.
Robertson indicated such assistance may be deployed over time.
The message of his speech, which can be read in full here, was aligned with that Reserve Bank Governor Adrian Orr delivered on Tuesday - that the response remains targeted.
He echoed a phrase used by Orr that a “knee-jerk reaction” isn't necessary.
And he reiterated the "best and first way to protect the economy is by containing the spread of this virus".
Time is of the essence for businesses
Wellington Chamber of Commerce CEO John Milford agreed with Robertson that government support should be "timely, targeted, and proportional", but stressed: "What we can’t have is a significant gap in time between any disruption and the assistance on offer.
"We are hearing from our members, particularly smaller businesses in the hospitality, retail, export, tourism, and education sectors, that they are already hurting from export delays, fewer visitors, and uncertainty in the community.
"Funding for business advisory services, faster payments from government departments, and bank assistance for customers is a good start. Instructing the Ministry of Social Development and the Inland Revenue to work with businesses and workers on targeted tax adjustments, such as deferred payments on provisional tax and GST, also show the Minister is listening.
"We would also like to see some promotional work done to push Kiwis to support their local shops, cafes, and restaurants. It’s small businesses like these that are really hit hard in times like this."
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The only option for NZ to diversify exports is to sell less to China.
Or, more realistic alternative is to help China to build the Belt and Road so that many other countries can development themselves and then become NZ's potential exports markets.
Choose one please.
Also, Grant only talked one side of the issues -- exports!
What about imports from China?
Check information from:
go to tradeintelligence.mbie.govt.nz
Click Market Intelligence
Select China
and see for yourself.
We sell milk to a corrupt dictatorship that is largely lactose intolerant whilst filling our rivers with cow pee and the atmosphere with methane. Farmers then in-debt themselves out the wazoo leaving themselves horribly exposed to a downturn.
Meanwhile, back in the burbs, we invite a housing bubble to our shores by turning houses into globally traded commodities to be speculated on till they are out of reach of the ordinary NZ'er. All assisted of course by a privatised banking system that is out of control.
The ordinary NZ'er, meanwhile, has seen little wage appreciation as he/she now has to compete with the min/slave wage immigrants who are just happy to leave something worse than what we are spoiling here.
1972 Limits to Growth was right, the neoliberal pretend cornucopian businessy economising mumbo jumbo was wrong.
Now we are in a hell of a muddle.
There are alternatives to China in Asia and ignoring the smaller countries:
China 1,439,323,776 34.64%
India 1,380,004,385 33.21%
Indonesia 273,523,615 6.58%
Pakistan 220,892,340 5.32%
Bangladesh 164,689,383 3.96%
Japan 126,476,461 3.04%
Philippines 109,581,078 2.64%
Vietnam 97,338,579 2.34%
Turkey 84,339,067 2.03%
Iran 83,992,949 2.02%
Thailand 69,799,978 1.68%
Myanmar 54,409,800 1.31%
South Korea 51,269,185 1.23%
Some of those countries are even poorer per capita than China but they all have potential just as China did 30 years ago. Looking to the future NZ should be spending more effort on India, Indonesia, Pakistan and Bangladesh both for exports and imports. Glad to see Xingmowang suggesting NZ diversify away from China; it proves he looks to the longterm.
“Already, plans are under way to adopt a NZ Inc. approach to re-engaging with China,” Robertson said.
What does this even mean.
He is talking about unveiling a plan next week. The plan he unveils next week would probably have been sufficient two weeks ago. So we're three weeks behind the eight ball in dealing with a pandemic that seems to spread exponentially. We're still letting a polynesian cultural festival go ahead mere months after we exported a measles outbreak to a pacific island neighbour.
This is what leadership failure looks like.
It is very obvious that NZ reliance on China is very troublesome. As troublesome as NZ reliance was on the UK. However, when you are selling milk to rest of the world, where can you really go as a market? Europe is a also a producer, US is a producer etc. Asia, Africa and Russia potential customers. Out of them, China has market (both numbers and purchasing power). India is the second but, India is not a lucrative market for anything really.
So, unless NZ starts to export stuff other than milk, NZ will be very limited to how much diversification they can do.
A lot of these macroeconomic woes stem out of the Anglosphere's love affair with exporting bulk commodities to China (US and NZ's agricultural exports, Australia and Canada's mineral and ore exports).The 'Dutch Disease' from higher commodity prices have led to a steady decline in value-adding ('first world') industries.
Our poor and middle classes struggle to get ahead due to lack of semi-skilled job opportunities unlike in other comparable countries with thriving R&D-driven industrial sectors.
'Post-industrial' Western economies were supposed to replace blue-collar jobs with service jobs. Who would've thought that would mean lots of local employment opportunities for Uber drivers and baristas, while outsourcing all our hi-tech needs to a small cohort of corporations based in California (more like Dublin/Cayman Islands).
That is true. I think globalisation does require global standards including work force standards. But whose standards will that be? ours, the Americans? the French?
However a global, open economy with global environmental standards, labour standards (i do not mean pay, I mean health and saftey, leave and other rights, union access etc) and government relation standards is a dreamland too far away at present time.
Three ways the coronavirus could trigger a global financial crisis – and why central bankers are to blame
https://www.scmp.com/comment/opinion/article/3074459/three-ways-coronav…
Bolivia and Peru ????
WTF ?
Have you ever been there ?
They have taken the term slackers to new levels , that bunch .
Their work ethic is nowhere near that of China , South America was colonized by Spain and Portugal who imparted upon them their lackadaisical approach to everything in general and hard work in particular.
Their electrical power systems dont work properly , their infrastructure is a mess , their officials are corrupt .........how anyone is able to efficiently do business there is a mystery to me
NZ is in the perfect geographical position (in terms of time zones), to expand our technology sector which employs highly skilled high paid individuals (see Ireland for GDP impact of this strategy). In our summer we’re a 3 hour difference from the US West Coast, (which is the same as the time 3 hour difference from NYC to SF). No other country outside of The America’s has that luxury.
If we want to boost productivity, we need to boost wages and get away from our over-reliance on primary industries.
Spot on. While the near-future earnings of the entire primary industry looks bleak, our homegrown stars like F&P Healthcare, Kami, A2 Milk and Weta are bucking this downward trend, thanks to their unique placement in their respective market.
There have been countless calls from our hi-tech industry for tailoring our investor category and skill migration programme to better suit their needs but we continue wasting our window of opportunity on feeding low-skilled workers to sunset industries.
Reliance on China.
Been saying for years that this is foolish. Why does take a disaster for people to wake up. Far too late then.
Our further exposure to China through Australia makes matters worse. Australia is our second largest customer and sends 37% of it's exports to China.
Right now is not the time for knee jerk responses that will enrage our largest customer. A steady, cordial, supportive, but firmly independent approach to China is required to keep things as positive and as stable as possible for every bodies sake. Long term, a measured unwinding of our reliance is required as we put some hard work into developing a far wider market spread and move our offerings up the value chain.
Donnie the buffoon mistakenly announced the restrictions would apply to trade and cargo. And tanked the futures markets...
I suspect that was the single worst - and most counter-productive - presidential address in history
— Edward Luce (@EdwardGLuce) March 12, 2020
Let's not be too hard on ourselves for getting into bed with China. This planet has only one China & we've done nicely out of it to date. The downside however, is the selling of our souls (houses) to the half million Chinese that now call NZ home, many of whom are CCP spies. We've seen that in our own universities, haven't we? In fact you could argue, China has held this country up economically for the past decade or more. As much as we like to not admit that, it is true. So, moving on to a key point of difference here....
NB: The CCP is different from the other 1 point something billion Chinese citizens, many of whom are not even Chinese, and we need to get this. The CCP are the bastards. The rest of the (so-called) Chinese people are former peasants trying to scratch out a living.
The good, the bad & now the ugly.
What we have today is a particularly cruel version of autocratic (police state) communism, that was already cruel before the CCP created their own brutal version of it. And we know that anyone with half a brain thinks communism stinks. Ask the Ukrainians. So, as good as it's been for our trade & economics, as bad as it is for a large % of the so-called Chinese people, who have come from slave labour, to working class slave labour, to working class labour over the past 20 years. It's better than being a peasant you might argue? True. But not much. So, where am I heading? Here. I just hope that what the world is witnessing today is a wake-up call, that pandering (sic) to China has it's costs & they are far greater than the just 10% of your current manufacturing costs that they've been selling (telling) us for the past 30 years. China is both an opportunity & the devil in disguise so, as I've written here before, we should tread very carefully when we choose to dance with the dragon.
Business take the easy money, wouldn't you ? It has been all well and good for 10 years plus but those that are 100% reliant on China just hit a brick wall. Do they deserve handouts ? not really, they should have diversified into harder markets while they were still creaming it from China.
Recommend handouts to all working medical staff and then children - universal child benefit. The former is common sense (if I was a nurse or doctor my common sense would tell me I'm now in a high risk occupation and I'd want danger money or take extended leave). Money to kids because this epidemic will spread via families having to work despite being ill to provide for their kids.
We are probably in a better position than almost any other country to grow food that others will pay a premium for, but it has to be premium food. Still reckon our smartest move would be going organic, extensive farming only and supplying those who will pay for absolutely top notch food.
Colour me bemused. Changing tens of thousands of businesses' sales plans, processes, product lines, and raw material inputs by Central Fiat sounds like the fabled 5-year plans of yore. Picking winners, like the 'ol Fink Bigly, equally clumsy and woefully timed. Jawboning by pollies in an election year is simply Noise, not Actionable Strategy, especially when the noise is 99.5% Stating the Bleedingly Obvious. Still, given that it is utterly ineffectual, better to let the pollies think they are Thinking Good Thoughts, keep them where possible from Acting on them, and let the much savvier noses of actual businesses sniff out the scent of sales, weigh these against cost price signals and environmental uncertainty (Captain's Calls, anyone?), and act in a way and at a time of their own choosing....
That's it he just sealed Lab's coalitions fate. Other half of Nat Co. voters already embraced the calling from motherland, NZ shall pay the price 'even' if wanting to diversified... away from China, there's no such things, when you already tied to the motherland.. Mommy is started to get angry with this Lab/coalition.. They'll push the blue baby forward for this year's election.
Tourist.. import from China, Students.. import from China.. trade import from China.. NZ under blue/JK only been introduced to .. China. Well? he's a bwanker and always will be, I rarely met any of them that into..other things in life.. apart from $ signs to manage.. unless they're in stadium 4 cancer. China, India, China, India, China, India.. really NZ? I thought about almost 200 countries on this planet.
Tha Nats sure need to give this guy his marching orders https://www.stuff.co.nz/national/politics/97133056/national-mp-jiang-ya…
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