Finance Minister Grant Robertson is warning we need to buckle in for a long ride, coining the period of social distancing we’re in, an “era”.
While more government support is on the way, he says “there’s a long-term adjustment now required” by sectors like retail, hospitality and tourism.
Businesses will be able to open their premises, but not interact face-to-face with customers at Level 3. Even at Level 2, some social distancing requirements will remain.
“We are going to live in an era of physical or social distancing, I believe, for some time to come as we eliminate the virus and get on top of it completely,” Robertson told interest.co.nz.
“That will help shape the kind of responses that we give. But equally in some of those sectors, there’s a long-term adjustment now required. Therefore, we’re having to have a conversation about both the short, medium and long-term - all at the same time.”
Robertson didn’t indicate what the next wave of support for businesses would be once they’ve exhausted the 12-week wage subsidy - IE whether the government will provide targeted or universal support, or help commercial tenants pay rent as a large portion are now in arrears. Commercial property management company Re-Leased said its clients had received just 50% of rent due to be paid on April 1, by April 13.
Banks defer loan repayments on $15 billion of consumer loans
Because a number of small businesses in particular borrow against their owners’ homes, households’ abilities to meet their mortgage obligations will have a direct impact on business.
As at Friday, the New Zealand Bankers’ Association said that when it comes to consumer lending (home loans, personal lending, credit cards and arranged overdrafts), its members had approved loan repayment deferrals for 40,918 customers. These customers had outstanding balances of $15 billion.
Meanwhile banks had allowed 41,436 borrowers to reduce their loans to interest-only, or made other principal and/or interest repayment reductions. The value of these customers’ outstanding balances was $14.6 billion.
Govt open to buying equity in companies and extending the Business Finance Guarantee Scheme
In terms of larger, “economically significant” businesses, Robertson said consideration was being given to extending the Business Finance Guarantee Scheme to them.
Currently, the government will underwrite 80% of individual bank loans to eligible businesses that had turnovers of between $250,000 and $80 million at the end of the 2019 financial year.
Robertson said government buying stakes in these businesses was also an option, however it would have to be very “judicial” in doing so. This would also only be likely in a small number of cases where all other options had been exhausted.
In Air New Zealand’s case, if it can’t repay the loan of up to $900 million offered to it by the Crown, the Crown can seek repayment by converting the loan into equity or getting the airline to do a capital raise.
Robertson believed there wasn’t a need for New Zealand to follow the Federal Reserve in the US, and for the Reserve Bank (RBNZ) to provide businesses with loans.
Given banks only started accepting applications under the Business Finance Guarantee Scheme at the beginning of April, RBNZ Governor Adrian Orr earlier in the week said it was too early to say how this scheme was going.
He said banks should be “courageous” with their lending, but also said: “The longer an economic slowdown persists, the higher unemployment becomes, the harder and harder it is for the banking system itself to be the provider of credit.”
No need to side-step financial markets when it comes to QE
On the topic of government debt and quantitative easing, Robertson believed it was unnecessary for Treasury to follow its English counterpart and issue bonds directly to the central bank, side-stepping the secondary market.
The RBNZ has committed to buying up to $30 billion of New Zealand Government bonds and $3 billion of Local Government Funding Agency bonds on the secondary market over the next 12 months.
Former investment banker, Raf Manji, and economist, Shambueel Eaqub, are among those calling for the Robertson to turn up the dial, and issue bonds straight to the RBNZ.
However Robertson said the status quo is working.
“Bond issuances that the Government is doing are still being subscribed and oversubscribed. So the system as it stands now is providing the amount of financing that we need. I’m comfortable with for that to continue to be the way that we work," he said.
“[The system] has an inherent set of disciplines in it around both ourselves as a government, on how much debt we do release... and the Bank itself, in terms of how it works. The market is still functioning in that regard.
“Obviously we keep it under review. If we don’t believe it’s working or if the amounts of money that are required turn out to be such that they can’t be sustained through the secondary market… then of course we would look at that.”
Interested in what Robertson had to say about deposit insurance - or the lack there of? See this video, cut out of the one attached to this story.
94 Comments
Incredible. A guy with no economics or finance qualifications whatsoever is now the chief central planner who will determine the direction of our economy. The socialist, nationalise everything government agenda is now in plain view. A permanent welfare state, with a cheering populace happy to follow him over the cliff. Not only have we handed over all our freedoms, but we’ve agreed to the wholesale destruction of our entire economy. And people here ramble on about China being a communist, totalitarian state!!! We are now more socialist than China by a long shot. We can blame others all we like, but like Rome, the fall of the empire is from within. The only thing that keeps our govt in power is that the majority of the people don’t understand this.
The correct answer, of course, was to allow the capitalist system to enact pure market principles - survival of the fittest etc.
Yes, The Market should determine the cost of money - interest rates. - keep the RBNZ etc out of it.
Yes, those businesses that deserve to fail should.
And, yes, what we have today is already Socialism.
But that's not what we have in front of us to deal with.
"What is'" is what we have, and hoping to undo what got us here ain't gonna help at this juncture.
But the soccer moms understand Ardern... for example, they understand the trials of kids drawing on carpet... OMG, sooo infuriating!!
Relatability is all that matters to the soccer moms. That and the working for families/ benefits tap and being in thrall to the world's trendiest leader.
That's why we are here.
And because the comrade fush n chip monger was simply put there by an old man with a vendetta and predilection for snouts and troughs.
It's that simple.
And yes, devastating not more cannot see what's unfolding before us.
The same was said pre 1939. The hoi polloi largely didn't see that coming either.
Laying out Greens wishes.
High speed electric rail ProjectEverywhere.
The article & comments make for a fascinating read.
https://i.stuff.co.nz/national/politics/121108095/greens-want-nationwid…
Ludwig. What you need to understand is that covid is not political, much like a table or chair or CO2 . These are part of reality. When you deny Covid you deny reality, and reality always wins. It not personal, its just the way it works.
From a evolutionary point of view reality is very harsh on those who deny it, again its not personal.
I am on next flight to Australia once flights start again for my kids health.
This government is going to destroy many families and businesses with this PC approach the cure is def worse than the disease which we may never find a cure for.
Remember the CHCH eathquakes it was EQC who caused the most stress for most people same thing happening now.
Mother nature will win in the long run trying to eradicate it is a dream.
This would have been a better plan
https://www.news.com.au/world/coronavirus/australia/coronavirus-austral…
And don't forget to get Aussie Citizenship when you and yours arrive. 10 years residence would give you the leg-up you need. Because if you don't, come the next pandemic ( there will be one) then you'll have no economic or medical support.
Oh, and don't forget to come back 'home' within 10 years of retirement - there'll be no Government Super available for you until that time has passed in residence, and it might even be 20 years by then.
(You'd be surprised how many 64 1/2 year olds turn back up here thinking they can get Super when they are 65 only to find out - they can't until they've been back 'home' for the required time!)
Actually, it looks like an achievable goal for NZ.
But whether it was the right one, is skewed by folk arguing from their $$$$$$ POV.
Ecologically, it probably wasn't right - overpopulation needed addressed, including here, sans FF. Socially we can make it work to our long-term advantage. Australia was the place with the bushfires, in case your memory is a tad short. They are in serius doo-doo. Good luck, but I'd stick with the frying-pan.
Good point Te Kooti my main problem is the high numbers we take.
https://www.stats.govt.nz/news/new-zealand-net-migration-rate-remains-h…
Plenty of Aussies moving here recently we have an agreement. What I am against is bringing in low paid migrants and overwhelming the system i.e schools/hospitals/housing just so a few industries can make a extra dollar by keepings wages down at the expense of the majority.
Any country that has half a brain only wants immigrants that have money to support themselves and add value to the country longterm thats me I have my own job and enough equity to be comfortable for a long long time and can work anywhere with internet so I guess that puts me in a different boat to some.
I have lived over in Aussie in the past and never had a problem but I guess it depends on where regarding Kiwi jokes etc.
Canada and Germany are also options.
You're free to do whatever is best for you of course, that's wasn't my point. It's just that many posters here are vehemently anti-immigration and in the next breath they're off to Oz for cheaper housing. I'm pretty sure the irony of that goes right over their heads!
I personally find that those with the get up and go to relocate are the ones you want to employ. I think that's why so many Kiwi's do well in Australia and beyond.
I am all for immigration that is sustainable but for a long time I feel the country has lost it soul and just kept the gates open for fake growth.
Now even immigrants I talk to say that it is to high and they can see what it is doing to the country as a whole.
I would love to see a study covering all the costs to tax payers versus full benefits that this system brings I have a gut feeling it is a big cost to taxpayers in all areas like schools/hospitals/roads/social benefits.
10000-20000per year would be plenty in my view to try keep some normal functions stable like housing etc.
Australia is going to be in lockdown for many months, same with the Uk, and US. They will have multiple waves of the virus. UK may get 10 waves, as they are all trying herd immunity. The problem for NZ is if it comes out of lockdown too early, as we have the chance to eliminate it, although there are too many idiots out there that is making this more difficult by the day.
"Currently, the government will underwrite 80% of individual bank loans "
Again. Which bit is guaranteed?
Is the first 20% the Banks' risk, and the last 80% the Governments or is it shared 20/80 from the first dollar of default?
It makes a difference if you are a bank looking to lend.
So bankers will immediately refinance any 'suspect' lending they currently have on their books with a 'new' loan, and the Government takes 80% of every dollar of the 'new' lending risk?
Let's just hope it's for any new, gross additional lending. (ie; Over and above what's already on the books and that risk is taken 100%, first)
“Bond issuances that the Government is doing are still be subscribed and oversubscribed. So the system as it stands now is providing the amount of financing that we need. I’m comfortable with for that to continue to be the way that we work," he said.
by Audaxes | 11th Mar 20, 5:56pm
ANZ economists call for a minimum wage freeze and for the Government to increase its debt limit by $60 billionOf course - ANZ would love to park zero risk weighted government stock issuance on it's books in preference to increasingly shaky, overvalued collateral underpinning their residential property mortgage assets.
Except the citizen taxpayers would underwrite ANZ's position just as their depositors underwrite the mortgage assets.
MMT explained in one tweet
They also wrongly assume that government deficits create money, when actually they create national debt & growing regressive interest transfers from the many poor to the few rentiers who they seem to be serving Link
And last week from the RBNZ
https://www.rbnz.govt.nz/news/2020/04/anz-capital-requirements-s95-repo…
ANZ share price https://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=NZ%3AA…
New Zealand has apparently been taken over, "conquered" if you will, by a master race of Utopians. It's difficult to tell from this vantage point whether they will consume the capitalist business sector or merely enslave them. One thing is for certain. There is no stopping them; the Utopians will soon be here.
And I for one welcome our new socialist overlords. I'd like to remind them that as a trusted Interest commenter, I could be helpful in rounding up other kulaks to toil on their subsistence farms.
I will not be sticking around to find out how this ends if social distancing measures go on for month after month or industry are strongarmed into accepting government holding equity. We are talking about measures that would erase hundreds of thousands of jobs permanently and undoubtely leave a generation financially worse off not to mention the terrible effects of that decline (crime, violence, drugs, theft etc.) Idealism has its limits and this is risk taking I would be unwilling to participate in.
So you'll be off to where they are still experimenting with quarantine/or not, to see if the virus does wipe out their society or not?
No one knows what this sucker is going to do; no one. There's dozens, if not more, opinions on what it will do next. (Why was China so petrified of it in the first place?)
So, give me a country that at least tried to wipe it out and keep it out until we know better.
It'll be easier to stop quarantining you, than bring you back to life.
In its current form it will wipe out about 5/1000 people worst case.
That is the fatality rate, assuming everyone is able to get the medical care they need.
The disease quickly overwhelms hospitals, preventing people from getting the medical care they need, thus driving a higher fatality rate.
I imagine China was worried about the economic consequences and trade consequences, I doubt they cared about the relatively small number of deaths.
HAH. China is worried about the populace rebelling and having to have a very public crack down. That's the sort of thing that can happen when a disease spreads and ends up killing lots of people - the specific sort of societal threat that governments exist in order to solve. If your government can't solve it, no point having that particular government in command.
no one knows this virus yet, there are now reports of the virus reinfecting those that have already had it a short time before meaning herd immunity will not work very well, also it killing young with no apparent underlying conditions, and the death rate is higher in some countries compared to others so reporting rates are all over the place. even china has revised its deaths up by 50%, the british were not counting elderly dead in rest homes, the usa were miscounting deaths
so good luck heading off into the unknown
I predict that within five years from now NZ will be economically destroyed beyond redemption.
Even in the good times we are just too small a (working) population, spread far too geographically apart over mountain ranges for a basic standard of living to be economic. Too many inter- generational-non-workers- by-choice sucking the life out of those who work. Add to that a government intent on destroying entire industries as sources of wealth. I just can't see how things could be better in 5 years than now.
On 8 April , the RBNZ released its M10 data
https://www.rbnz.govt.nz/statistics/m10, showing 1,188,262,000,000, in housing wealth as of December 2019.
Given the very close correlation between household consumption and housing inflation, and the combined issues of wage growth and job security that many now face, can the Minister give reassurances that this wealth which has doubled in the past decade and increased by a factor of only five since the turn of the century will not be affected and its effect on "growth". As we await the RBNZ with their new forecasts in the coming week, a trip down memory lane.
http://quotesfromthebubble.blogspot.com/search/label/Brian%20Lenihan
It’s all a bit confusing isn’t it? Are we trying to eliminate this virus? Why would we need to distance if it’s eliminated? If the goal is not to eliminate then why the lockdown still?
Considering most of the population have a very low chance of COVID death, how long do they think those people will want to have no life or income for?
Spot on.
The incubation period, and when you can spread it, is between 2-10 days ( or 14 to be safe) so keep "Level 4: for 14 days after the last person is declared infected, and that should confirm 'Elimination". Then, keep the borders closed and free up New Zealanders to Level 1 and below.
Or, instead of staying at level 4 for that long, just drop it to level 3 when the obvious threat has passed.
Why stay in level 4 for 3 months when you could stay in level 4 for 1 month and level 3 for 2 months and achieve almost exactly the same outcome but with less economic and social destruction.
The answers to your question are obvious:
1. We know we haven't eliminated it yet
2. When we think we have eliminated it, we still won't "know" we have eliminated it
3. Therefore we need to take measures to ensure that if we are wrong about having eliminated it, it won't be able to take off like a bush fire and instead will be able to be detected and contained swiftly.
A plausible progression of lockdown would be something like this:
1. Level 4 for 1 month
2. Level 3 for 1-2 months, dropping to level 2 when we get 0-2 average daily new cases, excluding arrivals from overseas who are all quarantined
3. Level 2 for 3-4 months, until we get to 0 new daily cases, excluding arrivals from overseas who are all quarantined
4. Level 1 thereafter, until a vaccine or other material change in the threat posed by this virus is lessened (eg effective treatments, sophisticated contact tracing, other very effective mitigation methods).
There is an obvious opportunity for an innovative kiwi to start to put up Virus threat signs all around New Zealand. Just like the fire risk signs but even bigger and in more places. Then at least they can stop that damn jingle on the radio. It’s audio torture.
I know a lot of people that will just disobey a continued oppression of our freedom to mingle and meet if they continue on with this misunderstood control mechanism longer than 3 months. Seriously! This is just one of many viruses that kill we will experience in the future.
Apparently they weren't koalas but some type of large rodent. Wolf puppies were available though. For the "menu" see here:
What a disgusting place. They were advertising Koalas but may have been trying to con people as they obviously have less than zero morals.
https://www.newshub.co.nz/home/world/2020/01/chinese-food-market-where-…
Now listen comrade, remember we spoke about this...? you can either choose to keep taking the truth serum or you can go back for realignment. Up to you. Don't say you didn't have options.
Now, how about a nice government-approved meal... which gruel would you like. You can have the red slop, yellow slop, green slop or brown lumps. The brown one is the chef's own 100% synthetic version of Cuban Guinea pig pot roast. I'm told it's absolutely delicious.
Government open to buying equity in companies it views as "economically significant". Pros and Cons obviously, I am sure someone may have commented on this before but I'll proceed anyway.
"And in January, CFIUS gained increased powers to scrutinize deals for national security threats."
From:
https://www.cnbc.com/2020/04/16/chinese-takeover-of-europe-tech-firms-f…
Now, if New Zealand Government of the day (State is a term I feel unconformable with for my own personal reasons) needs to buy into local business for the above reason (foreign takeover) then I am all for it. Hopefully there is more detail on what policy changes are being planned? OIO scope may not be enough in these unprecedented times. This threshold in particular may need to change 'business assets worth over $100
million'.
Very interesting.
Step 1 - destroy the local economy with lockdown, forcing businesses to beg for capital from anywhere they can get it.
Step 2 - provide capital in return for ownership stakes at depressed values.
Step 3 - pseudo nationalise the economy via widespread state ownership of businesses.
The socialist dream, accomplished in 6 months. And all this being done while democracy suspended.
Yes, we are definitely going to have to practise social distancing continuously both socially and at work until a vaccine is discovered.
New Zealand's only previous pandemic, 1918 Flu Pandemic, tells us that:
1. That pandemic arrived in two waves: the first wave was relatively benign, scarcely worse than seasonal flu. the second wave was super deadly, killing 9000 New Zealanders in two months when our population was barely a quarter of today's. Pandemics can come in waves.
2. That pandemic first wave virus unaccountably mutated from the benign into the more deadly virus of the second wave. The virulence of the pandemic virus can change without warning.
3. That pandemic was no respecter of age: yes, the over 85 year olds were the worst hit, but you will be gob-smacked to see how it hit the other age groups from 20 to 60 years old; see the link below for age group mortality:
https://teara.govt.nz/en/graph/27794/male-and-female-death-rates-from-i…
I equate what's coming to a cross between the 1918 Flu Pandemic and the Great Depression if we don't practise rigorous social distancing while we await the hopefully rapid discovery of a vaccine.
Run these numbers
Hints? - see when they joined the RE ponzi scheme, Don't underestimate the power of subconscious/bias decision. All Govt apparatus, from PM, ministers, Civil servant leaders, local councils, Banks, RBNZ, paid/independent/journalist Economist - are all deeply inggrained into this RE/property scheme of F.I.RE economy - difficulties? - future tax payers bail out. Other input? secondary market etc - leave as it's just.. theory.
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