A new scheme will offer a total of $6.25 billion in loans to New Zealand businesses.
Minister of Finance Grant Robertson. Photo: RNZ / Dom Thomas
It will allow those with annual revenue between $250,000 and $80 million to apply to their banks for loans of up to $500,000, for up to three years.
The government is guaranteeing 80 percent of the risk, while the banks are covering the remaining 20 percent.
It comes as the government warns unemployment could climb into double digits as the fallout from Covid-19 continues.
Economist Shamubeel Eaqub said it could reach between 15 and 30 percent.
Finance Minister Grant Robertson told Morning Report the government will provide a forecast on unemployment, but the situation now is very fast moving.
"[Eaqub] acknowledged that those forecasts really are, by and large, economists putting their fingers up into the wind," he said.
"When the Treasury does that kind of work it's taken as gospel and you only have to look at what happened on the money markets yesterday afternoon after we had the select committee to realise that we've got to make sure we get it right."
However, he acknowledged they will have to act quicker than they have in the past.
"We have to make sure that data is accurate. It's quite different from an economist who works privately or works for a bank - they can go on and make the comments that they make," Robertson said.
"Treasury's forecasts are the things we use to put budgets together; they're seen around the world as being what is the actual situation so I think it's completely understandable that we've got to get those right."
Robertson said the wage subsidy scheme is an important part of keeping people employed, with more than 650,000 now benefiting from the programme.
"That's an important scheme not just for income, but attachment between employees and employers because we do want those jobs and businesses to come out the other end and be able to keep going."
"I absolutely appreciate the uncertainty here because, right around the world, people don't know exactly how long this will last or how deep it is, but these initiatives are designed to keep that attachment for as long as we possibly can."
Robertson said the government is currently looking into rent relief for commercial tenants and is working with the property council to find solutions.
"We know for most businesses, their biggest cost is wages and that's what the wage subsidy scheme is about, and second is their rent - on average about 40 percent of the fixed cost of a firm. So, we do recognise that this is an issue."
Media is one of the sectors that is facing enormous pressure from an advertising drop off. MediaWorks have asked staff to take a pay cut, while NZME has indicated it will be reducing its workforce. Robertson said the government will act to ensure media plurality remains.
"With all respect to Morning Report and Radio New Zealand, which I enjoy, the state cannot be the only media. We need to make sure that we continue to support plurality of media sources in New Zealand. How we do that will depend a little bit on where those media outlets end up," the finance minister said.
"We understand the media sector is one of a number of sectors where, as we work our way through this, we're going to have to be looking at recovery plans."
Robertson said he has no doubt that, at the end of this, there will be a global resetting of the economy and debate over the size and role of government in businesses.
"It makes sense for New Zealand to ask ourselves some important questions such as what do we need to make here in New Zealand that we haven't made before, what kind of institutions are the ones to back that up, what does trade look like, how do we organise ourselves in an environment where movement will be restricted.
"I think it's actually responsible to answer those big picture questions, but obviously they come after we've done the short and medium term. But we can't put our heads in the sand and say things are going to carry on as normal. They're not."
- If you have symptoms of the coronavirus, call the NZ Covid-19 Healthline on 0800 358 5453 (+64 9 358 5453 for international SIMs) or call your GP - don't show up at a medical centre
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