Post-Cabinet Press Conference: Monday, 9 March 2020

Thank you, Prime Minister. I’ve just returned from a meeting with the CEOs of New Zealand’s major banks. The meeting was part of the Government’s comprehensive engagement with business, industry groups, and workers as we work together on New Zealand’s response to COVID-19.

The meeting today followed a number of calls I had over the weekend with industry representatives and business people. I have to say I’m impressed but not surprised by the pace of work being undertaken on this common goal of supporting the economy as we respond to the global disruption created by COVID-19.

The discussion with the CEOs of major banks today was constructive and focused on the actions that both we and they are taking to respond to COVID-19. The banks reiterated that they are well prepared both in terms of their own operations and in their ability to work with customers to get through this. The Reserve Bank and banks reiterated the strength of the financial system and the stability of our banking system.

Both us and the banks have said from the start that it is important that business customers affected financially by COVID-19 contact their bank. I also today asked, and reiterated my request to banks, to be proactive in their contacts with customers to ensure any issues are dealt with as quickly as possible.

Today the banks have set out a range of potential options for supporting their customers, depending on their customers’ individual circumstances. These include 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. This comes on top of what is already being done in partnership with industries and business groups. I want to thank the banks for their approach to now, and continue to encourage both them and their customers to keep a constant dialogue up as we move through this process.

All of this, of course, comes on top of what the Government has already done in partnership with industries and business groups. This includes, as the Prime Minister has said, the support for the tourism industry, the seafood industry, the regional business support funding, and directing Government departments to cut their repayment times. Of course, IRD and MSD are supporting businesses and workers on issues like provisional tax readjustments, late payment and filing fees, wage instalment plans, and income support. We have the Ministry of Social Development’s rapid response teams already in place in regions such as Tai Rāwhiti and the announcement today about the removal of the standdown period. As the Prime Minister mentioned, Cabinet today approved the development of a business continuity package to help support the economy through the disruption caused by COVID19. The 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.

Secondly, the Treasury and IRD are to continue developing tax policy options in line with the goal of reducing the impact for affected businesses and to support businesses to maintain operational continuity. The focus here is on more flexibility for targeted small businesses to meet their tax requirements, targeted relief to support affected businesses and maintain employment, and support for measures for business investment.

Thirdly, the Treasury and the Ministry of Social Development have been directed to continue developing policy options to support households to maintain incomes in labour market attachment, with a priority on employer support with regional and national targeting options, income relief programmes to provide temporary financial assistance, and community wellbeing requirements to provide support to vulnerable individuals and families. The detail of this package is now being worked through. It will be discussed again at the COVID-19 Cabinet committee on Wednesday, and we expect to be in a position to make the detailed announcements next week. At all stages we will be engaging with business groups and industry representatives to make sure the business continuity package meets their targeted needs. Feedback that I’ve received from industry representatives and indeed the advice we’re getting from officials is that the rapidly changing situation we face is different from others that the economy has experienced in recent years. It is clear in previous situations such as the earthquakes which business were impacted, where they were, why, and how. It is different now. We’re seeing different businesses in the same industries in the same regions impacted differently. This requires a tailor-made response. The fact that we haven’t seen a situation like this before means it is important to get the details of this package right; in particular, the timing of support and the criteria that we will use. We have to keep in mind that this is a rapidly changing situation and we have been planning for multiple scenarios.

Today, I can also confirm that Cabinet has directed officials to work on a package of longerterm measures that may be required to support the economy, businesses, and workers. I reiterate that while we are planning for that situation, we are not predicating it. But it is responsible to do that planning now.

It’s important to note that all of this comes on top of our already expansionary fiscal policy and the work that we have done with the New Zealand upgrade programme to put $12 billion into infrastructure.

On Thursday, I will be expanding on our work programme, as well as other work that we’re doing, in a speech that I’m giving to the Wellington Chamber of Commerce. It is quite clear that the global economic disruption caused by COVID-19 is going to have a serious impact on the New Zealand economy, but New Zealand is well placed to respond. We have been running surpluses; our net debt position is at 19.5 percent of GDP, well below what we inherited and well below other countries. On top of the work we’re already doing. I’m confident that this package will help New Zealanders through this situation.

Thank you; happy to take questions.

Why Andy Coster over Mike Clement?

Oh, look, ultimately this is a decision where I’m going to reflect on the candidate that was chosen. However, what I will say is that Mike Clement is also an outstanding police officer—42 years of service—a man of great integrity who also showed his abilities time and time again, including on Whakaari/White Island. But, ultimately, I’ve made a decision here that I believe that I can absolutely stand by, which falls back on the ability for Andrew Coster to take the police forward into the future with the ongoing culture change, representation of the community, working alongside the community to make sure that we have the most effective police force possible.

Was the IPCA investigation into Mike Clement a factor?

It had no bearing, and you can see from the language that I’ve used that Mike Clement is a police officer I hold in very high regard.

Andy Coster was the youngest of the candidates? Was that a factor?

No. Again, it came down to the merits of each candidate, and, again, there are huge positives in a range of those different candidates, but in the end made the decision that Andy is the candidate who I believe can take the police force forward with the range of challenges, both prevention—the challenges of organised crime, the work he’s done in the front line in Auckland and Southern; he understands different regions—but also the ability to bring the community with him.

Will the IPCC investigation report into Mike Clement be made public?

I can’t answer that, but what I can say is that it had absolutely no bearing, and I continue to maintain that Mike Clement is a police officer of huge integrity, and I will continue to maintain that.

Do you think that the findings of that—

Regardless of that report, I believe that Mike Clement is a police officer of huge integrity.

Are you aware of the findings of that IPCA investigation?

That had no bearing, and so regardless of its findings or its process it had no bearing on my decision.

How many names did the State Services Commission put forward for your consideration?

I don’t want to get into the ins and outs of the final elements of that process. I mean, look, I’m happy to put in the process that the SSC went through. Ultimately, they go through a very rigorous process, and then I’m given candidates to select from.

And you made that final—

Sorry, what was that?

Was Andy Coster the first recommendation?

The decision was mine.

You made the decision?

I’m not going to go into the details of individual advice from the State Services Commission. They went through a rigorous process and it was my job to select a candidate.

Is it your expectation that that advice will be released?

regard.

I’d want to check general practice. I’ll stick with what’s the usual guidance in that

When was it that that you made that decision, and also is that five-year term a new thing?

So I wouldn’t consider that unusual. What we had with Commissioner Bush was two consecutive three-year terms, taking it to a total of six

When did you get the recommendation from the State Services Commission and when did you make the call?

Oh, I made the decision fairly soon after receiving paperwork, so within the turnaround of possibly a week.

You got the paperwork—oh, last week—

Within a space of, I would say, give or take, roughly a week—receiving and making the decision.

Prime Minister, on self-isolation, for coronavirus, the statutory minimum for sick leave is five days, but you’re supposed to stay away from work for at least 10 days if you think you might have it, is the Government—

14 days.

14 days—10 working days Is the Government looking at any kind of package to help that?

Look, at this stage, keeping in mind we’ve had 8,000 individuals go into selfisolation, without having had significant issues in that regard. MBIE is finalising some of the advice, in conjunction with the CTU and Business New Zealand, that it’s putting out in this regard. It’s quite clear, if someone is sick, then there are obligations for someone to, of course, continue to be remunerated while they’re sick; the guidance on that is quite clear. When someone’s not sick and they’re required to self-isolate, that’s when we’re really calling for the conversation to be had between employers and employees. Many will be able to work from home. For those that aren’t, we’re seeking agreement between employers and employees and as it—with regard to wider issues, those we are still having conversations about, but today that has not been an issue raised with us.

What about contractors like Uber drivers who, if they self-isolate, will not be paid?

Again, then of course we have the MSD system available for different scenarios that may arise—for instance, if someone is not directly employed and they’re unable to work, that’s when things like hardship grants may well be a viable option for them.

Prime Minister, on Air New Zealand, at what point would you consider any kind of bail out?

We’re not at that point. What I would say—and perhaps the Minister of Finance might have something further on this as well—we’re in a global environment where, at the moment, all airlines are obviously experiencing a downturn in the number of people who are choosing to travel, and, of course, who are restricted from travel because of border controls like New Zealand’s. What I’ve heard from Air New Zealand, they see themselves as no different in that regard. They acknowledge that they’re in an environment where they have to manage the changes in capacity. My view is that they’re a very successful airline, which, alongside other airlines, are going to have to manage this short-term storm of COVID-19. Do you have anything further to add on that?

Nothing, that’s fine.

Why is more not being done to protect some contractors, given there are so many contractors generally who work in some of these industries affected?

Well, first, you’ve made the implication that they don’t have forms of support available to them. Of course, we do have the MSD system. More broadly than that, as you can hear, we are working up the detail of a business continuity package. I don’t want to rule too much in or out before we finish completing the detail of that work.

BNZ has said they are now thinking it’s probable that New Zealand is going into a recession. What advice have you had from your officials that New Zealand—

We’ve not had that from Treasury. I’ll let the Minister of Finance respond.

Yeah, we haven’t had that advice, and I would say that there is a range of views about where we’re at. I’ve been very clear for some weeks now that the first quarter of this year is going to be a very challenging one where any growth is hard to find. I don’t think we’re in a position right now to alter the view that we’ve been given, which is that the New Zealand economy remains robust. So we don’t have that advice at this point. I also note that Mr Toplis, in the comments that he’s been making, has also talked about if that were to happen, it would be shallow, and we would come back quickly.

ANZ’s chief economist says scrapping next month’s minimum wage increase in response to coronavirus is a no-brainer. Are you considering that?

No.

No.

Will you consider it at all?

No.

I think, in fact, one of the benefits that we have—perhaps relative to other economies—is not only are we well placed in terms of low debt; our position around surpluses, the upgrade package, so that stimulus already going into the economy. Also we have to keep in mind what we need people to keep doing, of course, is continue to spend and consume. And so also the adjustments we’ve already had to benefits, and I would say, of course, what people are anticipating in their wages, is all part of continuing to keep the economy ticking over.

What’s the scale of this business continuity package?

Yeah, that’s obviously the detail that we’re now working our way through. The scale will be determined by the shape of the criteria. I want to reiterate that it will be a targeted package. I also want to reiterate that we have to have some time limits around it, so that will also affect it. But we have to work through those matters now, with the business community. But it is designed to be able to continue the focus we’ve had, which is that different sectors and different parts of different sectors are being affected differently.

The Budget responsibility rules give you a pass—a free pass—if there’s a crisis. Have we triggered that crisis?

I think we’re all aware that this is a very difficult and unique set of circumstances. I’m focused on making sure that we get a package together here that supports businesses in real time and enables them to be able to maintain and retain employees. The issue around the question of the Budget responsibility rules will, obviously, be clear when we do the Budget.

Has the Government got the mechanism to be able to target this down to these, sort of, micro-interventions that you may well have to make because of what you’ve been saying—the difference between businesses even in the same region.

Look, that’s right, and that’s the design work that’s now taking place, and I’ve got every confidence that we’ll be able to do that. We also have to accept that this is a rapidly evolving situation and that over time, some of those criteria elements may change as we move through the process. But for now, the feedback I’ve had from businesses and industry groups when I was speaking to them both last week and over the weekend is an understanding that this is affecting people in different ways. We’ll continue to monitor that, but we can design a package that supports that approach.

Also, just keeping in mind, you will have heard from the MSD figures that I’ve shared, we’re at a point currently where those numbers, and certainly the conversations the Minister of Finance has had directly with leaders in those different sectors—is that we are at the very early stages. We don’t want to wait, however, until we’re in a position where we’re seeing large-scale impacts without having done the work. We’re getting in front of it. We’re doing the work now. We are planning and prepared, and it’s all about making sure that package is ready; there is a safety net to keep our businesses ticking over as we weather the storm of COVID-19.

So overseas, obviously, they’ve taken a hit. At what point would you expect that to travel to New Zealand, and would you be prepared to put any pressure on companies to make that happen?

I think you’ll see from the work that we’re already doing, we’re already putting in place transparency measures that mean that people should be paying a more fair and reasonable price at the pump. That’s work we already identified through the Commerce Commission—is already under way.

Are you prepared to put pressure on, though, if that doesn’t start—

My message would be they’re always very quick to respond to an international crisis in order to put the price up; I’d hope that they would respond in the reverse and put the price down.

How soon should we see those prices go down?

Again, ultimately, our view is that we haven’t got, at the moment, enough transparency in the system, to add as a bit of a pressure point. We are working on that through Parliament as we speak. But I think—I’d like those companies to remember the consumers that they’re meant to be serving as well.

My barometer of extortionate fuel prices is the station near the airport, and I have noticed that, actually, prices have dropped in recent times.

Can you give us an idea of a time line of when that would be introduced, if it were to be introduced—would that be around the Budget, or following?

Yeah, that’s what we—I mean, this is a rapidly evolving situation, Henry, and it means that we, again, as the Prime Minister said, are getting ahead of the situation here. We’re not predicting the need to deliver that package, but we’re planning for the possibility that we will. Clearly, as we work towards the Budget, that gives us a good marker post, but we’re not being bound by that. We’re getting the work done now.

When is the earliest that could come—like how long—

Just to be clear, are you referring to the business continuity package? Yep.

Look, I mean, I’m not going to put a date on that. What I’m saying is we’re getting the work done now. We’ve directed officials today to pull that together. Over the next few weeks, we’ll be able to look at the shape of that and be ready to deploy it when and if it’s needed.

What sort of measures are you considering in that—

Oh, I’m not going to get into too much detail of that today, but I think you’ll all understand that if we were in a position to be needing a large macroeconomic input, then there would be a number of areas where we’d be wanting to see direct and quick impact from that.

Can you give us an indication of how much money that would be in—

No. Not today.

In terms of the response by the banks, is the Government sort of helping them out financially in any way, or at this stage is that just being done by the banks—

No, and there has been no request for that from banks. I mean, one of the things that we are doing some planning around at the moment is whether or not we would need to work with them on working capital arrangements for some firms who are facing temporary credit-related issues. Again, it hasn’t been raised, but it’s important to get ahead of that work. But what the banks are saying, and I think it’s really important to reiterate this, is they want a dialogue with their customers now rather than when, perhaps, a crisis emerges. I’ve outlined to you a set of specific things that the banks, I think, probably by now have released a media release about, saying what they are prepared to do for customers, and I just urge both customers and the banks themselves to have those conversations.

National today outlined its economic plan and wants to scrap your rental reforms, your workplace reforms, your regional fuel tax—among other things. What’s your response to that?

Look, I would have thought that at a time when people see the importance of making sure that New Zealanders are healthy and well, things like making sure that homes are warm and dry are exactly the kinds of measures that we need to stop putting pressure on our health system. So it’s disappointing to see they haven’t gotten in behind that

What do you make of the charity that hasn’t existed for five years still having $3 million in reserves and paying board members tens of thousands of dollars each year?

That’s not something I have any further detail on, other than what you’ve just outlined now.

It was the Quit Group that was commissioned to run Quitline. It stopped operating in 2015, so it has $3 million in reserves and has four board members that have been getting $18,000 a year to effectively do nothing.

I wouldn’t mind getting a little bit more detail from our officials on that, because I’m sure they will have an interest in that too.

What do you make of APEX union coming out and saying that their members are going to be striking this Friday as the coronavirus situation worsens?

As you can imagine, my first priority is making sure that there is no impact on lab testing as it relates to COVID-19, and I’m advised that it won’t have that impact, that the lab testing we’re doing is not linked directly to the action being taken by APEX. But I have to say, still, within the current environment that we’re in, my instinct is that most public health workers, most health workers, will be very mindful of the situation New Zealand finds itself in, in wanting to pull together as much as we can. This is, ultimately, though, an issue that needs to be worked through by APEX and the DHBs, but my primary concern is whether or not we can keep going with our lab testing, and we can.

What’s your message to union organisers before Friday?

It’s just to keep in mind the situation that we’re all in at present, and we can pull together as much as we can.

Prime Minister, just on the travel restrictions. It seems clear in Northern Italy, for instance, or Iran that the situation’s not going to be resolved within a week, so why keep making these for seven days? Why not make it indefinite?

Look, ultimately, it’s actually one mechanism we can use to not only review our existing border restrictions but assess whether or not wider international developments mean that we should be adding. We’re actually doing that more often than once weekly, and in fact, Health are working through a set of criteria that means at any point they can prompt Ministers to increase the border restrictions we have in place. So, really, it’s just a constant refresh, constant chance for us to reassess those border controls.

Do you have any reports on the impact that all these disruptions in the supply chains might be causing the retail sector in New Zealand?

Anecdotal at the moment mostly, but we are trying to—

Is there any need for any rationing?

I’ll let the Prime Minister answer that aspect of the question, but in the weekend I spoke to a Greg Harford from Retail New Zealand, and he certainly reflected the fact that for some retailers there have been issues, particularly around accessing inventory. He did say that a number of those retailers have now either found different places in which to source their products or have been able to source them from where they were. He, as the Prime Minister’s already alluded to, suggested that the issue that most retailers who have problems that are happening at the moment is cash flow, and obviously the measures we’ve discussed today can help with that.

The Government’s taking pretty urgent action. Would you expect the stabilisers of lower interest rates and the lower currency to start giving you some help?

Well, obviously that’s an independent decision for the Monetary Policy Committee of the Reserve Bank. I’ve met with the Reserve Bank Governor to discuss the macroeconomic situation, and I look forward to what he has to say on 25 March.

What did he tell you about the economic situation?

Well, broadly what we’ve discussed here, which is that clearly, you know, we can all see what’s happening. This is a period of time where the New Zealand economy, along with economies all around the world, is facing some serious issues, but decisions that he makes are ones for him to talk about.

Do you think the OCR should be cut?

I never comment on that.

Were there discussions today with the banks and perhaps the Reserve Bank about easing the Reserve Bank’s capital requirements, or perhaps introducing the new ones?

No, there were no discussions about that today.

Did you discuss his speech tomorrow and how the Reserve Bank could do fiscal policy in drag once it gets down below zero?

Is that an official turn of phrase?

Look, I have had a discussion with the Reserve Bank Governor about the speech that he’s going to give. That was more in the nature of him advising me what was in it. You know, he’s obviously entitled to give speeches like that, and I think it is important that we get some clarity around the kinds of options that are available. I certainly have a strong expectation, and I know he shares this, that where there were to be so-called unconventional monetary policy deployed, which I might say is not on the cards but were it to be deployed at some time in the future, there would be discussions with the Government, because, obviously, this is a situation where you say, not to use your language, but where fiscal policy and monetary policy come close together

On the Māori Party, Che Wilson, president, earlier kind of said that the Māori Party was playing towards Labour a lot. It felt like Labour would be a natural partner. John Tamihere seemed to throw that out the window on Q+A yesterday. What do you make of that?

Oh, I think I’ll leave that internal dispute that seems to be emerging between where the Māori Party would choose to align itself were it in that position, to the Māori Party. That’s a matter for them.

Is the Māori Party more of a threat, though, with John Tamihere in the mix?

No.

He said he would leave it to a female co-leader to negotiate with you should he be leader. What do you make of that?

That is a pure hypothetical situation.

Will Labour’s Māori electorate candidates be going back on the party list this election?

Oh, look, we haven’t made final decisions around the way that we’ll be applying the list in that regard yet, so that’s not a decision that we’ve made. But, again, what I’ll say is I have huge faith, based on the hard work that our MPs have done in each of those electorates, around their return. Some of these discussions with the Māori Party are obviously—and who’s standing—quite late in the piece, and, toe-to-toe, I back our MPs all the way.

Mr Robertson, do you have any update on Ihumātao?

No, nothing in particular today. We continue to make good progress.

OK, last question.

Is a decision closer?

We continue to make good progress.

Progress implies closer—every day. OK, I’ll take last question. Anything else? All right. Thanks, everyone.