WELLINGTON: New Zealand Prime Minister Jacinda Ardern, ministers in her government and public service chief executives will take a 20 per cent pay cut for the next six months given the economic impact of the coronavirus pandemic.

“This is where we can take action and that is why we have,” Ardern said on Wednesday (Apr 15) in a news conference announcing the decision.

She said the decision was made in light of the economic challenges New Zealanders are expected to face in the coming months. 

Despite having fewer COVID-19 cases than many other countries, New Zealand enforced a one-month lockdown in a bid to completely eliminate the disease from the country.

The country on Tuesday recorded four additional deaths related to COVID-19, taking the total to nine deaths in the country. It has recorded 1,366 cases of infection.

But the number of new cases has stayed significantly low since the lockdown and the health ministry said it was confident the country had passed the peak.

“We have passed the peak, that seems to be clear now,” Ashley Bloomfield, the director-general of health said in a news conference.

“We will be more confident once we know more about each of those new cases that has been occurring in the past week,” he added.

MORE FISCAL STIMULUS

The New Zealand government said on Tuesday it will unveil further fiscal stimulus this week as it forecast a surge in the unemployment rate to 26 per cent if tough lockdown measures to fight the spread of COVID-19 are extended.

New Zealand’s offices, schools and non-essential services have been closed for the last three weeks, with the country experiencing one of the strictest lockdowns globally.

The government is expected to decide next week whether it will extend that current Level 4 shutdown, which is the highest ranking on the scale. If it does so, Treasury has forecast it would increase unemployment to between 17.5 and 26 per cent from the current 4 per cent.

Mapping economic scenarios from the lowest restriction level to the highest, the Treasury said declines in annual gross domestic product in the year ending March 2021 would vary from around 13 per cent to close to one-third.

Finance Minister Grant Robertson said work on further government investment to protect jobs, support cash flow, and prepare the economy for recovery was “well advanced”.

“The next steps in the government’s plan to support businesses will be released later this week,” he said in a statement after the Treasury forecasts were released.

Robertson said unemployment could be kept below 10 per cent, and return to 5 per cent in 2021 with additional government support. The economy could bounce back to be NZ$70 billion (US$42.62 billion) larger by 2024 than in 2019, Robertson said.

The government has already announced fiscal measures, including wage subsidies and support for small businesses, of around NZ$20 billion.

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