Finance Minister Bill English is ruling out a Government bailout for struggling farmers to prevent widespread foreclosures.
Opposition leaders have called on the Government to offer a relief package to farmers, hit hard by low dairy prices and current dairy debt of $38 billion.
However, Mr English told TVNZ's Q&A programme today that a bailout was out of the question.
"The Government has in place a system for dealing with hardship because you are going to see, for a small number of dairy farming families, some real distress."
The Government's role was to provide a stable framework, such as low interest rates and favourable changes to the Resource Management Act (RMA), he said.
"If the opposition want to support the dairy industry they should vote for the TPP (Trans Pacific Partnership) and the changes in the RMA."
While he admitted the TPP would not help farmers in the near future, it would indicate politicians were taking action that would underpin long-run confidence in the dairy industry.
Fonterra on Tuesday trimmed the forecast dairy payout for the current season to $3.90 per kilogram of milk solids from $4.15kg milk solids.
Farmers urged the Reserve Bank to cut interest rates, and on Thursday Governor Graeme Wheeler announced a record low cut to the official cash rate, setting it at 2.25 percent.
When asked if three years of low dairy payouts could result in large numbers of dairy farmers defaulting on debt, Mr English replied it was hard to imagine it being a threat to the economy.
"A few billion of losses for the banks is not a threat to financial stability. The regime that's in place now means the banks are stronger than they've ever been," he said.
"The dairy industry's had a pretty good run and a lot of their balance sheets are in reasonable shape."