Coronavirus: Cutting public sector workers' pay not currently proposed - Finance Minister

The Finance Minister isn't currently considering any proposal to cut the pay of workers within the public sector as COVID-19 continues to wreak havoc on the country's economy.

As the SARS-COV-2 virus continues its global spread, economies being shattered by the consequential effect on trade and travel. In New Zealand, many businesses have also had to close due to the lockdown in place to limit people's exposure to others potentially with the virus.

While the Government has introduced a wage subsidy to help soften the blow, a string of businesses have had to cut workers' pay or, in some cases, make employees redundant. 

When asked by MagicTalk's Peter Williams on Thursday whether any consideration had been given to cutting the pay of workers in non-essential parts of the public sector, Finance Minister Grant Robertson said it wasn't something that had been proposed to him.

"I haven't heard a particular proposal around that. We are well aware that a lot of businesses that are taking pay cuts," Robertson said.

"Those are ideas I guess that will be floated and the Minister of State Services and the State Services Commissioner will, no doubt, be talking around that.

"I do know that an awful lot of public servants have been working 24/7 over the last few weeks. That is how we get a wage subsidy scheme going. That is how we make sure those essential services are running."

With businesses closed and people not allowed to leave their homes unless it is for essential services or exercise, many employers are having their staff work via alternative methods, such as remotely from home. Robertson said that was applicable to many public servants as well.

"The majority of people who are working from home, in terms of being public servsants, are still working, and there is a lot of work to be done to prepare ourselves both for getting out of this and getting into recovery as well as the short-term work. We would expect those people to be working," Robertson told MagicTalk.

"One of the things we will do as we move through this over the coming months and years, we will be asking ourselves questions about what is the role of Government here.

"I think one of the things we have seen over the last few weeks is the importance of having a robust public service."

On Wednesday, when appearing before the Epidemic Response Committee, Robertson said that there will be a "quantum economic shock" greater than the 2008 Global Financial Crisis due to the COVID-19 outbreak. 

"These are very extraordinarily tough times for the whole country, for businesses and workers especially, but we have to remember the economy was robust going in - sound, and full of innovative and successful people, and it still is," he said.

Robertson highlighted how New Zealand's net debt was low before the coronavirus impacted the global economy, explaining how the country has more room to spend. 

Crown financial statements for the eight months to the end of February released this week show net debt was $600 million below forecast at 19.2 percent of GDP, and the surplus of $1.4 billion was $100 million above forecast. This compared extremely well with countries like the United Kingdom and the United States. 

Actions the NZ Government has taken to soften the blow include:

  • The wage subsidy scheme that will be worth between $8 billion and $12 billion 
  • A $500 million increase to public health funding for the immediate response
  • A six-month deferred mortgage scheme for home-owners affected by the virus, part of $6.25 billion package to support businesses 
  • A doubling of the Winter Energy Payment 
  • An increase to main benefits
  • Rent freezes and a ban on terminations of tenancies/evictions other than in exceptional circumstances
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