New Zealand’s government has announced a spending package equivalent to 4% of GDP in an attempt to fight the effects of Covid-19 on the economy, in what ministers called the most significant peace-time economic plan in the country’s modern history.

It includes covering wages for people who are required to self-isolate but cannot work from home, or those caring for relatives who are sick with the virus, even if they are not sick or do not test positive for Covid-19.

“This package is one of the largest in the world on a per capita basis,” Grant Robertson, the finance minister, told reporters at New Zealand’s parliament on Tuesday.

On Tuesday, authorities began spot checks on travellers, with two people arriving from south-east Asia already facing deportation for failing to self-isolate.

Stephen Vaughan at Immigration NZ said: “This kind of behaviour is completely irresponsible and will not be tolerated which is why these individuals have been made liable for deportation.”

The NZ$12.1bn stimulus includes wage subsidies, bolstering the healthcare sector’s response to the virus, more money for low-income families and those on social welfare, and changes to business tax.

New Zealand has only eight confirmed and two probable cases of Covid-19. But a decision to impose strict travel restrictions on the weekend – requiring almost all travellers arriving from anywhere to self-isolate for 14 days – is expected to wreak havoc on business, especially in the country’s tourism sector, New Zealand’s biggest export earner.

Businesses hard-hit by the virus – experiencing more than a 30% decline in revenue compared to last year – will be eligible to receive wage subsidies to keep paying staff.

Full-time workers will receive $585 per week under the scheme – currently set to end on 30 June – with $350 paid to part-time workers.

Those required to self-isolate or care for someone who is sick will receive the same amount. The wage subsidies will apply to all employers in New Zealand – including self-employed people – providing they do not already work from home and cannot perform their jobs remotely.

“We hope to save some jobs through this package, but we will not be able to save all jobs,” Robertson said. “We cannot guarantee that all workers will be retained. This is about helping businesses to adjust.”

Money has also been allocated to redeploying workers in the hardest-hit regions – beginning with Tairāwhiti on the east coast of New Zealand’s North Island, where the forestry sector has already been hard-hit. Business tax changes costing $2.8 billion will free up cash flow for employers, the government said.

The package includes $500m for healthcare, including doubling resources for the public health units tasked with tracing contacts of people who become unwell, bolstering intensive care capacity at hospitals, and money to support primary care doctors.

Those on social welfare will receive an extra $25 per week.

Robertson said that globally, each country was dealing with a different situation. But he added that the wage subsidy scheme he had announced was “significantly more generous” than that of New Zealand’s nearest neighbour.

The maximum each business can receive is set at $150,000, compared with Australia’s $25,000 limit per employer.

He said the stimulus package totalling 4% of New Zealand’s GDP was bigger than Australia’s (1.2%), Britain’s (0.6%), Ireland’s (0.9%), or Singapore’s (1.3%).

“We are acting now to avoid the kinds of scenes that we are seeing overseas,” Robertson said. He added that the package was “just the beginning” of the government’s Covid-19 response, rather than a one-off.

Jacinda Ardern, New Zealand’s prime minister, announced on Monday a ban on gatherings of more than 500 people. Schools remain open. But leaders expect a recession for the country with a sharper shock than the 2008 global financial crisis.

“We will not be any different from them,” Ardern said Tuesday, of other countries that have been harder hit than New Zealand. “The hit will be significant.”

Leader of the opposition national party Simon Bridges criticised the stimulus package, saying it lacked “ambition” and the government’s priorities were “muddled and confused”.

“What we see today is money flowing faster into the hands of beneficiaries than workers … and that is a crying tragedy,” Bridges said.



