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Universal basic income or superannuation could be option to help economy recover from coronavirus - Bernard Hickey

Newsroom editor Bernard Hickey says the Government should consider extending New Zealand's superannuation scheme to everyone in the wake of the Covid-19 coronavirus pandemic, but if not, a universal basic income is also a good option.

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Bernard Hickey says the Government will need to drastically change the economy in the wake of Covid-19. Source: Breakfast

Speaking this morning to TVNZ 1's Breakfast, Mr Hickey said we are yet to see the full scope of the economic crisis which will be brought on by the global coronavirus outbreak.

"We're talking about a fall in output for the global economy of anywhere between 30-40 per cent in the June quarter - this really is a full stop at a very fast rate," he said.

"In the last three weeks, the global output has fallen more than it did during three years of the Depression from 1929 to 1932.

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Newsroom Pro editor Bernard Hickey says large parts of the global economy may not operate for years. Source: Breakfast

"This is something that will dominate our lives now for decades to come, because when you have that big a shock to the global economy, it always has some sort of flow on effect."

Mr Hickey said the Government has so far promised to push about $12-$20 billion into the economy, but quadruple that figure - or quintuple - would be needed to stave off most of the effects of the downturn.

"This is a complete rebuild of the economy that is required - a change in the way we do everything - and that is going to take some massive government intervention - particularly with people's incomes," he said.

"I think that's the next step we're expecting from the Government - some sort of wider income support package."

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They are fearing the worst as demand is rapidly rising and families already feeling the pinch. Source: 1 NEWS

A universal basic income - where every person is paid up to a certain amount per week unconditionally - is "the simplest, fastest, cleanest, fairest way to do it," Mr Hickey said, adding that "we may well see something like that".

Businesses will also need more support, not only to pay staffing costs, but for rent and goods and services, and this could lead to nationalisation of businesses not seen in New Zealand since the 30s.

"At some point were going to have to have a re-organisation of the entire economy where, unfortunately, large parts of it are going to have to be rescued by the government in some way or form," Mr Hickey said.

"After the 30s, a large chunk of our economy was owned by the state - it took 30 or 40 years of that before it started to unwind.

"We're obviously going to see the nationalisation of Air New Zealand, we're going to see the nationalisation, I think, of the rest of the media sector.

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The Government says the national carrier is too important to fail amid the coronavirus crisis. Source: 1 NEWS

"You're going to have to see a whole bunch of areas that aren't going to come back - retailing, fast food - we haven't really grasped the scale of this shock and how much we need to change."

In terms of certainty of income, another good option was to simply extend New Zealand's superannuation scheme to everyone.

"Apply that to everyone, it's simple," Mr Hickey said, "It means we're confident of an income and we can then go forward and do the work we need to do for each other and not worry if we're going to get paid.

"For a lot of people in business and government, that will mean they essentially work for nothing for their business - but they're getting paid by their government."