The latest steps to insulate the economy against the chill of economic recession has been met with a warm, but muted response.

Prime Minister John Key today outlined a "Jobs and Growth Plan" intended to make life easier for small to medium sized businesses.

The package focused on tax changes worth $480 million over four years increasing businesses' short term cash flow and reducing compliance measures.

The two largest tax measures were removing the requirement for businesses to factor in a 5 percent growth in income when they pay provisional tax and cutting the penalty for underpaid tax from 14.24 percent to 9.73 percent.

Mr Key said this would increase cashflow by $245 million this year, giving hard pressed businesses a breather.

The business sector warmly welcomed the changes, but some said they did not go far enough.

Labour leader Phil Goff said the package was a useful, but underwhelming step.

"This rescue package stands in stark contrast to the $52 billion package announced by the Australian Prime Minister Kevin Rudd yesterday and Mr Rudd's commitment to move heaven and earth to protect Australian jobs," Mr Goff said.

Mr Key defended the announcement, saying the Government would soon be announcing the fast-track of building projects on top of the personal tax cuts reductions coming into effect from April 1.

"The combined effect of this infrastructure spending, together with tax reductions, will mean that New Zealand will experience a fiscal stimulus amongst the top five in the developed world, when compared on a relative basis," Mr Key said.

Other tax initiatives in the package included more generous business-related tax deductions and raising compliance thresholds.

Other elements in the package included:

* an expansion to the export credit scheme;

* extending what cases the Disputes Tribunal can consider;

* expanded business advice services;

* and a prompt payment requirement for government agencies.

Mr Key in his speech to the Waitakere Enterprise Business Club was blunt that New Zealand's economic prospects for the next two years were grim.

As an open economy and trading nation New Zealand would suffer from the international recession and the forecasts were "sobering".

However, he remained confident that already there was light at the end of the tunnel.

"I am confident that we will get through these tough times together. The New Zealand economy will recover strongly."

Asked why the Government was not spending more, Mr Key said a balance had to be struck between reducing pain now and not blowing out the Crown accounts for years to come.

"It is not always about the amount of physical money that you are spending. It is about the ease of doing business ... if you are solely going to measure things on the fiscal cost of them you are missing the point," Mr Key said.

The reforms to the Resource Management Act announced yesterday were another example of a non-fiscal measure which would assist business.

Mr Key said the long term debt projections of Treasury were not sustainable and while he did not think they would occur to that extent, his Government and future governments could not allow it to happen.

There have been calls from some businesses for further cuts to the company tax rate.

Mr Key said this was too expensive at this stage and, even if was affordable, it was not his highest priority.

"If all the sudden we strike a massive oil find and start getting lots of money then my preference would be to lower and flatten ... personal tax."