Prime Minister Jacinda Ardern says the wave of Omicron cases is set to hit a peak in three to six weeks.
Ardern provided details on the conditions under which vaccination mandates could be eased as protests continue around Parliament's grounds.
She said the seven day average for cases now exceeded 1600.
"It's likely then that very soon, we will all know people who will have Covid.
"There was a time when that was a scary prospect but it doesn't have to be now,"
Ardern said New Zealand was in a stronger position than many places to weather the Omicron storm.
She said in three to six weeks, Omicron numbers would probably peak.
Then they would decline drastically.
"What we'll be looking for is a clear indication that we're on the other side of it."
Ardern said it was crucial to manage the pandemic "with as few restrictions on our daily lives as possible".
From late March, it would likely be more realistic to ease public health measures, the PM said.
She said measures imposed have "always been the least bad option".
Ardern said some mandates would inevitably be less necessary after Omicron subsided.
Ardern said mandates were likely to remain important in some places, such as some healthcare sectors, where vulnerable people were exposed.
"If our health system can cope, everyone gets better health care."
She addressed the issue of vaccine passes.
"Once we come through a wave and a peak of Omicron, that equation changes because many unvaccinated people at that point will have been exposed to Covid-19.
Vaccine passes will likely be removed when New Zealand moved away from the red traffic light stage, Ardern said.
"But masks still are helpful, and at different stages you have different gathering limits."
Asked if Omicron was worse than the flu in terms of fatalities, Ardern said Omicron was more mild and moderate for most people.
"The issue is that Covid is in a pandemic state, so the issue is the cumulative impact of people getting it all at once."
She said health officials wanted New Zealand to be cautious as winter approached.
Ardern said new variants and potential future waves meant it was still likely the traffic light system would have to be maintained.
"We need to ensure our health system can manage a heavier burden as well."
She added: "We must brace for the next six weeks."
Ardern said New Zealand had already stopped lockdowns, was soon about to start opening international borders, and was preparing to wind down MIQ.
The PM was asked if the testing system collapsed in Auckland, and said it had not.
"The issue is we have a large number coming through," she said.
But rapid antigen tests had been prepared for that, she said.
Ardern said based on health advice and the likely impact of Omicron, changes to vaccine passes would probably happen sooner than a change to the traffic light system.
Finance Minister Grant Robertson said: "We are in a position where people can continue to travel and eat out ... It is still safe to do that but obviously people will come to their own conclusions."
The PM addressed the protesters at Parliament directly.
"Everyone is over Covid. No one wants to live with rules and restrictions, but had we not been willing to protect one another, then we all would have been worse off as individuals.
"We all want to go back to the way that life was and we will, I suspect sooner than we think."
Ardern said she would not put thousands of people at risk or dismantle swathes of the pandemic response system just because the protesters "demanded" that.
She said she had confidence in Police Commissioner Andrew Coster and "absolute support" for police.
The PM said it was crucial for police independence to be upheld.
She said the "bullying and harassment of Wellingtonians" was unacceptable and she was disappointed some opposition MPs appeared to be caving in or talking about making concessions to protesters.
Businesses hard hit by the red light setting and Omicron will be able to get some relief from a new Government support scheme, Finance Minister Robertson announced.
The new Covid Support Payment of a maximum of $24,000 will be made available for businesses struggling with a business downturn during the red light setting and the Omicron outbreak.
Each payment is $4000 per business plus $400 per full-time employee. It will be capped at 50 FTEs or $24,000. Businesses have to show a 40 per cent drop in seven consecutive days within the six weeks prior to the shift to phase 2 of the Omicron response on February 15.
"We believe that this will get people through the worst of the Omicron outbreak," Robertson said.
He said changes would be made to the Small Business Cashflow Scheme, which related to top-up loans.
Robertson said the economy continued to outperform expectations.
He said international experience showed Omicron cases rise rapidly but peak at four to six weeks.
After that, cases plummeted and consumer confidence tended to bounce back quickly, Robertson added.
Businesses can apply for the first payment from February 28 and payments start from March 1.
It is available fortnightly basis for six weeks – three payments in total.
Robertson said that reflected the expected timing for Omicron to peak and ease again.
"We will continue to closely monitor the situation and have the option to extend the payment if this if necessary."
Earlier, Ardern said restrictions could well be eased more quickly than many people expected once Omicron had peaked. The issues she is expected to address include the mandates that cover about 45 per cent of the workforce.
They are the biggest focus of attention of the protesters outside Parliament but on TVNZ's Breakfast, Ardern said her decision to provide more clarity on those issues was not a result of the protest.
"My job is focusing on the growing pandemic and speaking to the future. Those measures are for all New Zealanders, not as a result of the activity taking place on the [Parliament[] lawn today."
She said she would not engage with those protesters, and would hold that position as long as illegal activity continued.
She said Omicron was her primary focus, as the outbreak continued to swell: today there were 2365 new community cases of Covid-19.
There were two further Covid-19 related deaths, bringing the total to 55 since the outbreak began nearly two years ago. 116 are in hospital and one in ICU.
It is a week since Ardern announced phase 2 of the Omicron response. The Ministry of Health has moved to more to rely more on rapid antigen testing as the PCR testing system came under pressure.
Opposition parties Act and National have both called for the Government to review whether mandates were still needed, and how long for.
National Party leader Christopher Luxon called on the PM to set out the criteria or a general timeline for when the mandates might ease. In an opinion piece on nzherald.co.nz this morning, Luxon said they were creating division in wider society and within families, and it was time the Government confronted the issue.
Early this morning Police moved to install concrete barriers on the roads around the perimeter of the protest area in a bid to stop it from getting larger.
A statement from the groups representing many of the protesters to those protesters said the way that was done could have damaged attempts to engage with Police.
"Police have for many days been talking about implementing a traffic management plan, but the way this action was carried out in the early hours was disappointing and counterproductive to maintaining positive relationships."
The vehicle was damaged while later being towed and an $11k claim by the owner followed.