Government must move urgently on Covid-19 relief, says Business Central

Business Central welcomes the Government's announcement but says they must move with urgency. Photo
Business Central welcomes the Government’s announcement but says they must move with urgency. Photo
The Government must move urgently on its targeted wage subsidies and other initiatives it’s working on for businesses hurt by Covid-19, says Business Central chief executive John Milford.
“We welcome yesterday’s announcement but the Government must move with urgency.
“Businesses, particularly small businesses across the hospitality, hotel, tourism, and retail sectors and those that export primary produce, are feeling the pinch right now, and the Government must do what it can to ensure they can stay in business and keep staff on.
“New Zealand has one of the highest rates of tax across the OECD and the Government should use its spending to assist affected businesses and their employees.
“Targeted tax help, such as deferred payments on provisional tax and GST, and Government paying its bills sooner, would be a great start, but it’s also not just about the size of the spend, it’s about the timing.
“Businesses are hurting now and it’s likely to get worse before it gets better. We’re pleased to see the banks are looking at reducing loan repayments and making some business financing arrangements interest-only, but like the Government’s plans, these need to happen before things get any worse.”
BusinessNZ has welcomed news that the Government will introduce a targeted wage subsidy for businesses hurt by coronavirus.
Chief executive Kirk Hope said the whole BusinessNZ Network had been involved, with business organisations EMA, Business Central, Canterbury Employers Chamber of Commerce and Otago-Southland Employers Association actively engaging on the support package proposal.
“We are glad the Government has recognised the gravity of the situation for businesses and has offered relevant support, similar to that offered to businesses affected by the Christchurch and Kaikoura earthquakes.
“It is also encouraging to know that the Government is considering a longer-term package if the situation requires,” Mr Hope said.
He welcomed the suggestion of targeted tax help, possibly with deferred payments, for businesses hurt by the virus’ economic effect, the Government’s action in asking all government agencies to pay their bills to small business as soon as possible.

Cabinet yesterday approved the development of a Business Continuity Package to help support the economy through the disruption caused by Covid-19.

“New Zealand is well-placed to respond to Covid-19. We have been running surpluses and our net debt position at 19.5 per cent of GDP is well below what we inherited, and well below other countries,” Finance Minister Grant Robertson says.

“We’ve also got ahead of this, through the $12 billion New Zealand Upgrade Programme of road, rail, health and school infrastructure investment around the country.

“Government Ministers have been in regular contact with businesses and industry groups as we work together to respond to the impacts of Covid-19. We have already taken action to support businesses and workers, and we are now in a position to announce the next steps in response to this rapidly changing situation.”

The Business Continuity Package includes:

 ·         a targeted wage subsidy scheme for workers in the most adversely affected sectors.

·         training and re-deployment options for affected employees; and

·         working with banks on the potential for future working capital support for companies that face temporary credit constraints;

As part of the package:

 ·         The Treasury and IRD have been directed to develop tax policy options in line with the goal of reducing the impact for affected businesses, to support businesses to maintain operational continuity.

·         The Treasury and MSD have been directed to develop policy options to support households to maintain incomes and labour market attachment.

The detail of this package is now being worked through. It will be discussed again at the Cabinet Covid-19 committee on Wednesday, and the Government expects to be in a position to make further detailed announcements next week.

At all stages, says Robertson, the Government will be engaging with business groups and industry representatives, to make sure the Business Continuity Package meets their targeted needs.

He will be making a speech on Thursday at a Wellington Chamber of Commerce event, expanding on the Government’s approach.

However National’s Finance spokesperson Paul Goldsmith believes more urgency is required from the Government with respect to a relief package for businesses affected by coronavirus,

“The announcement (yesterday) that the Government is thinking about a business continuity package and expects to make decisions next week is startlingly flat footed.

“The Government say they’re trying to get ahead of this but they’re getting bogged down by detail.

“Affected businesses are struggling and need tangible support now. They now have to wait another week before they see any sort of relief package.

“Businesses need certainty and relief in the short term followed by broader economy-wide changes, like tax relief, so the economy can quickly bounce back from the downturn.”