National has come up with a more generous and better targeted plan for small businesses hit by the Covid-19 lockdown:
Leader of the Opposition Simon Bridges has today announced the first part of National’s plan for getting New Zealand working again.
“New Zealand has flattened the curve. Our first priority now must be to lift the restrictions that are flattening the economy.
“We need to get cash flowing to the thousands of small businesses that were forced to close in the national interest, and left shouldering a disproportionate amount of the economic burden.
Businesses, and the jobs they support, come and go at the best of times.
But these are the worst of times owing to circumstances beyond their control and as a direct result of government directive.
The directive was made with the best of intentions and for the public good but that in no way softens the blow to businesses nor reduces their need for help.
“To reduce the damage and to save jobs, National would offer a GST cash refund of up to $100,000 – based off the GST they paid in the 6 months to 1 January 2020 – to the small businesses most affected. They would need to demonstrate a revenue drop of more than 50 per cent across two successive months due to the lockdown rules.
“We estimate this could benefit up to 160,000 businesses and save countless jobs.
“If the business paid more than $100,000 in GST over that period, then they would be able to claim up to an additional $250,000 as a repayable loan over 5 years.
“National understands the key to growing the economy is to encourage and incentivise business investment.
“That’s why we would temporarily lift the threshold to expense new capital investment for firms. The Government lifted the threshold from $500 to $5000 as part of its Covid response. We’d go much further and lift it to $150,000 for two years.
For example, if a company spends $145,000 on a new machine to improve its productivity, rather than depreciating that asset over many years, it will be able to expense the full $145,000 in this tax year.
“What we do in the next few months is critical to help businesses survive and save jobs.
“The Government took the right steps to contain the virus but already it’s stalling on what to do next.
“National will work alongside New Zealanders to achieve jobs, sustainable growth and boundless opportunities for New Zealanders and their families.
“Kiwis have done a great job self-isolating and social distancing to save lives. But with 1000 people a day joining the dole queue, we now need to turn our attention to saving jobs.
“National will get New Zealand working again.”
BusinessNZ says National’s proposals for business support would help build investment and confidence.
Chief Executive Kirk Hope says National’s proposals for cash grants, low-interest loans and a higher cap on depreciation are sensible options. . .
Luke Malpass says Bridges has hit the right note:
. . .For a start he has been positive: although all the usual political point-scoring applied, he has announced a new policy that, were it to be enacted, would greatly assist many small businesses which are currently being nursed through the continued lockdown. It is new, it has been roughly costed (at a cool $8 billion it is not chump change) and it is specifically designed to support small businesses which will struggle to make payroll once they can start operating again.
The second policy announced — a temporary instant asset write-off for investments of up to $150,000 (supercharging the Government’s $5000, which was increased only in March) is also good policy given the circumstances. It is designed to provide an extra incentive for firms to invest as the lockdown continues to wind down.
Importantly, the policies are both forward-looking and recognise that as the economy loosens, the next wave of Government support is going to be needed. This will clearly be the focus of Grant Robertson’s Budget next Thursday.
The entire basis of the lockdown was that the Government was prepared to induce a sharp recession in order to avoid a surge of Covid cases resulting in deaths, which would in turn lead to an elongated downturn, driven by fear and uncertainty.
Yet as the will-they-won’t-they nature of the Covid alert levels rolls along the Government risks having both the sharp and deep recession, followed by a drawn-out period of uncertainty which it sold the New Zealand public on hopefully being able to avoid.
It is this risk that Bridges is seizing on, pushing the Government to move to level 2 quickly, and it is not unreasonable. . .
The Prime Minister was praised for her announcement explaining the alert system levels but they no longer mean what she said, and what the Ministry of Health’s website, say they mean.
A couple of weeks with new cases in single figures, two days with no new cases and then just one confirmed and one probable case yesterday should mean the risk of community transmission is low.
People are losing patience with the constraints under which we’re working and the lack of information on what will happen next, and when it will happen.
We’ll learn today what will and what will be permitted at Level 2 but won’t know until Monday when we’ll get there.
Clutha Southland MP Hamish Walker writes of the need for certainty:
. . .The Government needs to be giving details of the conditions that will enable an easing of the alert levels, and when Southland will be able to function normally again. If normal functioning is not possible, the Government needs to tell us what restrictions will be put in place and what support there will be for businesses?
The Government needs to be providing details to us now so businesses can plan.
Sir Bill English once said to me “Hamish, it’s uncertainty which kills business and the economy. People can live with negative decisions that affect them, but you need to tell them so they can plan.” . .
The government isn’t following this advice and National has stepped into the vacuum with a policy that would provide certainty and enable businesses to plan. Unfortunately it’s in opposition and therefore not in a position to implement it.
That leaves us with uncertainty until the government deigns to provide us with the information we need and the assistance businesses require.
The full speech is here.