As the world continues to grapple with the COVID-19 pandemic, the Ardern Government has swung into action, announcing one of the largest stimulus initiatives per capita in the world, equating to around four percent of GDP.
In a bid to protect the Kiwi economy against one of the most significant peacetime threats to business, the government has launched a stimulus package that includes wage subsidies, business tax breaks, money for low-income families, healthcare support, and more.
“This package is one of the largest in the world on a per capita basis,” said finance minister Grant Robertson, at New Zealand’s parliament today.
And although the country only has 11 confirmed cases of COVID-19 (at the time of writing), the fallout of the pandemic is expected to take a heavy toll on businesses, particularly those in tourism and hospitality.
UPDATE: The Government has announced New Zealand is entering threat level 4, with only essential businesses allowed to keep trading, where trade can’t be sustained under lockdown conditions. For a list of essential services, see here.
With travel bans in place and those flying into the country expected to self-isolate for a minimum of 14 days upon arrival, New Zealand’s largest business sector, tourism, is expected to be among the hardest hit.
As a result, the Government has released details of a wide-ranging support package that aims to support sick workers and keep businesses open for as long as possible.
Other details of the package include $126 million in COVID-19 sick leave and self-isolation support and a $600 million aviation support package.
Businesses that can demonstrate a 30 percent or greater decline in revenue for any month from January to June 2020 compared to 2019 (including projected revenue) will be eligible to apply for subsidies.
Subsidy payments will be made as a lump sum at a rate of $585.80 per week per full-time worker and $350 for part-time workers, with a limit of $150,000 per business.
UPDATE: The wage subsidy scheme has recently been streamlined in response to raising the threat level to stage 4. You can find our breakdown of the wage subsidy here.
Arriving 1 April, the threshold for provisional tax will lift from $2,500 to $5000 with an aim for reducing business cash-flow pressures.
Further, the Government has indicated plans to waive interest on some late tax payments, but businesses will be required to prove they are facing hardship as a result of COVID-19.
Prime Minister Jacinda Ardern also announced a large package specifically to assist the tourism industry, with $10 million to be spent on international marketing with the stated aim of diversifying the international visitor market.
A further million will be put towards domestic marketing campaigns, Newshub reported.
“Too often we perhaps neglect our domestic tourism market,” said Ardern.
“We know that those regions that are specifically being impacted by the decrease of Chinese tourism are for instance Auckland, Rotorua, Queenstown and Christchurch in particular.”
SME businesses around the country will welcome today’s announcement of targeted relief from the Government in response to coronavirus, but how it is delivered will be crucial to its success, says leading tech company MYOB.
In an earlier media release, NZ country manager for MYOB, Ingrid Cronin-Kight said the stimulus is a clear sign of support from the Ardern Government.
“This is great news for the country’s half a million SMEs, which sit at the heart of our local economy,” said Cronin-Knight.
But how the package will be delivered is crucial, with clarity needed on how businesses can demonstrate eligibility.
“Rapid, targeted delivery of this package is key,” said Cronin-Knight.
“This investment must be put into the hands of small businesses as quickly as possible, to help them pay staff and suppliers, and maintain cash flow.
“Our experience over two decades of working with local businesses tells us that cash flow is going to be the biggest issue in ensuring the survival of SMEs.
“It’s vital we get this process right so we can ensure businesses are getting the urgent help they need now.”
And while MYOB plans to continue to develop its own messaging and resources to best support NZ businesses, Cronin-Knight offered some advice of her own.
“From the business side, SME operators need to focus on communication – talking to their banks and financial advisors about how they can help to even out cash flow bumps and restructure debt, while employers should be having conversations with their staff about any shared solutions the business can come up with to reduce cost.
“It will also be timely to review any spending and evaluate future projects, with a view to seeing whether you can defer any costs.”
Stay up to date with the latest news and advice from MYOB by subscribing to our newsletter today.
Get regular business news and tips in your inbox to help keep your business firing.