15th May, 2020
The New Zealand Government will extend the Wage Subsidy Scheme for another eight weeks, enabling businesses that have suffered a 50 percent reduction in revenue to access the new benefits.
The Wage Subsidy Scheme extension is part of a $4 billion lifeline for businesses as part of the Government’s Budget, unveiled on Thursday. Among the various initiatives for rebuilding the economy is a $50 billion centrepiece fund for COVID-19 recovery efforts.
A proportion of this funding will go towards supporting small businesses operating across a range of industries, with potentially more than $4 billion earmarked for SMEs.
MYOB New Zealand Country Manager, Ingrid Cronin-Knight, says the spending package will provide crucial support to many businesses across a range of sectors, helping them maintain staffing levels and provide greater certainty around their finances and operations for the coming months.
“Around the country, SMEs are preparing for a long winter ahead. As they navigate ongoing restrictions and face falling consumer confidence, having the Wage Subsidy extended will provide some breathing room – allowing them to continue trading, look at new opportunities and protect their staff,” said Cronin-Knight.
The Wage Subsidy Scheme will be extended by eight weeks, bringing financial support for some businesses to a total of 20 weeks. All of the same eligibility criteria and rules will apply, though the subsidy will now be available to businesses that have suffered a 50 percent reduction in revenue.
Businesses must prove this decline for the period in the 30 days prior to their application.
The Trades and Apprenticeships Training Package will help those who lost jobs during the COVID-19 crisis, or for those who want to upskill.
The fund will include courses linked to building and construction, agriculture, and manufacturing, as well as also vocational courses like community health, counselling and care work.
Cronin-Knight also believes the Government should also consider identifying opportunities for SMEs within the deployment of packages like the $1 billion Environmental Jobs package.
“This would encourage business growth and employment opportunities and will help SMEs in these sectors expand as they support our national agenda,” said Cronin-Knight.
Up to $10 million will be made available for SMEs to improve their e-commerce systems, and incentives or grants to encourage e-commerce adoption.
Cronin-Knight said the funding support announced today is a good start, as consideration around opportunities for business digitisation grows.
“Capital for SMEs is scant right now and we have seen over recent weeks, the SMEs who were able to manage their business remotely – even at a reduced capacity — have been able to maintain a degree of cash flow. Giving more businesses financial support to help digitise their operations is a step in the right direction.”
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The Government will also provide more support for business advice, in the e-invoicing project, Business Connect and the Better For Business programme.
Another way in which SMEs could be incorporated further in economic developments from today’s 2020 Budget is to provide them with the opportunity to participate in the Government’s major infrastructure projects.
This includes ensuring SME involvement in the ‘shovel-ready’ projects which will receive a $3 billion investment by the Government as it seeks to boost economic recovery.
Cronin-Knight also believes businesses will be pleased to see the Government’s recognition of the need to encourage entrepreneurialism, with $230 million set aside to support ‘risk-taking’.
This includes a $150 million fund for loans to cover up to 50 percent of a businesses’ R&D investment and $80 million in tax deductions available for unsuccessful or abandoned assets created as part of product development.
“Over a fifth of businesses surveyed in our recent Business Monitor wanted to see easier access to R&D tax credits to support their investment in growth and development.”
This money is apportioned as part of money reserved for “risk taking” ventures, designed for entrepreneurs to pursue fast-growth projects.
Businesses exporting goods will benefit from a huge $216 million boost to New Zealand Trade and Enterprise, which helps businesses access new markets and expand digital services.
The Government will pump $400 million to the Tourism Sector Recovery plan, a portion of which will go toward boosting domestic tourism interest with a marketing campaign.
Ultimately, Budget 2020 – the ‘Rebuilding Together’ budget – includes the above measures in a bid to create jobs and grow the economy through backing Kiwi exporters, encouraging entrepreneurship, and helping SMEs thrive in the digital economy.
“This Budget is about creating jobs. We know how businesses and workers have been impacted by this global pandemic. This Government is backing businesses to regain the confidence to invest as we work together to grow the economy in the face of this global recession,” said Finance Minister Grant Robertson.