Yesterday Hon Grant Robertson delivered Budget 2020, which he called “the most significant financial commitment by a New Zealand government in modern history”. The Budget establishes a $50 billion COVID-19 Response and Recovery Fund which aims to boost critical public services, fund infrastructure and provide an unprecedented injection for the recovery and rebuild of our economy. To build on the previous business support measures taken to date (outlined in our previous post), the Fund includes a $4 billion Business Support package made up of the following key measures:
- Targeted extension of the wage subsidy scheme – Estimated to cost up to $3.2 billion, the wage subsidy scheme will be extended for a further eight week period for those who have suffered a 50% reduction in turnover over the 30 days prior to making an application, compared to last year. This extension will follow on directly from the end of the first twelve week scheme.
- Loan scheme for research and development (R&D) –The Government is launching a $150 million short-term temporary loan scheme to incentivise businesses to continue R&D programmes that may be at risk due to COVID-19. The loans will provide one-off finance and will be administered by Callaghan Innovation.
- New Zealand Trade and Enterprise (NZTE) funding – $216 million to NZTE to provide additional support for exporting firms. This includes increasing activity for New Zealand firms in priority markets and expanding the digital services available for firms.
- E-commerce funding – $10 million in funding to support small businesses to improve their e-commerce service offerings and incentives/grants to encourage e-commerce adoption. The Government will also provide further support for business advice, the e-invoicing project, Business Connect and the Better For Business programme.
With $13.9 billion already spent (including on the wage subsidy scheme) and another $15.9 billion worth of initiatives revealed in yesterday’s announcement, $20.2 billion of the Budget remains unallocated for future investment.
This support and more will likely be needed with Budget 2020 also unveiling a sea of red in the nation’s books. The deficit is forecast to increase to $29.6 billion by next year, with net Crown debt rising to 30.2% of GDP this year and peaking at 53.6% in 2023.
In the months leading up to the election, we will be monitoring Government announcements for further business support measures. In the meantime, if you have any questions about this article, please get in touch with business advice team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.