Yesterday, the Government announced a $50 Billion Rebuilding Together 2020 Well-being budget. This response and recovery fund is the biggest NZ Government spend in history. Below is what I think is most relevant for business:
The Wage Subsidy Extension
I will start by saying do not apply for this straight away without understanding the 50% reduction in revenue for the 4 weeks prior to your application. There are different qualifying requirements this time, and the one that may trip you is when you actually apply. Here are the key points:
- The subsidy extension is available from 10 June 2020 until 1 September 2020.
- It covers a period of 8 weeks per employee and is paid as a lump sum. The subsidy amounts per employee are the same as last time. ($585.80 for full time and $350 for part time, per week).
- If you applied and received the last subsidy, you cannot apply for the extension until the 12 weeks has finished.
- Your businesses must have suffered a drop in revenue of at least 50% for the 30 days before you apply, compared to the same period last year. For example, if the end of your last 12 week period was say 14 June 2020, to apply for this on the 15th of June, your revenue would have to have dropped by atleast 50% for the period 14 May to 14 June, compared to last year. Make sure you compare your sales before you apply. Since this starts on 10 June 2020, you would not be able to compare sales for a date before 10 May 2020.
- You would need to submit a new application, which will be available through the MSD’s (Ministry of Social Development) website.
- This is expected to cost the Government $3.2 billion.
Research and Development
The Government is increasing support to Research and Development by launching a $150 million short-term temporary loan scheme to incentivise businesses to continue R&D programmes. R & D businesses will be able to access a loan, to the equivalent of 50% of their R & D expenditure, up to a maximum of $100,000. The loans will provide one-off finance and will be administered by Callaghan Innovation. This scheme will be up and running by early June and more details will be released in the coming days.
The Budget 2020, also sets aside $80 million to encourage entrepreneurs and businesses to develop new products by enabling them to claim tax deductions for unsuccessful or abandoned assets.
Export or potential export support.
Budget 2020 recognises the importance of Kiwi exporters as part of the economic recovery, with investment in practical measures to help them re-engage with international markets, and supporting firms looking to export for the first time,” Trade and Export Growth Minister David Parker said. The investment is $216 million to boost to New Zealand Trade and Enterprise.
Free trades training to support New Zealanders into work
The 2020 budget has put a lot of investment into jobs and training as we get New Zealand working again after the COVID-19 Pandemic. This includes:
$1.6 billion Trades and Apprenticeships Training Package.
$400 million in MSD Employment Support.
$121 million for He Poutama Rangatahi.
$19.3 million to place 10,000 people into primary sector jobs.
The 1.6 billion Trades and Apprenticeships Training Package will provide opportunities for New Zealanders of all ages to receive trades training. It will be continue to be added as part of the Governments ongoing work to rebuild the economy. This includes:
$334m funding for additional tertiary education enrolments.
$320m targeted investment support for free trades training in critical industries.
$412m support for employers to retain and keep training their apprentices.
$276m funding for Workforce Development Councils and Regional Skills Leadership groups, to be established to give industry and regions a greater voice and help them respond to COVID-19.
$141m to support high quality tertiary and trades education.
$32m increased funding to meet demand in Trades Academies.
$50m for a Māori Apprenticeships Fund.
$19m for group training schemes to retain apprentices.
$26m operating and capital for a new online careers advice system.
Education Minister Chris Hipkins said by making targeted training courses free for all ages, not just school leavers, over the next two years will help people who have lost their jobs retrain and also allow new employees in some essential services to train on the job.
Further business support
$10 million in funding will be provided to support small businesses to improve their e-commerce service offerings, and incentives/grants to encourage ecommerce adoption.
The investment is supported by $12.5 million to progress the trans-Tasman e-invoicing regime between New Zealand and Australia. “Trans-Tasman e-invoicing is one of many initiatives designed to make the business climate easier and fairer for small and medium enterprises during the recovery,” Stuart Nash said.
Other support for small businesses from the COVID Response and Recovery Fund includes:
- A $3 million investment to support the Business Connect platform to provide COVID-related support services where businesses need to register for support such as grants, the business hibernation scheme and location tracking.
- A $2.3 million investment to enable business.govt.nz to work with 200 partners to deliver tailored recovery guidance and advice to 600,000 small businesses. Resources will focus on how to: forecast and manage cash flow and adapt their businesses, obtain finance to meet needs now and for future growth, market their businesses here (especially tourism) and globally, adopt new digital technology, including e-commerce and productivity enhancing tools, and deal with isolation and mental health issues.
- A $9.7 million investment in the Better for Business programme focussed on making it easier for businesses to deal with Government, particularly as business take-up of e-commerce increases.
A $1.1 billion environmental package was announced to create 11,000 environment jobs. This includes regional environmental projects, biosecurity, weed and pest control, and additional DOC jobs.
Tourism Recovery Fund
A $400 million Tourism Recovery Fund was announced. This includes a transition programme to support businesses to plan for the next steps, a fund to ensure key tourism assets survive and a domestic tourism campaign.
$20 Billion Dollars has not been earmarked yet. The Government will be flexible with how they will use this throughout the coming period and they have not ruled out another wage subsidy extension.
We will be running a special webinar for the Budget on Thursday the 28th of May. An invitation for this will be sent out next week. (Click here to be added to our newsletter list) Some of the specific details for these budget topics are not available yet, but we hope to include this in the webinar as more details become available. We will also be discussing some ways you can make the most out of this budget, as this affects every single business in some way. Please feel free to contact us on 03 374 9393 if you would like to discuss your business specifically.