Businesses need more help than they’re getting.
It’s not a criticism of the help rolled out thus far. The Finance Minister deserves praise for how fast he rolled out that wage subsidy scheme and stitched together a loan deal with the banks, but it’s becoming obvious it’s not enough.
At the halfway point of this lockdown, it’s alarming to see how this economic shut down is hurting businesses.
We now have more than a million workers in this country on the wage subsidy - that’s 41 per cent of our workforce. We’re hearing 30 per cent of firms in our biggest city don’t think they’ll survive the pandemic response.
These are businesses that only a few weeks ago might’ve been ticking along happily.
The problem is cash. Many businesses don’t have the cash coming in to pay all the bills.
The wage subsidy scheme covers wages, but what about the rent and the payments to suppliers?
Already we’re hearing of businesses withholding payments from each other, which only makes the chances of the other falling over so much higher. But can you blame them if they don’t have the cash to pay?
The government-backed loans offered by banks are supposed to cover this but we’re hearing many businesses don’t qualify. The criteria are too strict.
The fact is, the government assistance could be more generous. It’s a lot more generous overseas.
Our wage subsidy pays businesses $585 per full-time worker. Australia’s pays $770.
Australia’s government offers a tax-free cash injection to businesses of between $20,000 and $100,000.
Something like that would save countless businesses here in New Zealand, and we should save them. Because we’ve asked businesses to take the pain in this country so people don’t have to.
As things stand right now, they are the casualties of this lockdown.