- By Christopher Luxon, MP for Botany
There is no doubt small business is in Botany’s bloodstream.
In East Tamaki alone, we have over 2000 businesses that employ 30,000 people generating $3 billion for the New Zealand economy every year.
What’s common to all these business owners is they are exceptional people who take a risk, borrow and raise money to start a business, develop a business model and build loyal customers and employees. Most importantly, they work incredibly hard – not eight hours a day for wages, but often 24/7.
Small and medium enterprises (SMEs) are especially important to New Zealand’s economic recovery and future. They make up 97 per cent of all Kiwi enterprises and employ more than 70 per cent of our people.
In times of maximum uncertainty, we need to build the confidence of these business owners and give them predictable and supportive government policies that will create economic growth. If we do that, they will be encouraged to invest in upgraded facilities and hire more staff.
However, small business owners need help urgently just to survive this Covid-19 lockdown and continue to play a significant role in New Zealand’s economy, as well as providing employment all over the country. Kiwi business owners are experiencing high levels of anxiety and stress, with many operating with zero revenue in Alert Levels 4 and 3 and operating at severely reduced capacity during Level 2.
No doubt the Wage Subsidy and also the Resurgence Support Payment have helped small businesses, but rent is the most significant cost and while some commercial landlords are cutting their tenants slack, others are not.
The Resurgence Support Payment doesn’t really go far when you factor in significant costs like unexpected stock wastage, insurance, rates and the fact that the one-off payment is dependent on the number of employees a business has.
National’s Shadow Treasurer, Andrew Bayly, has developed what I think is an excellent proposal for a Rental Support Package that he is urging the Government to adopt in order to take pressure off both tenants and landlords. A majority of OECD countries have some form of Covid-19 rental support for SMEs and National wants to secure the same for Kiwis.
Under our proposed Rental Support Package, small businesses who have seen a 40 per cent drop in their revenue under either Level 4 or 3 will be entitled to 50 per cent of their assessable rent and associated building operating costs being paid by the Crown, on the condition that the landlord contributes a 25 percent discount on the rental costs for the duration of the period the Rental Support Payment is provided to the small business owner. Ultimately, this leaves just 25 per cent of the rental costs to be paid by the tenant.
In order to ensure any rental disputes can be settled quickly, the Government would prioritise emergency arbitration services when requested by either the tenant or landlord.
The policy would draw down on any remaining unallocated balance in the Government’s Covid Response and Recovery Fund (CRRF). It clearly supports an economic response to Covid-19 with demonstrable benefits – unlike a lot of the spending that has been funded out of the CRRF to date.
Our Rental Support Package would alleviate hardship on businesses and prevent the harmful knock-on effect on the economy and society should businesses fall over. I hope the Government sees it for the constructive proposal that it is and gets to work implementing it as soon as possible.
