Covid 19 coronavirus: Putting small business at the front of New Zealand's recovery
Good public health and good economic health are two sides of the same coin. You can't have one without the other. While the business community has supported the "go hard - go early" approach from the Government, we now need to maximise business activity, so that taxes are paid, and people still have jobs - at the same time as the public health objectives are met.
The economic shock of the lockdown runs deep and wide for many. Thousands of businesses have felt the damage already, many mortally. This damage will continue as the economy slows and unemployment grows.
Those businesses that do pull through may well be more vulnerable and employ less people than they did just a few weeks ago.
We have an opportunity right now to make sure that as many businesses as possible survive. Importantly, within this window of opportunity, we need to look to supercharge our small businesses and give them, and the entrepreneurs out there, the confidence to carry on, grow again or start something new.
Small businesses are the job engines of the economy and we need to get them back into action – and fast.
Some great work has already been done by officials. The wage subsidy, for example, has been particularly helpful to smaller businesses. However, we need to go further.
In short, we need to:
Be more generous, financially. The biggest killer of small- to medium-sized businesses is cash flow.
Business assistance needs to reflect this to make sure that these businesses don't collapse.
While the wage subsidy payment is good, it will only delay that nasty moment when SMEs run out of money.
In Australia there are instant cash injections into each business of between $20,000 - $100,000 administered simply to provide a bit of cash to run with. We should urgently do something similar.
We should also be improving and enhancing the banking and finance package, which is still quite hard for some businesses to access and there are some strange exclusions.
Larger businesses, who have additional and bigger costs than the SMEs, need more than the wage subsidy. They need greater assistance with loans and working capital – and they need this now.
Be clear about what the responsibilities are. We need to think widely about how we retain employment.
This means employer responsibilities need to be crystal clear and aspects of employment law need to be looked at - like the capability to stand workers down for a period in times like these without making them redundant. There also needs to be clarity for employers as we prepare to move from level 4 to level 3.
Instil business confidence. At least as important as anything else, we need to urgently give business people confidence that the Government has their back, that there is a plan for coming out of the lockdown and that, over the next few months and years, businesses will be supported in their fight to survive, grow and start anew.
The biggest determinant of New Zealand success in the coming years will be the decisions made freely by thousands of business people, employers and entrepreneurs to start a business or maintain and grow one.
Job growth in any economy is predominantly generated by small businesses.
So, what we all need to be thinking about very quickly is what would give these people the business confidence to make the right decisions and grow.
The Government would be wise to urgently implement a set of initiatives that aggressively addresses the following, particularly as they relate to small business:
- Ease of starting a business and doing business generally. The Government could abolish fees and any business rates differentials that apply for, say, the next two years. It could review small business regulation to remove some of the more burdensome regulations currently in place, if that could safely and sensibly be done. And it could guarantee a suite of small loans to provide some working capital.
- Hiring and upskilling employees. Industry training in New Zealand could be free for the next two years, and employers could be particularly incentivised to hire young Māori and Pacific people into apprenticeships or women into the construction sector by direct wage subsidies for them.
- Building productivity. The Government could announce that there will be accelerated depreciation with instant write-offs for any capital investment made by business under $150,000. There could be cash grants to businesses so that they can build their connections with the innovation community. We could scale up for advisory and governance services to business so they can better strategise and make the right calls.
Now this may sound like a radical list. But virtually all these themes are currently being considered or undertaken by other countries right now in response to the crisis.
If these kinds of initiatives were implemented, businesses - and small businesses in particular - would really understand that government has their back. They would be able to build confidence for the future, grow their businesses and employ more people.
With this confidence, businesses will drive New Zealand's success in the years ahead - while simultaneously supporting the public health of our nation.