Small Business Or All Business

By David Searle, National Chair, Baker Tilly Staples Rodway New Zealand

New Zealand, 20 March 2020 – We were pleased to see the government move quickly with relief measures for the COVID-19 pandemic.

Globally New Zealand’s $12.1 billion package is one of the largest as a percentage of GDP, and for this the government is to be commended.

At first glance, this looks like a very generous package, with employee wages covered by $585 per week. However, when you dive deeper into the numbers, the wheels start to come off.

The wage subsidy package as it stands gives businesses up to a maximum of $150,000 for up to 12 weeks. This equates to 21 employees. According to Statistics New Zealand, 90 per cent of New Zealand businesses (that actually employ staff) have 19 or fewer employees. For them, this package fits.

On the other hand, the remaining 10 per cent of businesses employing 20 or more people are responsible for almost 72 per cent of all employees in New Zealand.

For a business with 100 or more employees, $150,000 is a drop in the bucket – and those businesses are responsible for employing over 48 per cent of New Zealanders.

While the New Zealand economy will be affected by the collapse of small businesses, it is the medium to large businesses that will have the greatest impact on our economy and employees, if they find themselves in trouble. Already we are seeing hiring freezes and cutting back of non-essential and uncommitted spend by our clients.

With Tuesday’s announcement, the government stated that further packages for large employers will be announced in coming weeks. This is both vital and urgent.

This pandemic does not discriminate and will impact everyone. Therefore, government support needs to be relevant to all businesses, big or small, should they need it. The UK’s package, while loan-based, supports all businesses and we need to follow suit.

Although the headline figure of $12.1 billion is significant, 72 per cent of employees are being left unsupported. Medium and large employers need to know whether they are going to receive help for their employees before it is too late.

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