After two COVID-19 lockdowns, cash flow shortages and the biggest-ever fall in GDP, businesses need confidence in our Government.
A September ANZ Business Outlook Survey shows expectations of general business conditions were -28 percent, lifting to -14.5 percent in early October. Top business concerns were finding skilled labour, regulation and paperwork, competition and low turnover. Economic outlook and Government policy help to increase business investment.
With voting already open and Election Day just three days away, Newshub asked a group of businesses how the Government can help them during COVID-19. Labour Finance Minister Grant Robertson and National finance spokesperson Paul Goldsmith answer their questions.
"Our business needs people to be confident in the future. This relies on good leadership. Good leadership entails setting a vision that inspires us, a strategic direction that we can act on and a working environment that allows it to happen. When these things are there, we have confidence and will invest."
Q1. How will you increase business confidence and support investment?
Robertson said Labour's plans to increase business confidence and support investment include:
- Maintaining a strong public health response.
- Incentivising investment through tax refunds, R&D tax credits and loans and reinstating building depreciation.
- Lifting the threshold for low value asset write-offs.
- Continuing the small business cash flow loan scheme.
By expanding the flexi wage scheme, Labour would support businesses to hire new workers.
"We've also set aside funding to support people to start their own businesses," he said.
Robertson said Labour's free apprenticeship scheme had already led to more construction. It will partner with sectors to create transformation plans for the future.
"This will mean sectors like agritech and the digital sector have long-term, industry-led plans, supported by the Government, for how they will expand," Robertson said.
"This will create new opportunities, for example in robotics, AI and other technologies to boost productivity and make the economy more sustainable."
Goldsmith said National's small business package would bolster business confidence and growth.
"National's instant depreciation of up to $150,000 per asset will incentivise investment. Our tax stimulus package will give Kiwis the confidence to spend. This is crucial for our retail, tourism and hospitality businesses," he said.
"We'll simplify industrial relations legislation to reduce red tape and encourage businesses to create new jobs."
National's proposed changes to the tax system would help to reduce cost and compliance.
"National will increase the provisional tax threshold from $5000 to $25,000 and the compulsory GST threshold from $60,000 to $75,000," he said.
"Government needs to provide further economic stimulus so people get back out there and start spending money. This will help retail businesses get back on track and also stimulate job creation."
Q2. What economic measures will help stimulate consumer activity?
The COVID-19 wage subsidy put $14 billion into the economy. Robertson said economic research showed those on lower incomes were most likely to spend extra income and stimulate the economy.
"Our focus is on increasing the minimum wage and supporting low-income New Zealanders, because these people spend money in their local small businesses and stimulate their communities' economies," Robertson said.
He said Labour's infrastructure plan would create jobs. A strong health response is critical for stimulating consumer activity.
"That's why we're sticking to our plan to keep COVID-19 out of New Zealand, and when it appears, stamping it out quickly."
Goldsmith said National's tax stimulus package would put an extra $3000 in the back pockets of middle-income Kiwis.
"To keep our economy ticking, New Zealanders need money to spend. This will give Kiwis the confidence to go out and [do it]."
"With such challenging and costly times as we have right now, there's a lot of short-term thinking. I think it's important for a government to do some future planning and think on how we need to be positioned in 10-to-20 years."
Q3. How will future planning be incorporated into economic policies?
Under Labour, Robertson said funding has gone into health and education infrastructure and putting a transport infrastructure investment programme in place. It has worked on supporting long-term planning by councils and Governments.
"It's important for New Zealand to take a long-term approach to infrastructure investment. That's why we set up the Infrastructure Commission to lay out a 30-year plan for New Zealand's infrastructure requirements," Robertson said.
"We've also put in place new mechanisms to encourage private sector investment in infrastructure through the Infrastructure Funding and Financing Act. [We] put in place a National Policy Statement on Urban Development, which will encourage councils to build up as well as out so our cities can plan better."
National also proposes to future-proof the economy by investing in infrastructure.
"We've announced an ambitious $31 billion transport package to make it easier for New Zealanders to get around, reduce congestion to boost productivity.
"We've also committed to $4.8 billion to upgrade and fix our schools."
Q4. How would National's proposed 16-month $4.7 billion stimulus package help the average income earner and where will the money come from?
Goldsmith said National's tax stimulus policy will impact the average earner the most. It represents extra cash of $3000 (almost $50 a week) over 16 months.
It would take effect from 1 December 2020.
"Those are our teachers, police officers and nurses [average full-time income of $64,000].
"We're funding the temporary package from the $14.2 billion unallocated in the COVID-19 Response and Recovery Fund."
Q5. How would Labour's proposed 39 percent tax rate for income over $180,000 be used to help the economy (e.g. control debt/build recovery)?
Robertson said as it's important to deliver certainty and stability during COVID-19, most New Zealanders (98 percent) won't have changes to their tax rates.
A new top tax rate of 39 percent will apply to any income that is earned above $180,000, raising around $550 million a year.
"[This] will help us keep a lid on debt while making sure we can continue to fund essential services like health and education and keep investing in the recovery," Robertson said.
He emphasised that it's important to ensure there are sufficient funds for health and education.
"That's why we're raising a bit of extra revenue from the top 2 percent of New Zealanders, to support these services and the recovery to help keep a lid on debt and continue our responsible management of the Government's books," Robertson added.