Coronavirus: Grant Robertson hints at potential rent freeze for business

Business leaders have welcomed the Government's move to cut struggling businesses some slack during the COVID-19 crisis.

With the country on a pandemic alert level 4 lockdown for four weeks - and possibly longer - both employees and employers are hurting.

The Government moved fast to announce a wage subsidy scheme to encourage bosses to keep their staff, and on Friday revealed new rules allowing businesses to put debts into 'hibernation', if the majority of their creditors agreed. 

"Most of those creditors will have a good understanding of how that business operates," Finance Minister Grant Robertson told Newshub Nation on Saturday.

"They'll know whether it was a going concern going into this and whether it should be on the other side."

The new rules also allow the use of electronic signatures and for deadlines imposed on companies, charitable trusts and other entities to be extended.

BusinessNZ chief executive Kirk Hope told Newshub the changes would be "very helpful", and are in line with similar changes made across the Tasman.

"At this stage, what we were getting is a lot of feedback from businesses that there were concerns about the rules related to trading while insolvent, particularly in the case of COVID-19.

"This is a very practical measure the Government could make immediately to ensure those businesses, directors and owners could take some comfort in, in very challenging times." 

The Government hasn't yet implemented rent freezes on domestic or business premises, but Robertson says that's an option too, with rent making up an average 40 percent of businesses' costs.

"What we've wanted in the first instance is for landlords and tenants to negotiate an acceptable solution together. It's clear in some cases that's not happening, and so we've undertaken some work alongside the Property Council and others on what might be arrangements that the Government can support to enable this to carry on. 

"We're putting that alongside other initiatives we're looking at for small businesses, and we'll have more to say about that in the coming days."

Grant Robertson.
Grant Robertson. Photo credit: Getty

The Government has already poured billions into propping up the economy, which is expected to be hit harder and faster than in the global financial crisis 12 years ago, when unemployment reached nearly 7 percent. 

"We do know that there will be more people unemployed, and so we have to be there to support them. And that's also the work we're doing," said Robertson.

Next week, he expects to receive the unemployment figures for March from the Ministry of Social Development - and they won't be pretty.

"There is no doubt that there have been more applications coming into work and income for the unemployment benefit. And we have said that we expect unemployment to rise above the levels it was in the global financial crisis. 

"The initiatives we're taking are trying to cushion the blow of that."

Unemployment at the end of December - when the virus' existence was first revealed by Chinese authorities - was 4 percent. The last time it was in double-digits was the early 1990s, in the wake of the late 1980s sharemarket crash and massive restructuring of the economy by the Lange and Bolger governments. 

Many will likely have to find new careers once the pandemic is over, with the tourism industry virtually wiped out overnight. 

"That's an industry that will be fundamentally changed by what's happened here. We want to work alongside those in that sector to make sure that we've got a plan for redeployment, for transition. And we do hope that a domestic tourism sector can come back to the fore in the coming months.

"But, you know, the tourism sector is an example of one where there will be significant change and we want to work alongside them to create a recovery plan."

Robertson pointed to Moody's recent affirmation of New Zealand's credit rating as AAA as a sign New Zealand was well-placed to recover from whatever the coming recession has in store.

"We had very low net debt going into this and we had a strong private sector. So I'm very confident we will come through this. But I understand the concern and the anxiety. That's why we've got to focus on doing the right thing through level 4 to enable us to get the private sector back humming again as soon as we can."

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