COVID-19: Summary of government support available
The New Zealand Government has provisioned $52 billion to spend (if necessary) on measures that cushion the impact of COVID-19 on businesses and communities, and support the long-term recovery of the country’s economy. The support programmes announced to date are primarily targeted at keeping businesses afloat and keeping employees in work using a variety of tools, including subsidies, preferential loans, revenue foregone and relaxations of regulatory obligations.
While a considerable amount of government support has been distributed already, some businesses are struggling to identify what they may be eligible for, as the details of the support available are spread across more than a dozen central and local government websites.
To assist businesses, our Public Law team highlights 34 of the Government’s most significant support programmes and provides links to further information.
These programmes will be of particular interest to: employers, employees, taxpayers, exporters and importers; corporates in the banking, aviation, construction, health, arts and sports sectors; and members of the Māori, Pacific and NGO communities.
If you need help identifying or understanding how any of these programmes may apply to your business, with making applications or with the compliance requirements that may follow, please get in touch with our Public Law team or your usual MinterEllisonRuddWatts contact.
General support for businesses
Mortgage Holiday Scheme:
Retail banks have agreed a six-month principal and interest payment holiday for small business customers and mortgage holders whose incomes have been negatively affected by COVID-19. Further information is available here.
Tax relief measures:
On 25 March 2020, Parliament passed the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020, which: reinstates depreciation deductions for commercial and industrial buildings; increases the threshold for first year low-value asset write offs; increases the threshold for paying provisional tax; brings forward broader research and development refundability rules; and increases Inland Revenue’s powers to remit interest on late paid tax. The Act is available here.
Support for companies facing insolvency:
Temporary changes to the Companies Act 1993 have been introduced to help businesses facing insolvency to remain viable and keep New Zealanders in jobs. These changes include: a ‘safe harbour’ for directors’ insolvency duties; allowing non-trading businesses to hibernate debts; allowing e-signatures; extended filing deadlines from the Registrar of Companies; and relief for entities not in compliance with their constitutions due to COVID-19. Business Debt Hibernation will only be available where there is agreement of 50% of a business’s creditors. Further information is available here.
Support for Small and Medium Sized Enterprises (SMEs)
Business Finance Guarantee Scheme:
This scheme offers $6.25 billion in loans to New Zealand businesses with annual revenue between $250,000 and $80 million to help with their cashflow and operating expenses. Eligible businesses can apply to their banks for loans of up to $500,000 on terms of up to three years. The Government will guarantee 80% of the risk, while banks will cover the remaining 20%. Further information is available here.
Tax relief for SMEs:
On 15 April 2020, tax measures aimed at increasing business cashflow were announced. Inland Revenue will have the discretion to extend taxation due dates and timeframes (for example, for filing or returns). There will also be immediate and longer-term changes to the treatment of tax losses, including a $3.1 billion tax loss carry-back scheme (estimated cost over the next two years) that will allow a large number of businesses to access their previous tax payments as cash refunds. Further information is available here.
Regional Business Partner (RBP) Network Support:
The RBP Network has been given additional government funds to support SMEs through COVID-19. Registered businesses should contact their RBP Advisor to discuss eligibility for a business subsidy. Further information is available here.
Support for employers and employees
Wage Subsidy Scheme:
This scheme supports employers adversely affected by COVID-19, so that they can continue to pay their employees, even if they are unable to work. Support is available to all businesses (including the self-employed, contractors and sole traders), registered charities, incorporated societies and post settlement governance entities, that have had a 30% drop in revenue attributable to COVID-19. The scheme will pay $585.80 per week for full-time employees and $350.00 per week for part-time employees. Further information is available here.
Essential Workers Leave Scheme:
This scheme provides ‘essential workers’ who take leave from work to comply with public health guidance with an income at the same rates as the Wage Subsidy Scheme. The subsidy covers a four-week time period, with the option for organisations to re-apply for those same workers after four weeks, if necessary. Further information is available here.
Redeployment of workers:
On 20 March 2020, the Government allocated $100 million to help redeploy workers negatively affected by the economic impact of COVID-19. Of this, Gisborne-Tairāwhiti will receive approximately $28 million to support the redeployment of forestry workers into activities including roading, conservation and retraining. Further information is available here.
Support for landlords and tenants
Extended timeframes for tenants to remedy a breach of lease:
The minimum statutory period for a tenant to remedy any failure to pay rent will be extended from 10 working days to 30 working days. It is not yet clear whether this extension will apply to any non-payment of outgoings or other money that may also be in owing. Further information is available here.
Extended timeframes for mortgagors to remedy mortgage default:
The minimum statutory period for a mortgagor to remedy default under its mortgage will be extended from 20 working days to 40 working days. Further information is available here.
Residential rent freeze and tenancy termination restrictions:
A freeze on rent increases has come into effect and will apply for an initial period of six months. Tenancies may not be terminated during the lock-down period, unless the parties agree. However, tenants may still terminate their tenancy as normal if they wish. Tenants will have the ability to revoke termination notices that they have already given, in case they need to stay in the tenancy during the lock-down period. The termination restrictions will apply for an initial period of three months. Further information is available here.
Support for exporters and importers
Air Freight Support Package:
New Zealand Trade and Enterprise (NZTE) and the Ministry of Transport (MOT) are working with Air New Zealand and air freight operators to ensure that air freight capacity is available on New Zealand’s key routes for at least the next six months. The Government will provide variable top-up funding (of up to $50,000 per return flight) for international air freight movements to make sure the flights are financially viable. Exporters and importers of high value or critical products who would like to take advantage of this air freight capacity are encouraged to view the flight availability information here.
Export Business Continuity Service:
NZTE has launched a $4 million Export Business Continuity Service, in partnership with PwC and Deloitte, which will provide its export customers with access to one-on-one professional services to help them manage the impacts of COVID-19 on their businesses. The service will be provided via vouchers of up to $5,000 per business. Further information is available here.
NZTE has launched a new online platform, NZ Marketplace, which is a matching platform that allows New Zealand businesses that may need (or have extra resource) at this time to connect with each other. NZ Marketplace can be accessed here.
Tariff concessions on imports of COVID-19 related products:
Tariffs on all medical and hygiene imports needed for the COVID-19 response have been temporarily removed. Further information is available here.
Support for the banking industry
Large Scale Asset Purchase programme:
The Reserve Bank of New Zealand (RBNZ) will purchase $33 billion of New Zealand government bonds, across a range of maturities, in the secondary market over the next 12 months. The programme aims to provide further support to the economy, build confidence, and keep interest rates on government bonds low. Further information is available here.
Regulatory relief will provide banks headroom for customer-focus and risk management. The RBNZ has delayed most regulatory initiatives for an initial period of six months and deferred the start date of the increased capital requirements for banks by 12 months, which it expects will enable banks to provide an additional $47 billion of credit. Further information is available here.
Term Auction Facility (TAF) and Term Lending Facility (TLF):
These facilities will provide liquidity to the banking system. Under the TAF, the RBNZ may provide collateralised loans out to 12 months. The TLF will ensure access to funding for banks at low interest rates for up to 3 years duration, which is longer than the RBNZ’s other liquidity facilities. The first TLF operation is expected to be launched in May. The RBNZ noted that “the TLF will be priced at a margin over the OCR, with similar collateral eligibility and haircuts to our existing OMO and TAF operations”. Further information is available here.
Weekly Open Market Operation (OMO):
The RBNZ is encouraging banks to continue to fund their corporate clients by purchasing their debt securities, to ensure large businesses can better manage their cash flows and lower their funding costs. The OMO will be used to inject cash into the banking system using eligible Corporate and Asset-Backed securities, which are listed on the RBNZ's website here. This OMO is held at 11:00am each Tuesday and will typically offer up to $500 million dollars for terms out to approximately 3 months. Further information is available here.
Support for the aviation industry
Aviation Relief Package:
The Government has set aside $600 million to deliver an aviation sector relief package. The first tranche of support aims to secure the operators of New Zealand’s aviation security system, and includes:
- financial support to airlines to pay passenger-based government charges for the next 6 months ($163 million) and to cover Airways related fees for the next six months ($37 million);
- any fee rises or pricing reviews from agencies that charge fees at the border (Ministry for Primary Industries, Civil Aviation Authority, Aviation Security Service, Customs, Airways) are put on hold for 12 months;
- financial support for Airways in the face of declining revenue ($70 million).
Further information is available here.
Fast-tracked support for Air New Zealand freight:
The Government fast-tracked up to $1 million to help Air New Zealand move urgent freight to and from New Zealand. Further information is available here.
Support for the construction industry
Advanced Entitlement Payments to support roading contractors:
The New Zealand Transport Agency (NZTA) is offering advance payments to roading contractors so the industry will be ready to deliver vital projects when the country moves out of the current Level 4 lockdown. The payments will be available to contractors who currently have National Land Transport Programme (NLTP) funded projects in construction with NZTA. Further information is available here.
Support for “shovel ready” infrastructure projects:
The Government has tasked a group of industry leaders to identify infrastructure projects that are ready to start as soon as the construction industry returns to normal after the lockdown. These new projects will be in addition to, and build on, the Government’s $12 billion New Zealand Upgrade Programme and existing Provincial Growth Fund infrastructure investments. Minister for Economic Development Hon Phil Twyford said “the types of projects the Government would consider funding include water, transport, clean energy and buildings. They would also have a public or regional benefit, create jobs and be able to get underway in short order”. Further information is available here.
Work is underway to introduce measures that would fast-track consents for development and infrastructure projects during the recovery from COVID-19. Further information is available here.
Support for the health sector
$500 million Health Package:
This package aims to strengthen our health services to fight and contain COVID-19. The first $235 million allocated under the Health Package is largely aimed at scaling up public communications relating to COVID-19, testing and tracing cases and ensuring continuity of care in the community. Further information is available here.
$30 million support for GPs and pharmacies:
The general practice funding package consists of a $15 million general practice response payment aimed to support general practices with workload from testing patients and the costs incurred moving to virtual consultations. The community pharmacy funding package totalling $15 million is a support payment for all community pharmacy service providers to recognise the increased workload and for the way they are moving into a virtual working environment alongside general practice. Further information is available here.
Support for Māori communities
Whānau Māori Community and Mārae Package:
The Government has announced a reprioritisation of $10 million from the Māori Development vote to support community outreach and partner with whānau, hapū, iwi and communities to give them the tools and resources required to support a targeted response to COVID-19.
Māori Health and Whānau Ora response:
The Government will provide $30 million of funding targeted directly to Māori Health services, including financial support to Māori provider networks, payment for prescriptions, in-home care continuity for kaumatua, building a call-back mechanism into the telehealth service, a Māori-specific vaccination programme, and establishment of Community Based Assessment Centres in Māori communities. An extra $15 million will be directed to Whānau Ora commissioning agencies.
Support for Māori businesses:
The Government has allocated $1 million to a needs assessment of Māori businesses, to be followed by design and implementation of a Māori businesses response plan. $470,000 has also been reprioritised to Te Arawhiti to engage and work with iwi on their COVID-19 pandemic response plans.
Further information is available here.
Support for Pacific communities
$17 million Pacific Response Package:
This package will support Pacific health and disability services facing increased demand, increase public health messaging and guidance for Pacific communities in Pacific languages and enable the roll out of a new outreach programme putting non-clinical health support staff into Pacific communities, linking high-risk Pacific people with important services. Further information is available here.
Support for NGOs and community groups providing essential social services
$27 million for NGOs and community groups providing essential services:
This package includes: up to $16 million to bolster existing essential social sector services delivered by NGOs so they can continue to support individuals, families, whānau and communities at risk through uncertain circumstances and respond to increased demand; up to $6 million funding for disability Community Participation providers to put in place appropriate health mitigations for the current group orientated services and provide support for disabled people in lock-down; and up to $4.8 million to provide community grants or fund innovative community-led solutions to support local resilience. Further information is available here. See here for a list of essential social services.
Support for the arts
Creative New Zealand Emergency Response Package:
An initial investment of $16 million will provide emergency support for existing investment clients (open to the 83 multi-year funded arts organisations in the Toi Tōtara Haemata and Toi Uru Kahikatea investment programmes) and resilience grants for artists, arts practitioners, arts groups and arts organisations. Applications open on 14 April 2020 and the funds will be distributed to the sector through to 30 June 2020 (the end of Creative New Zealand’s financial year). A second phase, which will provide support beyond June 2020, will be explored at the April Arts Council meeting. Further information is available here.
Support for sports organisations
Roll-over of current funding:
The Government has announced that it will roll over the funding of national sports organisations for the current financial year into the next year. Sport NZ’s new four-year investment plan has been deferred so that current levels of investment remain through to 30 June 2021. In addition, Sport NZ partners will not be obliged to continue Sport NZ-led initiatives, so they can focus on remaining operational. High Performance Sport NZ has also confirmed core funding for 2020-2021 to Olympic and Paralympic sports so they can transition key high performance functions into the rescheduled Tokyo Games next year, as well as the new Paris 2024 Olympic and Paralympic cycle. Minister for Sport and Recreation Hon Grant Robertson has also noted that the Government is working on a sports recovery package that will look to include some support for community organisations as well as high performance and elite athletes. Further information is available here.