Mike Hosking talks to National leader Simon Bridges about him heading a bipartisan select committee tasked with scrutinising the parliaments response to the Covid-19 epidemic.
Tauranga's mayor says it is critical small businesses affected by the coronavirus crisis are supported now New Zealand is in lockdown.
However, a business expert warns the $6.25 billion to provide short-term credit to cushion financial distress on solvent small and medium-sized firms affected by Covid-19 is not free money.
Meanwhile, a Tauranga budget advice manager is concerned people who lose their jobs may struggle to make ends meet and those who are already facing hardship could slip further.
The government announced the major financial support package for businesses affected a day before the country lurched into level 4 and full lockdown at 11.59pm on Wednesday. The $6.25b Business Finance Guarantee Scheme will include a six-month principal and interest payment holiday for impacted SME customers.
Struggling employers can also apply for $585 a week for each full-time worker for up to 12 weeks as part of the government's $9.3b wage subsidy scheme.
Tauranga mayor Tenby Powell said he had spoken to many local business owners who were worried about their future and was pleased the government had taken immediate steps to support businesses.
"Their worries will increase as this lockdown continues," he said.
Tauranga mayor Tenby Powell. Photo / File
"It has been a big hit for everybody. For those businesses that are classed as non-essential, it is just absolutely dreadful."
Powell said small businesses were the backbone of New Zealand business. "It is critical they are supported."
Tauranga Chamber of Commerce chief executive Matt Cowley said the announcements would provide a safety net for businesses but there were plenty of other costs, including rent and existing mortgages.
Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / File
"Government-guaranteed lending is not free money where businesses have repayment holidays or have additional cash flow financing.
"Businesses will need to factor in these additional repayments into their overheads."
Priority One chief executive Nigel Tutt said the scheme would be welcomed by local businesses, which he thought would most help small businesses.
Tutt encouraged businesses to ensure they took advantage of the full suite of government support, in particular, the recently expanded wage subsidy scheme.
Priority One chief executive Nigel Tutt. Photo / File
Level 4 was a "sharp shock" with negative effects for almost all local businesses, Tutt said.
"At least we now have certainty and a few weeks immediately is better than a few months later on if we don't take action."
"I'm concerned for those who were already facing hardship and may slip deeper into debt.
"I'm concerned for those who are isolated because of lack of access to technology or the capacity to understand the support that is available to them."
McCombe warned eligible businesses should spend the short-term credit wisely.
"These loans are to ensure businesses can survive and then thrive when the self-isolation is over."
Steve Smith from EmbroidMe in First Ave said offering financial relief to small to medium businesses was "the right thing to do".
"I am sure there is a lot of people like us that are very grateful for that [the wage subsidy]," he said.
Steve Smith, owner of EmbroidMe Tauranga. Photo / File
Smith said he had applied for the wage subsidy on Sunday and it was in his account by Tuesday. "We are confident we will get through … we are lucky our personal circumstances mean that we have plenty of working capital and with that wage subsidy we will be able to ride it out no problem."
Smith said although there was a downturn in the short-term the silver lining was "business had not gone elsewhere; it is just not here at the moment".
The Studio owner Joanna Burch believed the government had done more than other countries do support small to medium businesses and was grateful for the wage subsidy.
Burch was yet to apply for any government support for her three-pole dancing studios in Mount Maunganui, Hamilton and Whangarei and instead was working on introducing online classes.
She said the company introduced nearly 30 online classes after the lockdown was announced to help keep the community active over the next four weeks.
"For us, it is about connecting the community with people and keeping a daily routine going."
Business Finance Guarantee Scheme - $6.25 billion - Provide short-term credit to cushion the financial distress on solvent small and medium-sized firms affected by the Covid-19 crisis. - It will include a six-month principal and interest payment holiday for mortgage holders and SME customers whose incomes have been affected. - A limit of $500,000 per loan and will apply to firms with a turnover of between $250,000 and $80 million per annum. The loans will be for a maximum of three years. - The Government will carry 80 per cent of the credit risk, with the other 20 per cent to be carried by the banks.
How to budget your way through the Covid 19 lockdown - Clarify your income, talk to employers, and Work and Income etc - Look at what is going out and how this can be reduced. - Speak to landlords and finance companies about how they can help. - Look at ways to make meals go further, eat from the garden (if you are lucky enough to have one) and avoid buying online to alleviate boredom. - Go to the Covid-19 website and check out what support is available from the government and speak with your bank regarding loans. Speak with your staff – you're all in this together. - Follow the rules, stay home and look after each other. Remember there is still help available from most social service organisations if you are dealing with addiction, abuse, mental health distress etc. - Call Tauranga Budget Advisory Service
