Phil O'Reilly says the Government must help business. Photo / Jason Oxenham
Phil O'Reilly says the Government must help business. Photo / Jason Oxenham
A former business chief wants government rent relief for tenants as a "quite urgent" move but a big-time commercial/retail landlord says parties should negotiate without state intervention.
Phil O'Reilly, BusinessNZ former chief executive, called for government rent relief support but Rolf Masfen of Masfen Group, which owns Auckland's Eastridge shoppingcentre and many other retail and commercial premises, rejected that.
Justice Minister Andrew Little said yesterday that the Government was considering options to support businesses with rent payments due to the economic impacts of Covid-19.
"While 75 per cent of the economy is up and running again under level 3, we know many businesses, especially our smaller ones, have been hard hit by a drop in revenue and are struggling to meet their fixed costs," Little said.
"So, to add to the wage subsidy and other support in place, Cabinet Economic Development Committee ministers discussed options around changing the Property Law Act to support New Zealand businesses in managing their rent," Little said.
O'Reilly rejected the notion that business had its hand out for more money after the 12-week wage subsidy scheme.
Justice Minister Andrew Little. Photo / Michael Cunningham
"It's not a gravy train. The wage subsidy was very quick, very good, one of the best in the world. But business has other costs beside that. They've got rental costs, equipment leases, other bills. That's what's killing them right now. The danger is you waste a lot of money paying for the wages as a government and then there's no business to come back to because it's fallen over. It's now quite urgent that the Government moves," O'Reilly told Mike Hosking on Newstalk ZB.
No rent relief was a big mistake, he said citing Australia, Canada and Switzerland whose governments implemented business cashflow support during pandemic lockdowns to ensure companies survived.
O'Reilly said Little's announcement should have come sooner.
"It really seems strange to me that the Government hasn't done this. Five weeks on from the lockdown, maybe six weeks, it's going to have probably thousands of small businesses that will either be mortally crippled or just fall over as a result. I just can't understand why the Government won't move on this."
Banks were often not an avenue because they usually wanted loans secured against residential properties and small-business owners were reluctant to risk family homes, he said, citing florists and hairdressers.
Because the Government had forced businesses to close, it was beholdent on it now to cover many of the costs suffered as a result of that, O'Reilly said.
"The Government effectively forced us all to stay at home. We agreed with that largely in New Zealand, good for us. But the Government should now come to the party to make sure businesses survive and put in place an ability for businesses to thrive."
Given the wage subsidy had cost around $10 billion so far, O'Reilly said it was "tens of billions more" in rent and cashflow support and he cited Canada providing interest-free loans of up to $40,000. It's got to be paid back over two years. As businesses get back going again, they'll be able to pay that back to you."
Others to back a possible rent subsidy scheme are Property Council chief executive Leonie Freeman and Craigs Investments Partners' Mark Lister.
Rolf Masfen of Masfen Group. Photo / Richard Robinson
But Masfen encouraged parties to reach rent deals without government involvement.
"Lessees/tenants and lessors/landlords should come to a reasonable agreement about rental forgiveness during level 3 and 4 lockdown on a case-by-case basis," Masfen said.
"Given the particular circumstances of each situation, I have done that. There is no rule that fits all. The situation is made far easier on everyone in the community if the Government speedily gets businesses operating again, albeit in a safe manner, as soon as humanly possible," he said.
He wants lockdowns ended.
"Every day counts and each day of business closure costs the taxpayer billions of dollars when this all washes out," a worried Masfen said.
Craig Tyson, ANZ's head of Australasian property securities, said landlords and managers were negotiating agreements.
"We are indeed living through an unprecedented time for the New Zealand economy. Never before has such a large part of the economy been put into an induced coma like this so most businesses are suffering, including property businesses," Tyson said.
The Property Council had put forward a proposal to the Government a month ago based on tax relief for tenants, which Tyson said had much merit.
Should the Government support tenants to pay rent to landlords? Photo / supplied
"We were disappointed that nothing came of it, particularly given the effort that went into the proposal.
"However since then, most pro-active landlords have come to an agreement with their tenants and it is quite late in the piece to come up with a new proposal similar to the code of conduct in Australia.
"From what we hear, this proposal is creating frustration for tenants and landlords alike. In any case, we don't believe that anything that cuts across the fundamentals of contract law is good for the property sector, or any other business for that matter," Tyson said.
No landlord wanted vacancies, particularly at a time when it will be difficult to find a replacement tenant.
"It behoves the landlord and affected tenant to sit down and negotiate a solution. This is what we hear is happening and therefore we don't believe that a new initiative similar to the code of conduct in Australia is necessary," Tyson said.
