National would introduce a GST refund scheme for businesses badly affected by the Covid-19 crisis to help with cash flow, leader Simon Bridges said in a major pre-Budget speech today.
"The Covid-19 curve is flattened, but we must not flatten the economy," he said in a speech delivered to a Business NZ webinar.
If the business could demonstrate that its revenue had fallen by more than 50 per cent across two successive months then it would be able to claim back the GST it had paid between July 2019 and January 2020, up to a maximum of $100,000.
"We estimate this could benefit up to 160,000 businesses and save countless jobs," Bridges said.
If the business had paid more than $100,000 in GST over that period, it would be able to take a loan of an additional $250,000 repayable over five years.
The interest on those loans would be at the 10-year Treasury bond rate, currently 0.7 per cent, which would make it fiscally neutral.
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Bridges said the main difference between National's cash-flow scheme and the Government's is that it was primarily a grant, not a loan.
"It is linked to pre-existing revenue levels, it is more generous and it is more targeted."
Finance Minister Grant Robertson last week announced a graduated loan scheme to be run by Inland Revenue to provide loans of up to $100,000 for firms employing 50 people or less, which would be interest free if they were repaid within a year or 3 per cent if paid within five years.
The Government also established a 12-week wage subsidy scheme open to all businesses that can show a 30 per cent drop in revenue due to Covid-19, of $585 a week for staff working at least 20 hours week and $350 a week for part-timers.
Bridges also said National would temporarily change the depreciation threshold for new capital investment, which had been lifted from $500 to currently $5000 under Covid-19.
National would lift it to $150,000 for two years. So if a company spent $145,000 on new machinery, rather than claiming depreciation on it over many years, a business could claim depreciation on the full $145,000 in the current tax year.
"Tens of thousands of small businesses would benefit from our schemes to make sure they stay afloat and trading in the months ahead."
He said the Government took the right steps to contain the virus "but already it's stalling on what to do next. It needs to get out of your way."
Bridges said the pace of business failures and job losses was accelerating.
"It's the economic curve that the Government has created and needs to flatten.
"It's the curve that is affecting and devastating far more families and individuals than Covid-19 has touched.
"Our view is simple; we need to get New Zealand working again. It's time for another curve, an upward curve of growth and jobs.
New Zealand was headed for, by the reckoning of every major economist, the sharpest and deepest recession the country has ever seen.
"The choices the Government makes now, in this Budget, and in the weeks ahead, will have a direct impact on how deep, how sharp, and how brutal it will be."
Bridges said National's agenda had five core elements:
• Getting out of lockdown by getting NZ working again.
• Delivering an effective stimulus to a stalled economy by creating an upward curve of growth and jobs.
• Creating productivity in a 2-metre world.
• Unleashing private sector investment.
• Investing in things that would guarantee New Zealand would succeed in the post-Covid world.
Kiwis visited supermarkets in their millions with no evidence of significant community spread of Covid-19, while small business like butchers and greengrocers had been forced to stay shut.
"There is no logic in that," he said.
"We can't afford to wait hopefully for the Government to slowly grant us our freedoms back; every week the Government should justify what is absolutely necessary to retain its restrictions.
"Businesses have been forced to shut down in the national interest. It is in the national interest to keep them afloat," Bridges said.
"It's not right that small business should be left to carry so much of the economic suffering. The wage subsidy has helped employees for 12 weeks, but it hasn't helped businesses with zero revenue pay overheads like rent, power and stock."
Bridges said National was looking at "blue-sky thinking" for New Zealand's future.
"What's over the horizon and how can we turn it to our advantage? Where's that going to come from? Well it won't be coming from a Labour-NZ First government living in the Wellington bubble.
"Don't assume a committee of Wellington politicians and officials, with a couple of business folk, a union rep and two iwi leaders can steer our path into the new economy.
"And I wouldn't rely on Shane Jones and Phil Twyford to implement it."
National believed the best ideas should come from all levels of business.
National was the party of infrastructure and had the competence and track record to do what it said.