Small business owners need help urgently so that they can survive this Covid-19 lockdown and any future lockdowns so that they can continue to play a significant role in New Zealand’s economy as well as providing employment all over the country, National’s Shadow Treasurer Andrew Bayly says.
“I am hearing from small business owners and representative organisations everyday about the sky-high levels of anxiety and stress Kiwi business owners are experiencing, particularly those in Auckland who face at least another two weeks at Level 4.
“The wage subsidy and Resurgence Support Payment have helped small business, no doubt, but rent is the most significant cost and while some commercial landlords are cutting their tenants slack, others are not.
“The RSP doesn’t really go far when you factor in significant costs like unexpected stock wastage, insurance, rates, and the fact that the one-off payment is dependent on the number of FTEs a business has.
“This outbreak is likely to continue for a number of weeks and many businesses will have to wait until Level 2 to be even partially operational. Not to mention the uncertainty of whether we will face more lockdowns in the future.”
Andrew Bayly has developed a proposal for a Rental Support Package that he is urging the Government to adopt in order to take pressure off both tenants and landlords. A majority of OECD countries have some form of Covid-19 rental support for SMEs and Mr Bayly wants to secure the same for Kiwis.
Under Mr Bayly’s Rental Support Package, small businesses who have seen a 40 per cent reduction in their revenue under either Level 4 or 3 will be entitled to 50 per cent of their assessable rent and associated building operating costs being paid by the Crown, on the proviso that the landlord contributes a 25 per cent discount on the rental costs for the duration of the period the Rental Support Payment is provided to the small business owner. This would leave the just 25 per cent of the rental costs to be paid by the tenant.
In order to ensure any rental disputes can be settled quickly, the Government will prioritise emergency arbitration services when requested by either the Tenant or Landlord.
“It is important that business owners and landlords have a clear process to reaching an outcome quickly,” Mr Bayly says.
“This Rental Support Policy would offer protection to small businesses, greatly lessening the likelihood of business closures, impacting jobs and communities for years to come,” Julie White, Chief Executive of Hospitality New Zealand says.
“Hospitality and accommodation operators have been accumulating losses for over seventeen months due to COVID-19. They are especially doing it tough right now, most operating with zero revenue in Alert Levels 4 and 3 and operate at severely reduced capacity during Level 2.”
Brad Jacobs, Director of The Coffee Club, has spent the last 18 months supporting franchisees through battles with landlords; some of them huge, off-shore multi-nationals. He reached out to Mr Bayly after receiving little support from Government ministers.
“I don’t want to see another franchisee shut down. For many of them the lockdowns and battles with landlords feel like death by a thousand papercuts. Andrew’s Rental Support Package would make a huge difference,” Mr Jacobs says.
“I am calling for the Finance Minister to accept my offer of this proposal. This is about alleviating hardship on businesses and preventing the harmful knock-on effect on the economy and society should businesses fall over,” says Mr Bayly
“The policy could draw down on any remaining unallocated balance in the Government’s Covid Response and Recovery Fund. It is clearly in support of an economic response to Covid-19 with demonstrable economic benefits, unlike a lot of the spending that has been funded out of the CRRF to date.”
To date, the following organisations have given their support for Mr Bayly’s proposal:
- Business New Zealand and their Employer & Manufacturing Partner organisations
- Retail New Zealand
- Hospitality New Zealand
- Restaurant Association of New Zealand
- Franchise Association of New Zealand