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Government considers further ways to support businesses through debt and equity; Ardern details her pre-Christmas priorities including the doubling of sick leave entitlements

Government considers further ways to support businesses through debt and equity; Ardern details her pre-Christmas priorities including the doubling of sick leave entitlements
Jacinda Ardern. Getty Images.

The Government is considering new ways of supporting small businesses through both debt and equity.

In a speech to BusinessNZ on Thursday, Prime Minister Jacinda Ardern recommitted to implementing Labour’s key policies.  

She also mentioned investigating new, lesser-talked about, support measures for businesses.

“I also want us to take up the challenge that has been extended to us by the small business council and commence work on new ways to support small businesses with finance, such as the proposed Small Business Growth Fund, repurposing the Small Business Cashflow Loan Scheme, establishing a micro-finance company for small businesses, or expanding the mandate of the Venture Investment Fund,” Ardern said.

Labour campaigned on extending the Small Business Cashflow Loan Scheme, set up in response to Covid-19, for three years. It also proposed extending the interest-free period on loans from one year to two years.

Ardern said this proposal would be taken to cabinet on Monday.

“Later in November Ministers will bring further proposals forward to enable the scheme to be used for a broader range of purposes, such as investing in new equipment or digital infrastructure,” Ardern said.

Under the scheme, businesses can receive a government loan of up to $100,000 depending on how many employees they have.

Small Business Minister Stuart Nash in June told he was exploring the option of making the scheme permanent.

As for the possible introduction of a Small Business Growth Fund, Australia launched such a fund in mid-October.

Investments from the Australian government and retail and investment banks have put an initial A$540 million in the fund. Australian businesses can apply for long-term equity capital investments between of A$5 million and A$15 million.

When Ardern mentioned expanding the 'Venture Investment Fund', she was presumably referring to the Crown's $300 million 'Elevate NZ Venture Fund', launched earlier this year. The fund invests in venture capital funds that primarily look to make Series A and B stage investments (round sizes of $2 to $20 million) into New Zealand entities. 

Pre-Christmas priorities

Ardern, in her speech, also detailed her government’s priorities, but didn’t go so far as to unveiling a 100-day plan as she did at the 2017 election.

These priorities include:

  • Expand the flexi-wage scheme by the end of the year.

This is an existing subsidy paid to employers who hire people “at risk of long-term unemployment and receiving a benefit”.

Labour has promised to channel an additional $311 million to the scheme so the average subsidy can be increased and more businesses can use it. Of this pool of funding, $30 million has also been ring-fenced to support eligible unemployed people who want to start a business.

  • Continue to cover the costs of trades training and apprenticeships.

Ardern said: “As of 2 November, one part of that package, the Apprenticeship Boost Initiative, has seen payments made to 5,219 employers to take on 11,455 apprentices…

“In addition, since we introduced free trades training and apprenticeships on 1 July we have seen 6791 new apprentices sign up in the building and constructions sector alone, 4000 more than in the same time period last year.”

  • Continue to approve projects to go through a fast-tracked resource consenting process.

"Cabinet will consider additional projects to go through the fast-track process before Christmas and will be announced in due course. The first project has already been approved by the fast track panel and we expect to refer additional projects to panels within the next two weeks," Ardern said.

  • Double employees’ sick leave entitlements to 10 days.

“Cabinet will consider draft legislation before Christmas, with a plan to introduce this in the house before the end of the year, but then move to a full select committee process so we can try and build some consensus around this issue,” Ardern said.

Ardern reiterated what she's said in the past that Labour would "govern for all New Zealanders" and aimed to "reach as wide a consensus on key issues as possible".

Tight border restrictions to remain in place

Ardern also said she would work to preserve New Zealand’s “hard won” position when it came to Covid-19.

She acknowledged there had been calls for managed isolation capacity to be expanded, but said this was constrained by the availability of health and law enforcement staff, who operate these facilities.

“On a per capita basis our quarantine capacity is larger than Australia’s, with up to 6,000 people in facilities at any given time. We have a work force of 4000 people including up to 1000 health staff as well as our military and police monitoring security,” Ardern said.

“So let’s keep the conversation on our borders going, but while remembering that they are key to our success.”

Policies avoided

Notably, Ardern didn't mention the minimum wage increase planned for next year. 

Nor did she talk about Labour's policy to introduce a new top tax bracket for income above $180,000.

And she didn't reference the country's enormous asset price inflation and the Reserve Bank's role in the economic recovery. 

See Ardern’s speech in full here.

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freeze min wage,
open border gradually,
small biz want customers, good quality and affordable employees not loans.

No throw money - print and dustribute free money to one and all.

Will not be surprised if in 2021 when things get real bad by all stimulus government is forced to bring minimum income scheme to all - employed or unemployed as this seems to be the only way forward.

Affordable employees? Seriously?
Oh... you mean Uighurs?


Yet, what is the 2% inflation target if not a wage reduction target? The government policy appears to be to reduce our wages steadily over time, until they compete with Chinese wages, thus restoring productivity. They assume you won't notice and they are correct. Our wages went down 30% over the last three years when measured against our biggest purchase item, a house. Did anyone notice?

With CPI below 2% RBNZ would want wages to go up. The average hourly wage has increased over the last 3 years (see That increase has been more than inflation over the same period.

They assume you won't notice and they are correct.


It may have been more than inflation for some - but house prices where I am have not just consumed any wage increase, they have gone up by more than my entire take home pay (including employer and govt kiwisaver contributions) for both of the last two years, and I earn a six figure salary. Even if I'd somehow manage to spend zero dollars on living costs I'd still be worse off. I'm so glad the government prioritized property owners 'feeling' wealthy enough to go out for brunch more often though. Because that's clearly the priority.

Oil rose in price from 1.80 $/bbl. at the end of the 1960’s to 25.81 $/bbl. at the end of the 1970’s. When inflation turns up it is not necessarily manageable, as house price inflation has shown. Every country is trying to light an inflation fire.

But it seems in this case, there is one very easy thing they could do: reintroduce LVRs for investors.

Isn't that treating the symptom not the causes, though? The causes being excess credit availability and capital inflow from overseas meets excess demand (too many migrants and tourists) and restricted supply (over regulated). Dealing with causes is hard for bureaucrats, it's not what they are good at, so we keep dealing with the symptoms?

We should do all those too, of course - but they are trickier and will take longer. In the meantime, the least the RBNZ could do is stop pouring petrol on the bonfire.

The border is as open as it can be while there is a pandemic. We have seen the holes caused by trying to cut corners at the border.

Also low wage people who can't afford to buy a house in the country is just creating more inequity.

Sorry Xing, I knew you liked low wages economy. But Lab team believe, the increase of min wage, will flow to the consumption of foods, this in turn will give more energy to work harder to pay for the increase rent, thus landlord mortgages, .. then the OZ Banks.. then more loan from Banks to the landlord/investors to provide more housing in the country. Now, you get it.
Nope, border stay closed.. after all what's the point of importing specific ethnicity by 300k during Nat, from 400k to 700k in just 3-4yrs ?
Small biz need to be forced into this govt loan scheme, in that way it's for the future all collectively contributed as a member too big to fail brigade, therefore govt will secure the plan of blanket carpet bail out systems in the unlikely event of emergency.

If the government seriously wanted to help small business instead of offering them more debt, they should be looking in to these issues in a timely fashion.
July 11 2020
Nov 5 2020
May/June 2021 Decision, maybe.
Wonder how many NZ potato growers will be lost to the industry by the time a decision is known. Current govt needs to change is messaging for SMEs from 'Lets keep moving' to 'Lets keep moving further in to debt'.

Don't forget to address the duopolies and monopolies too, that seem to be becoming more prolific, using their market power to bully SMEs. Loans etc dont, wont help when revenue / via price increases (even inline with inflation) cannot be realised because the monopoly / duopoly just plain wont accept it or remove you from the supplier network.

Personally I'd like to see special wholesale deals for bulk outlawed, along with allowing exclusive product and denying product access for SMEs. That's about as anti competitive and predatory as it gets! Then we could really see which businesses are the most competitive, rather than having huge cartels push everyone else out!

Contracts is what needs to be addressed, when you (as an SME) have a customer (Corporate, foreign) whom has say 65% market share of the NZ market. They just put in the contract "This is what we pay" either accept it or kiss good bye to 65% of the market. They also want to know every part of information your business has, again if you refuse... see you later. They gather this info to use later when vertical integration is the only option left to them, to extract more nutrient from the business model they have created.

Yeah, the worst part is that oligopolies in most of our markets are intermediaries, leaving both upstream suppliers and final consumers worse off financially.

More competition in the grocery retail industry itself will give the duopoly a run for their ticket-clipping money, forcing them to distinguish themselves (e.g. better service quality, welcome premium suppliers, reducing carbon footprint) or innovate (e.g. backend automation, cheaper online shopping).

Small Business Growth Fund, repurposing the Small Business Cashflow Loan Scheme, establishing a micro-finance company for small businesses, or expanding the mandate of the Venture Investment Fund

Successive government's tend to leave a major issue largely unresolved, that is a lack of ecosystem in NZ to help scale successful businesses from startup level to mid-sized entities (or bigger).

The Austrians and Germans love their Mittelstände but openly admit that those successful SMEs are often built around large corporations. The German auto sector dominated by 3 behemoths but over 600 SMEs contribute 70% of the industry's GVA.

Reality is the loan is not $100,000 it is a max of $10,000 plus $1800 per employee, so you need 50 employees to qualify for $100,000. It would be great if the media referred to the loans as 'a max of $10,000 plus $1800 per employee'. Majority of SMEs will not qualify for $100,000.

if i had 50 employees $100k would not cover the Christmas party, what a waste of time.
And if i did not have the resources already to access $100k when i needed it i should throw in the towel now and save everyone a pile of grief, certainly not borrow it to cover cashflow, that is a nail in the coffin.

Wow, $2000 per head wouldn't cover your costs?

I think my firm budgets about $100/head and my parntners give them $20/head.

You miss the point - this loan offers cashflow liquidity to businesses, not bail them out of a crisis. Even profitable businesses, especially in times like these with lots of disruptions, often find themselves low on liquidity.

For a lot of these small businesses with seasonal or project-based revenues, cash inflows are sporadic but bill payments are periodic. Suppliers also tend to grow more risk-averse in such times and force smaller players to pay upfront.

Surely, the government is targeting businesses that are otherwise profitable but facing cashflow problems due to certain disruption or timing issues for the scheme. Continuing this this support beyond COVID is something else that could be looked at.

The govt seems to believe that a functioning business can spend its way out of danger.... Its a but different, we cant just keep printing the stuff....

It would be wonderful if the government figured out how to help SMEs. They are the engine of the future as well as the present. Is this all they can come up with?

Unfortunately businesses operate very differently from Government

You cannot simply tax everyone and borrow/ print money from the RBNZ to pay your increasing bills... constantly in deficit
In the real world that is basically trading while insolvent - i.e. there is no viable or sustainable business...

Debt does not solve business issues caused by lack of revenue/ cashflow

There's nothing in there for me. No offers that I would take up unless, say it was to cover an excessive tax bill. When 2020 hasn't really been a good year for operating as a business. In that example the liquidity problem is creating by tax demands that are excessive. So maybe it's useful for addressing problems created by the government but it certainly doesn't lead to any improvement.

Money is just money, where is the government initiative that will lead to productive work?

From small acorns mighty oaks grow. From small initiatives a platform can be fashioned that is usable and familiar when another unexpected event happens.

These loans won't be taken up in any number because they are no advance on what has already been offered. There hasn't been an increase in the loan amount available to a sole trader. At least there is some inkling that there needs to be a structure evolving to provide finance that is currently lacking but the approach is too cautious to make a difference. Not unexpected given the current political climate.

Covid has given govt's all over the world a preliminary wake up call. They are now attempting to go back into their neoliberal torpor and to the laissez faire way of doing things. Given the population demographics of the two main economies, the US and China I don't expect a substantial pick-up in worldwide demand until 2023. So unless govts worldwide step in with genuine fiscal support during this period it's going to be a bit sad.

And dare I say it, Nature is doing it's bit. Covid is wreaking havoc and unless govts supply fiscal stimulus to their populations and act like govts are supposed to act individual nations will sink. If 'correct actions are taken' and aggregate demand is supported nations will cruise through the storm.

Books I can recommend for nation refurbishment -

Get Off The Grass - Shaun Hendy and Paul Callaghan

The Quest For Security In New Zealand 1840 to 1966 - WB Sutch

The Idea Factory. Bell Labs And The Great Age Of American Innovation - Jon Gertner

Hang on a minute...if my business is investing in leveraged financial products the government will lend me 10k? If I win I pocket the gains, if I lose the taxpayer will have to write off the loan. Cool.

Ok, that is an extreme example of a risky business, but a serious percentage of businesses fail. A similar loan from a bank would no doubt require a personal guarantee. I can understand why the government wouldn't pursue that but is anyone doing any proper due diligence on what the loans are being used for?

Nope not at all, A Sole operator I know took the interest free money and used that to pay off his van loan, and then just spent the rest on a playstation lol

Actually, if the lady or bloke involved does in fact develop good skills and can make a living trading, what's not to like? They are a net benefit to society and they bring in overseas earnings and spend them here. There will always be free riders, but more rules and regulations just stop anything happening.

The RB is printing all this money, but much of it is going into pumping up house prices, rather than into businesses. Then we have companies that are now doing share buybacks.

Sounds like she wants to give them free slaves. Doesn't it?

A bit of Ronald Reagan seems apt:
“Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Thank goodness, she listened to our collective voices - we opted for correct voting. She is continue and hopefully until further years ahead for the subsidy, just a rebadged version. NZ need this, without this sovereign $ numbers creation of subsidy to be channeled into 'NZ productive economy' the future will look rather dim. Every time wages subsidy announcement clearly impacted the unemployment figure: 4.2 to 4 now 5.3 (this is just during election uncertainty).. Now, our dear leader is back with the new team subsidy vengeance.. unemployment you're going down.. at least for another 3yrs - Housing? you'll pull us up please.

Just give SME's low interest easy access loans for capital expenditure.

We are glad that Ardern avoided those policies, after all it's just a feel good announcement in the past. It will drag down the current NZ bed rock star economic confidence should it be implemented. Keep that No CGT, more and increase of now 'flexi wage subsidy', 180K upper tax? you're joking right? they will all shift to OZ. Help RBNZ to keep removal of LVR, preferably by removing the bright line test. The OZ Banks clearly a bit shy to share their past years profit, Ardern govt. need to encourage RBNZ to speed up for more QEs, FLPs & neg OCR, more stimulus for low inflation number, the sooner, the bigger, the better it is for NZ Aotearoa.

And here is where the thinking falls down, the socialist view fails the human condition.

From where I sit it feels as though we have a borderless world for things like trade and the exchange of people and skills, and yet, rather than this leading to people being exposed to new and different ideas and ways of thinking, the advent of technology and the creation of online platforms has led us instead to find and build our tribes to entrench our existing views. Places where we can lock in our opinions, where we can further reinforce them, rather than allow ourselves to be questioned and have our perspectives tested.

The socialist view is that everybody wants to be told what to do and where they stand in the social structure and what the rules are. Trouble is, if you treat everyone like teenagers you tend to get teenage behaviour, or you leave home.

Growing up in 1970s England, I'm getting that been here before feeling. It all starts out sounding wonderful, but before long the argueing and tantrums begin. Strikes, blackouts, shortages (never did find out whether the run on sugar was based on shortage or just mass panic buying) and inflation. Then more inflation, then more strikes to get wages adjusted for inflation, then each group wants to get relativity back and so round and round and down and down we go. Lots of excitement. Followed by recession and lots of despair.