The 2020 Budget: Rebuilding Together
14 May 2020
He waka eke noa - We are all in this together
Budget 2020 focuses on $50b COVID-19 Response and Recovery Fund ("CRRF")
The CRRF focuses on rebuilding the economy and investing in jobs, protecting existing and new ones and providing support for workers to retrain. There have been no changes to tax rates.
A Snapshot of the CRRF
$4 billion business support which includes an extension of the wage subsidy scheme
$230 million is set to encourage entrepreneurship and risk-taking to kick-start growth with a focus on SMEs, e-commerce and exporters.
Economic recovery for NZ comes in the form of SMEs being productive, including exports to the global market. This funding will flow through NZTE with a focus on e-commerce.
$150 million is set for loans to R&D intensive business and to complement the existing R&D tax incentive. The scheme will start early June and is to encourage retention of ongoing R&D pre-Covid-19. $80 million is set aside to encourage entrepreneurs to develop new products.
There is a focus on the agri-tech sector. $11.4 million to grow agri-tech and continue to improve a sustainable balance of environmental outcomes and productivity in the agricultural sector.
$900 million is allocated to continue to support the Māori economy.
Budget Focus Points
Extension to the Wage Subsidy Scheme
The wage subsidy is to be extended from 10 June 2020 for businesses who have suffered a loss in revenue of at least 50%, over a 30-day period prior to application date, when compared to the same 30-day period last year. Applications will be open for a 12-week period from 10 June 2020. Applicants will however receive an 8-week lump sum payment at the same rates as the existing subsidy. This Wage Subsidy Scheme is also extended to pre-revenue R&D start-up firms that are recognised by Callaghan Innovation.
Assistance for Exporters
Additional funding for NZTE to provide intensive support for access to tailored NZTE and NZ Inc resources to connect exporters to overseas markets and boost the ability to reconnect to our overseas markets.
Loans for Research & Development
The CRRF includes the following initiatives:
$150 million for loans to R&D intensive businesses, to encourage them to continue with their R&D programme.
The loan will be for 50% of the annual R&D spend with a cap of $100,000 and will be operational in June.
In addition, changes will be made to ensure entities can deduct the cost of feasibility expenditure on unsuccessful projects or abandoned assets.
$10 million fund to provide incentives and grants to encourage businesses to adopt e-commerce, train digital advisers and provide additional support for SMEs to incorporate e-commerce into the Digital Economy.
Introduction of Trans-Tasman e-invoicing regime to make it easier to do business in Australia and New Zealand.
The establishment of a $400 million Tourism Recovery Fund for the following initiatives:
Tourism Transition Programme – delivering advice and support to assist tourism businesses either pivoting towards a domestic and Australian market, hibernating, or other options.
Strategic Tourism Assets Protection Programme – helping to identify strategic assets that are considered vital tourist attractions and amenities and provide them with protection and assistance so they will not be lost.
Tourism Recovery Ministers Group – established to oversee the Tourism Recovery package and the industry’s recovery.
New Zealand Futures Tourism Taskforce – A public-private taskforce established to lead the thinking of the future of tourism in New Zealand.
More Public Homes
Delivery of an extra 8,000 new public and transitional homes in a move to stimulate the residential construction sector.
The additional housing will be delivered by Kāinga Ora, Community Housing Providers and transitional housing providers.
$900 Million to Support Māori to Rebuild Together
There is a core focus on whānau to support business with $255 million allocated to various initiatives across mātauranga, apprenticeships, rangatahi, recovery and transformation. The balance of the investment is for health, education, and housing. In a whole of government approach, expect funding to come through multiple agencies.
The Government has allocated $1.1 billion for environmental initiatives which target the regions, and includes a $200 million “Jobs for Nature Fund”.