Economic Recovery

Bridges pitches GST refunds for Covid-19 economic response

The Opposition has pitched a plan to let Covid-hit businesses claim back GST payments, as they warn of a growing curve of job losses in NZ

National leader Simon Bridges has proposed an $8 billion GST refund scheme for Kiwi businesses badly affected by the coronavirus shutdown, accusing the Government of lacking a suitable plan for the country’s economic recovery.

In a speech to BusinessNZ members via Zoom conferencing software, Bridges set out the Opposition’s views on how to best assist employers and employees taking a hit from restrictions imposed to head off the worst of the Covid-19 pandemic.

National had always supported the decision to move into lockdown and the country could be proud of its citizens’ collective efforts, he said.

However, the inability of many companies to operate as usual had led to many losing their jobs, with Ministry of Social Development data suggesting more than 1000 people were “joining the dole queue” each day.

“Business owners, especially the many thousands of small business owners, are watching in horror as week after week of lockdown washes away the foundations of the businesses they’ve spent years or decades building,” Bridges said.

“The response to Covid-19 while necessary at the time, has cost jobs, livelihoods and, in too many cases, the work of a lifetime.”

The Government needed to flatten the economic curve of job losses as well as the infection growth curve, he said.

“It’s the curve that is affecting and devastating far more families and individuals than Covid-19 has touched.”

“New Zealanders feel no sense of confidence that Grant Robertson, Phil Twyford, and Shane Jones know how to steer the recovery. I certainly do not feel it - because there is no clear sense of a carefully thought-out economic plan.”

New Zealand was heading towards the sharpest and deepest recession it had ever seen, according to many economists, and the Government needed to give the public greater confidence that it knew how to chart a course ahead.

“New Zealanders feel no sense of confidence that Grant Robertson, Phil Twyford, and Shane Jones know how to steer the recovery. I certainly do not feel it - because there is no clear sense of a carefully thought-out economic plan.”

Bridges said the National Party would implement a GST “cashback” scheme if it were in power, allowing businesses with revenue drops of more than 50 percent across two successive months to claim back the GST they had paid between July 2019 and January this year, up to $100,000. Larger companies that paid more in GST over that period would be able to claim up to $250,000 as a five-year repayable loan.

Bridges said National’s proposal was superior to the Government’s loans scheme as it was primarily a grant, was linked to pre-existing revenue levels, and was both more generous and more targeted.

The party estimated about 160,000 businesses would be eligible for the scheme if it were implemented, at a cost of about $8 billion.

National would also encourage new capital investment for firms that were in a good position, lifting the expensing threshold from $5000 to $150,000 for two years.

Asked by BusinessNZ chief executive Kirk Hope about how the Covid-19 spending should be funded, Bridges said the Government had to invest where it was needed while not throwing money about recklessly.

“What I will be looking for in the Budget though, coming up next week, is making sure that’s not taken too far. It’s not just the numbers, it’s not just what you spend - it has to be quality spending in the right areas.

“My concern is [the Government will] turn what would be otherwise a $50 billion issue for New Zealand into a more like $100 billion issue, and to me that’s not required here.”

Bridges said fiscal policy, rather than monetary interventions from the Reserve Bank, would need to do the heavy lifting in the Covid-19 response.

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