2020 election: Labor $ 1.5 billion extension of small business loan scheme and cap on paywave fees

Labor is promising a series of new small business policies in a bid to keep the “engine room of our economy running” as the economic fallout from Covid-19 continues to weigh on.

If re-elected, the Labor Party will extend the small business cash flow scheme for another three years, invest more government money in personalized business advice, and make changes to small business tax schemes.

It would also crack down on the amount of money companies pay for contactless payment services, which cost Kiwi companies two to three times more than the same services in the UK and Australia.

Labor small business spokesperson Stuart Nash, along with Labor leader Jacinda Ardern, made the announcement in Tauranga this morning.

“Our message to small businesses is that we stand behind them,” he said.

Today’s policies focused on what he called the “next phase,” which includes improving cash flow support, reducing costs, and leveling the playing field to “help companies recover faster.”

A cornerstone of today’s plan was the extension of the small business cash flow scheme – a government loan for the small businesses hardest hit by Covid-19.

So far, more than a quarter of New Zealand companies have adopted such a plan.

The scheme entitles eligible businesses to a loan of $ 10,000, plus an additional $ 1,800 per full-time employee. The loan is interest-free if it is paid back within a year, and 3 percent per year every year after that.

Applications for this scheme were due to close on December 31 this year, but the Labor Party promises to extend it for another three years.

In addition, the interest-free period will be extended to two years.

The extension will cost an additional $ 1.5 billion and will be paid for through the government’s Covid-19 response fund, allocated in this year’s budget.

The cost is due in large part to the cancellation of interest payments on loans and administrative costs.

Another key element of Labor small business policy is its promise to regulate contactless payment schemes such as paywave.

The most recent New Zealand Retail Payments Survey revealed that these fees are 1.1 percent in New Zealand, but only 0.6 percent in Australia and only 0.3 percent in the UK.

Nash said these high fees are costing New Zealand businesses roughly $ 13,000 more than similar businesses in Australia.

“The point at which customers transact with companies is a source of concern for both health and the economy,” he said.

The plan, according to Nash, is to regulate the payment system, probably by putting a limit on the amount banks can charge for these fees.

Labor has also promised to create a $ 2,500 digital training voucher to help pay for digital training.

This training will be provided through trusted advisory organizations, such as Chambers of Commerce and industry associations.

“Small businesses are the lifeblood of our economy and will continue to be at the center of our policies. We will maintain the momentum of the recovery,” Nash said.

Key Elements of the Labor Small Business Proposal:

• More widely available no-interest loans, extended zero interest period

• Tighter regulation of commercial service fees charged to retailers

• More support for the digital transformation of SMEs

• Promotion of digital commerce such as electronic invoicing and other innovative processes

• Government funding for personalized business advice

• Mitigate compliance costs to maintain our number one position to facilitate business.

• Modify the tax regime of the accounting income method (AIM) to make it easier for SMEs to switch to a “pay as you earn” model throughout the year