Speech To BusinessNZ: Getting NZ Moving
Hon Simon Bridges
Leader of the Opposition
Can I first acknowledge Kirk Hope and Business NZ for the work you have done to provide businesses up and down New Zealand a voice during the COVID-19 crisis.
You’ve provided accurate information and sound advice in a time of great concern.
Nothing in recent history has brought about such global disruption as the COVID-19 pandemic.
Kiwis have sacrificed much through the restrictions of lockdown, but we can all be proud that the collective efforts of everyone have so far worked well.
A lot of the response has gone incredibly well. New Zealanders have done a great job self-isolating and social distancing. We've flattened the curve.
National has always supported lockdown, and, indeed, we called for it.
We've been consistent on the things that matter here, since the start of the year: quarantining at the border, testing, tracing, and the availability of personal protective equipment (PPE) so that all New Zealanders who wanted and needed it, got it.
I don’t shy away from the work we did to push the Government to act and to act sooner. In fact, I think we made the Government’s response better on the things that matter to New Zealanders.
Moving into Level 3 last week was welcomed by many Kiwis who were able to return to work. But for a lot of New Zealanders, it’s not so rosy.
Men and women have lost their jobs and, according to MSD, over 1000 people a day are joining the dole queue.
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.
The response to Covid-19 while necessary at the time, has cost jobs, livelihoods and, in too many cases, the work of a lifetime.
Unfortunately it’s not over. The pace of business failures and job losses is accelerating. It’s the economic curve that the Government has created and needs to flatten.
It’s the curve that is affecting and devastating far more families and individuals than Covid-19 has touched.
Our view is simple, we need to get New Zealand working again. It’s time for another curve, an upward curve of growth and jobs.
The Covid-19 curve is flattened, but we must not flatten the economy.
In just over a week the Government will deliver its third budget. There are very few years in New Zealand when the Budget is not the most significant economic event on the horizon, but this is one of those years.
The Budget matters, but only in the context of the far bigger and more serious economic event that is already upon us.
New Zealand is headed for, by the reckoning of every major economist, the sharpest and deepest recession we have ever seen.
The choices the Government makes now, in this Budget, and in the weeks ahead, will have a direct impact on how deep, how sharp, and how brutal it will be.
New Zealanders supported the Government’s approach through Level 3 and 4, and indeed we supported measures like the wage subsidy to cushion the blow to New Zealanders.
Now we are looking at our recovery, and 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.
That much was clear when Grant Robertson announced the Business Loan scheme on Friday. He couldn’t say how much he expected taxpayers were stumping up for these loans, nor could he say how Inland Revenue would assess a business’s credit risk.
Small Businesses need cash flow to stay open. The Government has to do something to make sure they don’t go under.
But spending, taxing and hoping for the best isn’t a recipe for success. It’s a recipe for more debt, more misery and more pain.
I’m deeply worried about the impact that this, coupled with our extended and heavy lockdown, has had on jobs and livelihoods, on all of our futures.
I’m deeply worried about the impact it will have on young people trying to get their first job, on men and women mid-career who have found their industry will be substantially smaller for months, if not years.
It’s relatively easy to go into lockdown. New Zealanders did the hard work. It’s much harder to lead an economy back into recovery.
It takes an understanding of business and a clear plan that a government has the ability to execute.
I am focused on that plan, on how we get New Zealand working again.
A plan to boost confidence in our key industries, to get New Zealand working again
A plan to give New Zealanders an assurance that we are as committed to flattening the recessionary curve as we were to flattening the COVID curve.
A plan to give businesses the tools to hire again and build our economy back up.
To get NZ working again.
We want the next generation of New Zealand to inherit a legacy of opportunity, not a legacy of debt.
We want to unleash a National Recovery Agenda that will rebuild the Kiwi dream.
Our agenda has five core elements:
- Getting out of lockdown by getting NZ working again
- Delivering an effective stimulus to a stalled economy by creating an upward curve of growth and jobs
- Creating productivity in a 2-metre world
- Unleashing private sector investment
- Investing in things that will guarantee New Zealand will succeed in the post-Covid world
Getting out of lockdown
New Zealand went early and went hard. It was hard and still is hard. Substantially tougher than in Australia, where much of the economy carried on throughout.
Having gone hard, we’ve seen the Government slow down and retain a very conservative approach to downgrading the levels of response. But you go early and go hard for one reason and that is to flatten the curve quickly, so you can get the country working again - as quickly as possible.
Yet today’s Level 3 is harder than Australia’s was in the height of the crisis and this is having a real cost to our livelihoods and wellbeing.
Kiwis visit supermarkets in their millions with no evidence of significant community spread of Covid-19, while small business like butchers and greengrocers have been forced to stay shut. There is no logic in that.
We can’t afford to wait hopefully for the Government to slowly grant us our freedoms back; every week the Government should justify what is absolutely necessary to retain its restrictions.
As quickly as New Zealand flattened the curve, the Government must lift the restrictions that are flattening the economy.
Delivering an effective stimulus to a stalled economy
As the lockdown unwinds and more Kiwis get back to work, we have to make sure jobs and livelihoods are protected.
We know that many Kiwis will still not be working. There will be job losses that cannot be avoided.
Many businesses will face a prolonged downturn in revenue and, in order to stay afloat, will be forced to let some workers go.
If you’re a business already struggling with cash flow and turnover, getting another loan is probably the last thing you need.
Instead, if we were the Government, we would implement a GST cash back scheme.
If the business could demonstrate that their revenue had fallen by more than 50% across two successive months then they would be able to claim back the GST they paid between July 2019 and January 2020, up to a maximum of $100,000.
If the business paid more than $100,000 in GST over that period, then they would be able to claim up to an additional $250,000 as a repayable loan over 5 years.
To make it fiscally neutral, we would only charge interest on those loans at the ten-year Treasury bond rate, which is currently about 0.7%.
The key point of difference with our proposed cash flow scheme - as opposed to the Government’s loan scheme - is that it is primarily a grant not a loan, it is linked to pre-existing revenue levels, it is more generous and it’s more targeted.
Let’s face it - these businesses have been forced to shut down in the national interest.
It is in the national interest to keep them afloat.
It’s not right that small business should be left to carry so much of the economic suffering.
The wage subsidy has helped employees for 12 weeks, but it hasn’t helped businesses with zero revenue pay overheads like rent, power and stock.
The third task is to encourage business investment, to get the economy cranking.
We want New Zealand businesses to succeed.
We would temporarily lift the threshold to expense new capital investment for firms. It has been stuck at the very low level of $500 for many years. The Government lifted the threshold to $5000 as part of its Covid response. We’d go much further and lift it to $150,000 for two years.
So, if you have a company and spend $145,000 on new machinery, rather than depreciating that asset over many years, you’ll be able to expense the full $145,000 in this tax year.
Tens of thousands of small businesses in New Zealand would benefit from our schemes to make sure they stay afloat and trading in the months ahead.
That’s what I mean when I say I want to get New Zealand working again.
Finding productivity in a 2-metre world
A practical challenge for the next few months as we retain social distancing is to design rules in such a way that we can operate productively while still staying 2-metres apart.
Handled poorly, workplace rules will be a drag on our productivity for the rest of year; handled well, with clear and pragmatic rules and access to swift testing and PPE, we can regain momentum.
Rather than pages and pages of rules and manual forms to be filled out, as seems to be the case now, we need simple principles and simple technology based systems. We need to slash red and green tape so small businesses in particular can get working again and quickly.
Many council consenting departments are scarcely operating. We would send a clear message for local government to open up to get the consents going. You can’t get back to work if councils are not operating effectively.
Unleash the private sector
As we climb out of Covid recession we’ll be looking for blue-sky thinking for New Zealand’s future – what’s over the horizon and how can we turn it to our advantage?
Where’s that going to come from? Well it won’t be coming from a Labour/NZ First Government living in the Wellington bubble.
Don’t assume a committee of Wellington politicians and officials, with a couple of business folk, a union rep and two iwi leaders can steer our path into the new economy. And I wouldn’t rely on Shane Jones and Phil Twyford to implement it.
We believe the best ideas must also come from all levels of business out there risking your own capital, persuading others to give you money to start new ventures, using your deep knowledge of particular industries and sectors to plan what’s coming next.
With their additional input NZ can set itself up for a stronger sustainable future.
No virus, not even Covid-19, can change the formula for economic success. Successful economies make it easy for investment to flow to productive activities. To be successful our economy needs to welcome investment, avoid over-regulation and over-taxing, while providing clear and consistent rules which are properly enforced. And without changing those rules on a whim.
Government investment in things that prepare New Zealand to succeed in the post-Covid world
National is the party of infrastructure and we have the competence and track record to do what we say we will. Labour has failed to deliver the infrastructure it promised at the last election.
It failed spectacularly to deliver KiwiBuild.
It hasn’t even started light rail down Dominion Road.
It hasn’t delivered rapid rail in the Golden Triangle.
It can’t get Transmission Gully done on time despite the call for infrastructure projects to be accelerated.
There are no new forests.
And they can’t blame Covid for any of those failures.
It’s taken a global pandemic and unprecedented economic disruption for Labour and the Greens to realise something important: that yes, we do need to be kind to each other, but it’s real investment and real jobs that underpin the security of New Zealand’s families.
National has recent experience at economic recovery after a financial crisis
National will deliver on its promises.
It was the previous National Government that invested massively to ensure Kiwis got early access to Ultra-Fast-Broadband, which has made the past few weeks much more bearable and productive.
It was a National Government that started the Roads of National Significance.
It was the National Government that built the Waterview tunnel, and gave the green light to the City Rail Link in Auckland.
It was the National Government that increased investment in R&D and science during its 9 years to help accelerate innovation.
I was deeply involved in all of those actions.
And because successive governments have kept debt low, we have the ability to invest further.
But the key is the quality of the spending.
Just borrowing endlessly and spending wildly and hoping for the best isn’t a plan for recovery. The danger now is that this government will assume that any and all spending is a good thing.
We know that poor quality spending diverts scarce resources away from useful and productive activities – and burdens future generations with debt.
National will be clear in the months ahead about additional aspects of our agenda and what our infrastructure plan is.
We won’t wait three years into our first term to get spades in the ground on critical infrastructure projects like roads, schools and hospitals.
National has a plan to rebuild our economy.
We will get New Zealand working again.
Not just for our business owners, but for our families.
We will make sure that my kids, your kids, and the next generation of New Zealanders are handed countless opportunities, not mountains of debt.
I have no doubt New Zealanders are ready to take up the challenge.
When we face the greatest economic challenge our world has seen since the Great Depression, it won’t be Government that saves the day. It can’t be.
It will be all of us.
The Government took the right steps to contain the virus but already it’s stalling on what to do next. It needs to get out of your way.
National will work alongside New Zealanders to achieve jobs, sustainable growth and boundless opportunities for New Zealanders and their families.
We will get NZ working again, and it is our New Zealand heroes, all five million of them, that depend on us doing so.