It is great to be in Petone today to announce the next stage of National’s Plan to Get New Zealand Working.
First, thank you to Chris Bishop for arranging today’s visit, and getting me out to the Hutt once again.
Today’s policy is called BusinessStart. It is the companion policy to JobStart, which we launched in West Auckland in late May.
As we gather here today, New Zealand faces its worst economic downturn for 160 years.
That’s not me saying that. It’s the Reserve Bank.
Right now, around 200,000 New Zealanders are on unemployment benefits.
Another 400,000 jobs are at risk, being kept alive through the wage subsidy scheme, which ends on 1 September – the day before overseas voting begins.
By Christmas, as many as half a million Kiwis may be unemployed.
All of us will know someone who loses their job. It could be you.
You will remember that JobStart provides $10,000 cash grants, to every New Zealand business, for every new permanent full-time employee you hire – up to 10 new staff, or $100,000 per business.
JobStart is an emergency programme that will begin on 1 November. It was then planned to run for five months through to the end of this financial year, 31 March 2021.
I am revisiting that, given it had overwhelmingly positive feedback from employers.
JobStart’s $10,000 is designed to cover the cost of hiring a new worker – their tools, training, getting them settled.
In good times, the New Zealand economy generates around 30,000 net new jobs a quarter.
JobStart is capped at $500 million, or 50,000 new jobs.
As we said when we launched it, if you as small business owners – the heroes of the economic crisis – employ even 10,000 of your neighbours under the scheme before Christmas, then there will be:
- 10,000 fewer people on the dole,
- 10,000 families who can face next year with confidence and who have choices they otherwise would not have had, and
- Ten, twenty or thirty thousand kids who might get a Christmas present that they might otherwise not.
BusinessStart is bolder still.
Kiwis are entrepreneurs. We are a nation of small businesses. Setting up a small business gives people the freedom to be your own boss.
And, economically, the great thing about small businesses is they can grow at a much faster rate than big businesses. It’s hard for a big business to double in size. It’s not so hard for a sole trader to hire a mate.
National’s BusinessStart is designed to help those who have lost their job since 1 March 2020 – or who lose their job in the months ahead – to set up their own small businesses.
We’re going to make at least $30,000 available to you to help you do it, to buy your kit, to make sure you have some working capital, and to lower your taxes in the early stages, as you start to become successful.
Here’s how we’ll do it. Here’s how BusinessStart works.
First, pretty much all Kiwis have one business idea or another. We want to harness your ideas to get us all through the crisis.
What we are going to do is this; for Kiwis who have lost their jobs since 1 March, plus those who lose them in the months ahead, National will give you a $1000 voucher for you to:
- Get proper financial advice from a Chartered Accountant or Registered Financial Adviser on your ideas,
- Put together a genuine and viable business plan, and
- Have you set up on systems like MYOB or Xero.
When your plan is signed off by your Chartered Accountant or Registered Financial Adviser, you’re eligible for the second part of BusinessStart.
We’ll let you withdraw up to $20,000 from your KiwiSaver account to get your business going.
It’s your money that you’ve put aside for a rainy day. Well, if you’ve lost your job, it’s not raining, it’s pouring.
A lot of that KiwiSaver money is sitting in default funds. Another big chunk of it is held in foreign shares. National says it may be more valuable to you invested in your own business. It’s your choice whether to leave it with the fund managers or invest it yourself.
We know people will criticise us for this. We want them to tell us why it’s better for Kiwis to have their money invested in Wall Street rather than in their Kiwi High Street.
We will also incentivise BusinessStart recipients to return the money to their KiwiSaver accounts when they can. Their future KiwiSaver contributions will be tax free until they have repaid the amount they took out.
The second thing we’ll do – if you have been made redundant – is give you the entire taxed portion of your redundancy as a tax credit with the IRD. If your redundancy is, say, $150,000 that could be as much as $50k.
You’ll then be able to use that to pay GST – or your provisional tax when you start making a profit.
But we think BusinessStart should be for all New Zealanders who lose their job.
So, for everyone else who becomes eligible by having their business plan signed off, National will give you a $10,000 tax credit – $5000 on day one and another $5000 after 90 days.
We’ll also pay your Company Office registration fee of $130 if you choose that structure for your business.
With your approved business plan, your $20,000 and your tax credit, we’re sure the banks will compete to give you a decent banking finance package for any additional capex and working capital you need.
And, remember like all business owners, BusinessStart recipients will be able to write off new investment of up to $150,000 for each new asset instantly under National’s previously announced policy.
Running a small business is still not for the faint-hearted.
That’s why BusinessStart also includes a new $10 million contestable fund for additional advisers, for the likes of chambers of commerce, employers and manufacturers associations and Business Mentors New Zealand to pitch for.
BusinessStart recipients will be able to get that mentoring free.
What we then want, is for BusinessStart recipients to be confident enough to take on a mate using JobStart.
That’s another $10,000 if you do.
As I said, JobStart was originally planned to end on 31 March 2021. I am extending it until 31 March 2022, the same time period BusinessStart will be available.
I am also announcing three further measures to assist existing small businesses:
- National will increase the provisional tax threshold tenfold, from $2,500 to $25,000
- Lift the threshold to write off old assets from $2000 to $5000
- Increase tenfold the threshold where a tax invoice from the current $50 to $500
National plans 17 months of an entrepreneurial and job-growth explosion, during the toughest times any of us has ever known.
We’re using a combination of KiwiSaver money, tax credits and taxpayers’ money to back you.
No Government ever creates jobs. You, the business owners of New Zealand, do that. National wants there to be more of you. National wants to back you, as you back yourselves and your mates to get this country working again.
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