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Cabinet agrees to expand small business lending scheme, signals Cook Island bubble

Nov 09, 2020

Prime Minister Jacinda Ardern and Finance Minister Grant Robertson have announced changes to the small business lending scheme, and moves towards a Cook Islands travel bubble.

Finance Minister Grant Robertson says Cabinet has agreed to expand the small business lending scheme.

"The scheme opened in May, and to date close to 100,000 businesses have received the loan, with a total lending of $1.6 billion," he says.

"The average value of each loan is modest, at around $17,000, with smaller businesses being the target. It is much needed working capital to help businesses who have been in a tight spot. A small number of borrowers have already repaid their loan."

He says supporting small businesses remains a central principal in Labour's five-point economic plan, and the changes signed off today make the scheme more attractive to prospective borrowers, and do not require legislation.

The changes include:

Extend the life of the scheme for a further three years - the loans scheme had been due to end on 31 December Extend the interest free period from one year to two years, with existing borrowers to be migrated to the new arrangements Broadening what the loan can be spent on, outside of core business operating costs to, for example, capital items

Robertson says the next steps are to have officials provide further advice on more changes to the scheme, including allowing businesses to re-borrow if they've already paid back and draw down a second loan, an increase to the borrowing cap, and further adjusting eligibility criteria.

He says Cabinet anticipates considering these changes before the end of 2020, but some of them would require legislative change.

"We also want to look at how this support sits alongside other measures such as the Wage Subsidy scheme, the business finance guarantee scheme, and also to look at broader questions around access to finance for small businesses."

Moves towards Cook Islands travel bubble

Ardern says officials are set to visit the Cook Islands from 14 November for an inspection with the goal of confirming a safe travel bubble.

"While I don't wish to put any time-frames on a potential travel bubble, it is my aim and hope that this can resume as soon as is safely possible, and this on-the-ground visit by officials to the Cook Islands is the next step in that process," she said.

"We of course have also said to counterparts in the Cook Islands we welcome any visits that they may wish to do in the other direction to equally assure themselves of the practices that we would have in place at the border too."

She says she does not expect to make an announcement within the next week, but positive moves are being made.

"Keep in mind it's not just New Zealand saying 'we're ready to go', the Cook Islands need to give their approval too, and that's really important because they have Covid-free status," she says.

"At the moment we're getting everything in place, we do want to go over and make sure we're having those face to face talks, in part, one of the things we've always been mindful of: it's not just the aviation border, it's the maritime border that has been an area of risk for both countries. Just checking all those arrangements are what both sides would expect is important."

Jacinda Ardern and Grant Robertson at Cabinet. Photo: Dom Thomas

Managed isolation

Ardern says the managed isolation voucher system, which has been running for a week, better enables the country to run its border protection facilities.

She says demand has been high for places in managed isolation, but more spaces cannot be stood up "carte blanche".

"It requires defence force personnel, it requires police, it requires dedicated health workforce that cannot be undertaking any other work across the health system because of safety issues," she says.

"As it is we have anything up to 4000 people already working across the system. Every time we increase the number of places we increase risk ... yes, we want to support New Zealanders to come home, but we also need to keep New Zealanders safe."

The head of Managed Isolation and Quarantine, Air Commodore Darryn Webb, has announced another 100 rooms per day are being made available for 13-26 December.

Ardern also says some vouchers can be returned to the system, and has asked people to cancel their voucher as soon as possible if they will not be able to arrive when they have booked.

"Rooms are being held and then released frequently," she says. "For example in a single day in September there were more than 300 vouchers returned to the system for this reason - this ensures rooms won't go to waste."

Asked if the limited spaces meant the country could miss out on having workers with useful skills, she says New Zealanders who are interested in coming home are not likely to change their long-term plans just because they cannot get the date they want in managed isolation.

"New Zealand is a great place to be right now, and that's not going to change any time soon."

The first Cabinet meeting was held on Friday, just hours after being sworn in.

Parliament is scheduled to open on Wednesday 25 November, and The House will rise for the year on 9 December. Regular Cabinet meetings will resume after that.

Ardern says Cabinet will meet again on Monday and there is a busy agenda for the rest of the year. She will outline more about that next week.

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