A View on the Latest Government Assistance Measures – Dukesons Business Law – Business Lawyer – Commercial Lawyer

April 2020

This Blog isn't legal advice – if you need legal advice on any employment law issue, please contact me. I'm business lawyer (commercial lawyer) in Auckland who provides advice on a wide range of business law including employment law issues.

First, I hope that everyone is keeping well and safe. It’s interesting when I go out for a walk several times a week (meant to be fast but I may be the only one who sees it that way). Lots of bods happy to look up and say hi, even make the odd passing comment. But quite a few are well and truly in their bubble. Steadfastly look straight ahead or at the ground, presumably fearing that even a simply hello may be risky.

I don’t know when we should move to Level 3 and exactly what should be done under Level 3 (the Government will announce what Level 3 may look like, later today) but it’s clear that there will have been many business related casualties as a result of COVD 19 (not to mention the unfortunate people who will not have physically survived). I’m not convinced that the latest Government assistance measures will be that useful – but, I’m no expert on that either. My expertise is as to business law, commercial law, not financial matters.

Most businesses in New Zealand are small, very small. My guess is that most of them aren’t innovators, aren’t high growth but rather, simply do what every other similar business does. Like it or not, accountants are accountants, lawyers are lawyers, cafes are cafes, builders are builders, and so on. Rather than making significant profits, many probably tread water or make modest profits.

I wonder therefore whether schemes like the temporary loss carry back scheme will benefit many. Accountants would be in a better position to judge.

I can’t see the proposal to give commercial tenants more time to catch up on overdue rent before a landlord can take steps to evict them. If things have got to the point where a landlord may want to give notice, will 30 days rather than 10 days make much difference in many cases?

Businesses are still having to pay overheads but may have no income or a reduced income. Getting further into debt through loans of any sort to pay overheads may not even be an option for many.

The Government is in a difficult position. I’m not setting out to criticise it and as I’ve admitted, I’m not sufficiently expert to be able to advise what is the miracle cure. Increased unemployment (of employees and business owners) means increased benefits being paid. Would it be better to use that money upfront to try to keep businesses afloat (hopefully good for proprietors and employees) and if so, which businesses?

No matter what is done, how will this all be funded? Does COVID 19 give the Labour Government an ideal platform that it has always wanted to raise tax rates (it would seem that you’re rich if you earn over $70K pa), implement new taxes, change the rules for NZ Super, and so on?

These writings aren’t really anything much – no law in them, no expert commentary, just some ramblings of a business lawyer (who acts primarily for small businesses). However, I think that it’s clear to everyone that business activity has to ramp up ASAP so let’s hope that we will exit Level 4 as soon as it’s reasonably safe to achieve that, and that Level 3 will achieve the right mix between acknowledgement of risk and the need to be economically active..

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