AUCKLAND (BLOOMBERG) - New Zealand's government will increase lending to small businesses and begin rolling out a new job-support programme before the end of the year, Prime Minister Jacinda Ardern said.
The government will extend the small business loan scheme out to three years, with the interest-free period raised to two years, Ms Ardern told business leaders in Auckland on Thursday (Nov 5).
It will boost funding for its flexi-wage programme by NZ$311 million (S$283 million) to help employers take on an additional 40,000 workers, she said.
Ms Ardern secured a second term with a landslide victory in last month's election, built on her response to the Covid-19 pandemic and New Zealand's subsequent economic recovery.
Faced with a global economic slowdown and the impact on key industries from a closed border, the government wants to create new jobs by supporting small and medium-sized businesses and by kick starting major infrastructure projects.
"The coming years will be very difficult with the global growth forecasts showing the impact of the virus is going to be with New Zealand for some time - both in terms of managing its spread but also recovering from its economic impact," Ms Ardern said.
"We have to acknowledge that the uncertainly that Covid has created will be with us for some time to come."
Ms Ardern said the small business loan scheme was set up as a "stop gap" to allow firms to cover costs in the wake of the lockdown.
As well as being in place for longer, it will also be broadened to allow firms to borrow to invest in new equipment and digital infrastructure.
"It's important that viable but vulnerable businesses, who may experience issues down the track, still have access to this line of credit to help them through," she said.
The government will also assess other proposals to support small businesses with finance such as a Small Business Growth Fund, re-purposing the Small Business Cashflow Loan Scheme, establishing a micro-finance company for small businesses or expanding the mandate of the Venture Investment Fund, she said.
The flexi-wage programme subsidises employers to hire people who otherwise may face lengthy unemployment.
"While the scheme will take some time to fully get up and running we want to be in a position to assist business to take on workers over the Christmas/New Year period if they can, rather than waiting until after the holiday period," Ms Ardern said.
To help accelerate infrastructure investment, the Cabinet will later this month consider more projects to go through a fast-track approval process, she said.
The government will also consider draft legislation to increase sick pay to 10 days a year before Christmas, with a view to putting it up for public scrutiny early in 2021, Ms Ardern said.