Budget 2020: Ecom, e-invoicing and digital priorities (or not)

Published on the 14/05/2020 | Written by Heather Wright

Finance Minister Grant Robertson_NZ budget 2020

The Covid rebuild – and cost – on display…

It’s the ‘rebuild’ Budget, with a $50 billion Covid-19 Response and Recovery Fund – the single biggest spending package in New Zealand’s history – at the heart of Budget 2020.

The package includes $15.9 billion for jobs and business support, including a further $3.2 billion targeted extension to the wag subsidy scheme, available to companies which show a year on year decline of more than 50 percent revenue decline in a month, $3 billion for infrastructure builds and $1 billion on environmental jobs. (That package includes a $315 million pest eradication and control package – including controlling wallabies…)

“This includes increasing activity for New Zealand firms in priority markets and expanding the digital services.”

Also included is a $1.6 billion trades and apprenticeships training package, $400 million tourism recovery fund and $900 million for Maori support.

But while the Finance Minister Grant Robertson (pictured) was talking the big dollars today, it’s not all been unveiled just yet, with Robertson admitting there’s still $20 billion ‘on the table’.

Robertson claims the money is set aside to enable the government to ‘continue to do what we’ve done in the last two months and that’s respond as necessary and as the need arises’.

“I’m not saying all $20 billion of that will be spent even in the next two years. We expect it to be spent across the four year forecast period of the budget.

“The spending is available for us as we need it.”

So what’s in the funding that has been announced for Kiwi businesses?

Funding for export
Robertson says trade will play a significant role in kickstarting New Zealand’s recovery, and New Zealand Trade and Enterprise is receiving a $216 million boost to ‘expand the scope and intensity of support provided to exporting firms.

“This includes increasing activity for New Zealand firms in priority markets and expanding the digital services available for firms.”

NZTE’s e-Commerce Centre of Excellence will be scaled up to provide digital commerce content, tools and advice to more exporters.

E-Commerce and e-invoicing
The Budget sees recognition of the importance of e-commerce – which businesses around New Zealand were forced to turn to for survival during level four and three lockdowns, with $10 million set aside to support small businesses to improve their e-commerce service offerings, and incentives/grants to encourage e-commerce adoption.

That fund will also see the training of more digital advisers and providing information and support for SMEs to incorporate e-commerce into their business models.

“We’re giving small to medium enterprises the tools to survive in a digital economy,” Robertson says. “This includes specific support for ecommerce including enabling small businesses to lift their offerings in e-commerce as well as the e-invoicing and further business advice projects.

The e-commerce fund is ‘supported’ by $12.5 million to progress the trans-Tasman e-invoicing regime.

R&D loans
The Government has put aside $150 million for a fund to provide loans to R&D-intensive businesses, in a scheme due to be up and running by early June.

“We expect most R&D performing firms to be able to access repayable loans up to the equivalent of 50 percent of a businesses’ annual R&D expenditure, up to a cap of $100,000.”

Meanwhile, $80 million has been allocated to encourage entrepreneurs and businesses to develop new products by enabling them to claim tax deductions for unsuccessful or abandoned assets.

Stuart Nash says the scheme is an important way of encouraging investment ‘because it gives businesses the confidence to have a go and take the risk’.

“If it works, we all come out better off due to the economic activity created by the ideas that come off.”

An $11.4 million investment is focused on growing the agritech sector and improving environmental outcomes while boosting productivity in the primary sector. That includes funding the development of robotics in horticulture and helping commercialise innovative technologies.

Economic development minister Phil Twyford says the agritech sector, along with digital and construction, ‘are well placed to help make our economy more productive and sustainable, and offer opportunities to use innovation to create higher skilled jobs’.

Next-gen comms
The Next Generation Critical Communications programme, to bring ‘state of the art’ comms capabilities to police, fire and ambulance, is also given a mention, with $47.8 million to replace the aging communications capabilities for the emergency services.

Debt blowout
The ‘biggest single spending package’ comes at a big price, however. Debt will soar from $58 billion in 2019 to $200 billion in 2024, with net debt forecast to rise from 19 percent in 2019, to 30.2 percent of GDP this year and peak at 53.6 percent in 2023.

Unemployment is forecast to peak at 9.6 percent in September 2020, before dropping back to 4.2 percent within two years.

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