At the Budget 2020 announcement today, the government announced the establishment of its centrepiece - a $50 billion COVID-19 Response and Recovery Fund. A lot of high-level spending announcements were made, but there was a dearth of detail in the government’s spending promises.
The COVID-19 Response and Recovery Fund is designed to provide investment towards:
Investments totalling $13.9 billion have already been made from the fund to fight COVID-19 and cushion the blow. Today, the government agreed to a further $15.9 billion of investments to continue the immediate response and kickstart the economy, leaving $20.2 billion remaining for future investment on a yet-to-be-determined basis.
The $15.9 billion announced today will be invested in:
While it’s good to see funding for creating and retaining jobs, falling through the cracks of Budget 2020 are people who have lost their jobs. People that were previously employed in sectors such as tourism, accommodation and related businesses but whose employer could not keep them in employment, will miss the benefit of the wage subsidy.
For those people, a lump sum payment paid directly to tide them over until the economy starts to recover and jobs become available, would have been welcomed.
The Budget announcement also included some high-level information on the extension to the wage subsidy scheme.
The subsidy will be open for applications for a 12-week period and will be paid as an eight-week lump sum to employers at the same weekly rates as the current wage scheme. Other core features include:
Applications for the wage subsidy extension for businesses that are 50% down on revenue for the 30 -day period prior to the application date versus the nearest comparable period last year will open from 10 June, with special rules for start-ups.
The eight-week lump sum is a welcome extension, but the issue remains as to what happens after that? Businesses that miss this threshold but need cash flow to survive have been left to fend for themselves, putting further jobs at risk.
A lot of businesses are currently limping along with the benefit of the wage subsidy - effectively “zombie businesses”. To be able to stand on their own again, real economic activity is required to provide the resources they need to survive.
For assistance or further advice on any of the announcements made today, please contact the Crowe Tax Advisory team, who will be happy to assist.
Crowe has developed a Government Stimulus Health Check and free Business Wellbeing Toolkit to help businesses manage potential risks and take full advantage of eligible stimulus assistance. Book your Health Check here.
Findex NZ Limited trading as Crowe
Crowe Global is a leading international network of separate and independent accounting and consulting firms that are licensed to use “Crowe” in connection with the provision of professional services to their clients. Crowe Global itself is a non-practicing entity and does not provide professional services to clients. Services are provided by the member firms. Crowe Global and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.
© 2019 Crowe Global
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or partnership interest in Findex (Aust) Pty Ltd.
Services are provided by Findex NZ Limited and Crowe NZ Audit Partnership, affiliates of Findex (Aust) Pty Ltd
© 2020 Findex (Aust) Pty Ltd.
While all reasonable care is taken in the preparation of the material in this guidance document, to the extent allowed by legislation Findex accept no liability whatsoever for reliance on it. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Findex assumes no obligation to update this material after it has been issued.
This document contains general information and is also not intended to constitute legal or taxation advice. If you need legal or taxation advice, we recommend you speak to a qualified adviser.
The title 'Partner' conveys that the person is a senior member within their respective division and is among the group of persons who hold an equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately-owned organisation and/or its subsidiaries.
© Findex Group Limited 2020. All rights reserved