'Second chance' grants may be one way to help business get back on its feet

Friday, 8 May 2020

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Business owners who saw their ventures sink as a result of Covid-19 could be given 'second chance' grants to get started again on another opportunity, Infometrics economist Brad Olsen has suggested.

Olsen has previously said some businesses such as those dependent on international tourism may need to 'go dormant' for a while as the country moves down alert levels.

Finance Minister Grant Robertson said in a pre-Budget speech on Thursday that this week's Budget would be a chance to begin to 'rebuild' the economy, but suggested that could be to a different design.

'If your house were to burn down, you probably wouldn’t build it back exactly the same,' he said.

Robertson added on Friday the Government would not lay out the full extent of its spending plans for the year ahead in the Budget, saying it was “just one moment on our road to recovery'.

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Olsen said Infometrics' thinking was that grants rather than loans would be needed to lessen the risks that entrepreneurs would face starting new businesses in the post-coronavirus era.

'I see it as straight-up cash grants for new companies that are re-imagining a new service.'

But if the Government was to contemplate such assistance, it should not put prescribe what industries grants would be directed towards, he said.

'Picking winners at this stage would bring in a dangerous element,' he said.

'If you give money to those who are looking at new ideas, they are going to see where the market is shifting.'

The Government could direct some help to people who had been forced to shelve their original business models due the coronavirus pandemic, he said.

'I'd probably want two different schemes.

'One for people who were looking at brand new entities to do completely different things, and almost a 'second chance' or 're-establishment' grant for businesses such as tourism firms that were looking to pivot themselves for a different opportunity.'

BusinessNZ chief executive Kirk Hope believed there might be better ways for the Government to help.

Anything the Government did, had to be balanced against the fact it was 'taxpayers' money', he said.

'It may be better for them to remove impediments to businesses to start and operate, such as regulatory burdens, than to drive an agenda for business growth and start-ups,' he said.