Industry support slowly forthcoming
THE $12.1 BILLION SUPPORT PACKAGE FROM GOVERNMENT, the biggest in the world, will go some way to relieving pressure on the forestry industry. It may have come too late for some and be too difficult to access depending on company structure and size for others, but at least it’s a start.
Eastland Wood Council Chief Executive, Kim Holland, says the wages subsidy and support for businesses will be particularly helpful for the small contractors who have been hardest hit over the past two months and it is encouraging that government is moving quickly to allow businesses to take it up: “Our contractors are appreciative of the support from the government to keep their businesses going, and keep their people employed.
“Unfortunately though, the forestry industry has lost some valuable and skilled people as a significant number of our small businesses have had to ‘tighten’ their belts, while we have waited for this package to be announced,” she says.
Ms Holland adds that a further announcement is being made in Tairawhiti-Gisborne that will be a redeployment package to keep people working, and support contractors to retain people.
She adds: “The Eastland Wood Council is also working with Te Uru Rakau on some forest industry training initiatives to make the most of some of the downtime to build skills and capability, so that we are ready when things change. Perhaps there could be some wages assistance for those businesses taking on those who have lost their jobs, such as the horticulture and agriculture industries?”
Development Minister Phil Twyford says: “Along with additional business support, our Government is looking at creative solutions such as using forestry workers to deal with our wilding pine issue in other parts of the country.
“Our Government’s economic response to COVID-19 is focused on protecting jobs and supporting impacted workers and businesses. Because of the underlying momentum in our economy, the Government’s surplus and low debt, we can bounce back to the strong level of growth seen before the Coronavirus appeared.”
Meanwhile Tax Management NZ (TMNZ) has set aside $30 million to help cash-strapped taxpayers in the forestry industry defer payment of provisional tax for the 2020 income year until June next year.
The tax pooling provider’s fund is specifically for forestry businesses, and businesses which directly service the forests such as logging, transport and milling operations.
Its offer comes after TMNZ was approached by the industry to see if its IRD-approved service could be of assistance to those looking to conserve cash in the wake of the current downturn caused by Coronavirus issues in China, says company Chief Executive Chris Cunniffe.
“Cash will be tight right now in the forestry industry, but tax pooling is a way they can keep money in the business until conditions improve,” he says.
“We hope this offer to those in forestry facing cashflow constraints due to the drop off in demand from China goes some way to providing some much-needed relief from having to meet IRD’s demands for provisional tax during this difficult and uncertain time.”
Tax pooling lets businesses make their provisional tax payments at a time that suits their business, without having to worry about IRD interest and late payment penalties. For businesses in forestry, TMNZ will cap the interest rate payable at 3.95 percent, much less than bank or finance company rates.
The Financial Services Federation says borrowers who have been affected financially by Coronavirus should talk to their providers and check if they have a credit-related insurance policy, arranged at the time the loan was entered into.
Also on a practical note, Ms Holland says, “One thing everyone can do is help support our local small business owners across all sectors, to keep our regional economy going as best we can. We have got through thus far, and now it’s about keeping people healthy and well, and keeping our small businesses working too.” NZL