Wednesday, December 1, 2021
Deputy Prime Minister Grant Robertson's recent announcement of new one-off financial support for businesses to move to the traffic light system has a welcome relief of including the previously left out category of pre-existing businesses sold during lockdown after the Indian Weekender's persistent reporting and advocacy.
On Monday, November 29, Finance Minister Robertson announced a transition payment of up to $24,000 to help businesses move into the traffic light system.
“The new one-off transition payment will be activated through the Resurgence Support Payment (RSP) system criteria and be available on December 10,” Grant Robertson said.
This payment is at a higher base rate than the current RSP and will be $4,000 per business plus $400 per FTE up to a cap of 50 FTEs – a maximum payment of $24,000.
A small new category of businesses now eligible for one-off transition payment
In this announcement, the Minister included a small new category of pre-existing businesses purchased during lockdown – a category previously not supported by the government despite experiencing significant financial woes because of restrictions imposed by the government.
“Cabinet has also agreed to change the rules so recently acquired businesses can access the Resurgence Support Payment,” Grant Robertson said.
“This issue arose because the RSP rules required the applicant to have been operating as a business for at least one month before August 17 so businesses acquired after July 17 have not been eligible for any payment.
“I estimate very few businesses have will been in this situation, but for those that are, it will have been a difficult time.
“The test will now be that the business itself must have been in operation for at least one month prior to August 17 and the business must be carrying on the same or similar activity as before the change in ownership.
"The revenue decline test also needs to be amended to allow the applicant to use the revenue received by the previous owner over the comparator period in order to demonstrate the necessary revenue decline during the affected period," Grant Robertson said.
Govt assured review after IWK first raised this issue
In an exclusive story, earlier this month, the Indian Weekender had raised the important issue of a large number of pre-existing businesses that have been operational for many years and were going through a sales process when the Delta outbreak and lockdown descended suddenly causing significant disruption and confusion and putting the new business owners under considerable financial stress.
The IRD had then been declining all applications of the government’s Resurgent Support Payment on the grounds that the new business owner did not meet the eligibility criteria of owning the business one month before August 17, despite the obvious fact that the businesses have been operational for a much longer period (only under a different owner).
One such new business owner, Nirmal Gupta (name changed) with whom the Indian Weekender had then spoken, told how exasperated they were as a struggling business owner when IRD declined their Resurgence Support Payment application on the grounds that it did not meet the eligibility criteria despite the restaurant business being in operation for more than a decade.
"We have ventured out (as a new business owner) despite the lockdown only to find ourselves in the deep end of the lockdown and were denied government's Resurgent Support Payment that was otherwise available to other eligible businesses.
“Resurgence Support Payment is technically government’s only cash support scheme for businesses (other than wage subsidy which is meant to support employees) and ideally should be meant to help businesses and not person or individuals.”
“RSP contributions are used to pay overhead costs of businesses such as rent, bills, insurance etc when no or insignificant commercial activity is happening and therefore any support should be targeted to businesses and not person or individuals.”
"This is unfair and not right," Gupta had then said.
When the Indian Weekender raised that issue with different government authorities, the office of the Finance Minister Grant Robertson has assured a "review."
"We are aware of this issue, and it is currently under review. I recognise there are concerns about the difficulties faced by some recently acquired businesses in meeting the criteria of the Resurgence Support Payment. This needs to be balanced against ensuring that the integrity of the scheme is maintained," Minister Robertson said.
New announcement a welcome step
Expressing a sigh of relief Gupta thanked the Indian Weekender for identifying and raising this important issue of the plight for a category of small business owners who were otherwise falling through the cracks and raising with the government, said, "I am thankful to the Indian Weekender for raising our issue and to the government for not turning their back on us during such a tough business environment."
Notably, the change will come into effect on December 10, and recently acquired businesses would then be eligible for RSPs made on and after October 29.