Covid papers: Treasury advised Robertson business grant scheme would stop widespread failures

Finance Minister Grant Robertson speaks to media during a press conference at Parliament. Photo / Mark Mitchell

Finance Minister Grant Robertson was advised by the Treasury in April that a board-based, cash-in-hand grant scheme for businesses would help prevent widespread Covid-induced business failures.

Although the Treasury advised that the scheme would not save all businesses, it would "reduce the risk of widespread business failures," the report from April 3 said.

"If you wanted to provide a more immediate scheme to reduce the risk of widespread insolvency, a grant scheme might be the most preferable option."

But such a scheme was never made Government policy.

Robertson has argued that the Government's wage subsidy scheme – which has paid out more than $11 billion and has been extended – had helped thousands of businesses.

In addition to the wage subsidy programme, the Government also unveiled a business loan scheme to help struggling firms.

National argued that rather than offering "cheap loans" to all sorts of companies, the Government should be giving out cash grants to struggling businesses.

The party's finance spokesman Paul Goldsmith said today it was a shame the Government didn't listen to National or the Treasury when they were advocating for such a scheme.

The Treasury advice was part of a dump of hundreds of Covid-19 documents, which were made public this morning.

The report said that as a "very rough estimate, a scheme similar to that in Australia could cost around $6.5 billion".

Officials recommended that this, among other options, be progressed in a bid to "improve cash flow and confidence" of New Zealand businesses.

This option would have been presented to Cabinet and would have included "delivery timeframes, fiscal costs, and how these options interact with existing measures".

"We can report back to you next week on the potential design of such a scheme, informed by our more in-depth analysis of the particular challenges facing different types/segments of SMEs," the report said.

But it appears this option was torpedoed by Robertson before it could get to that stage.