Thursday, November 30, 2023

Govt announces North Island Weather Events support package

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Government to underwrite cheaper loans with banks and provide $240m pool for equity finance.
Finance Minister Grant Robertson says the government is not able to pay the full cost of the recovery but the package will ensure banks continue to play an integral role in it.
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Growers and farmers impacted by recent cyclones and flooding will get cheaper and improved access to finance as part of a new government support package. 

Finance Minister Grant Robertson announced the North Island Weather Events (NIWE) Loan Guarantee Scheme to provide relief to affected businesses seeking lending. The government will underwrite 80% of the credit risk on covered loans, allowing banks to reduce interest rates and offer more flexible terms.

 “The government’s underwrite will support loans of up to five years agreed by businesses and their banks of up to $10 million from the scheme, including refinancing of existing loans,” Robertson said. 

The package includes the NIWE Primary Producer Finance Scheme, providing capital for affected growers and farmers unable to access lending.  The funding will target businesses that have been severely affected by the weather events and have a reasonable likelihood of being commercially viable, but cannot currently access commercial finance.

“This scheme enables the government to provide concessionary loans and equity finance for land-based primary sector producers up to $4m per business from a pool of up to $240m set aside in total,” Emergency Management Minister Kieran McAnulty said.

 “It will provide a way for businesses to fully re-engage with lenders at a later date, once we have helped them get back on their feet. This will in turn contribute towards their recovery, and provide better regional, social and economic outcomes in cyclone-affected regions.” 

Robertson said the government is not able to pay the full cost of the recovery and rebuild but the package will ensure banks continue to play an integral role in the recovery.

“We are committed to helping affected regions recover. Around $2 billion of support has already been committed so far, including $74m in grants to farmers and growers and a $1bn flood and cyclone recovery package as part of Budget 2023. Another $6bn in initial funding has been committed for a National Resilience Plan to focus on building back better from the recent weather events.”

More details will be released in coming weeks but the scheme should be operational by the end of July. Businesses can register interest in the scheme with their banks.

Industry groups have welcomed the announcement.

Horticulture New Zealand chief executive Nadine Tunley said the package is the result of cross-sector involvement.

“This package will hopefully provide vital help to businesses across the areas affected by the weather events in the North Island, including horticulture businesses. We know many businesses are still grappling with funding repairs and rebuild efforts. We hope this package and announcement will help relieve the pressure and stress people are facing, so they can get on with the recovery and provide jobs for people in regional New Zealand.”

 LeaderBrand chief executive Richard Burke said it is a “win-win”.

“Businesses like ours provide hundreds of thousands of jobs for people in the regions. In our case, we also supply the whole country with healthy, fresh food. Being supported in this way to get on with the recovery is a win-win for everyone involved.”

The cabinet has also announced a government inquiry under the Inquiries Act 2013 to review the response to the North Island severe weather events.

 “It is normal practice for local Civil Defence to review the response to a severe weather event, regardless of size. Given the significance of Hale, the Auckland floods and Gabrielle, it is appropriate that a government inquiry is set up. It will be led by former governor-general Sir Jerry Mateparae,” McAnulty said.

 “Affected communities, including rural, Māori and Pacific communities, have raised concerns about communication and support during the response.

 “There are lessons to be learnt. It is important we incorporate these into our systems so we can continue to improve.”

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