24 Sep 2021

Wage subsidy bill for Delta lockdown now $2.5 billion

From Checkpoint, 6:10 pm on 24 September 2021

The wage subsidies bill for the latest lockdowns across Aotearoa has reached $2.5 billion, but requests for support are dropping as restrictions ease.

WELLINGTON, NEW ZEALAND - SEPTEMBER 05: Deputy Prime Minister Grant Robertson speaks to media during a press conference at Parliament on September 05, 2021 in Wellington, New Zealand.

Photo: Pool / Getty Images

The support has been a lifeline for thousands of businesses, but as the struggle to operate continues, some say the government message to 'hang in there' is wearing a bit thin.

Latest statistics from the Ministry for Social Development show 41.6 percent of all employee jobs have been supported by the latest wage subsidies.

The figures through to 17 September reveal Northland has the highest proportion of jobs supported, followed by Auckland.

The construction, accommodation and food services industries are receiving the most support

Young people, including those aged 16 to 17 years old, make up the highest proportion of recipients, receiving 65 percent of the support.

As of Friday morning, 593,262 applications had been approved.

While just over 1.02 million jobs were supported in the first round of wage subsidies from the Delta outbreak, that dropped to 669,000 in the second round and 78,000,000 so far in latest round, which is open until 30 September.

Finance Minister Grant Robertson on Friday said the government is working hard to deal with any application delays.

"We're working closely with the Ministry for Social Development and Inland Revenue to clear any backlogs for processing, including follow-up calls to applicants."

He said the hold-ups were often due to details on applications not matching up with those supplied by Inland Revenue.

"We do ask people to look carefully at this as they make their applications."

Among those receiving the subsidy is Christine Parkinson, who owns a beauty salon in Matakana but cannot work in level 3.

"I have been able to access the wage subsidy which has been absolutely fantastic."

"It goes towards business type expenses with a little bit covering personal expenses, but mainly it stays in the business.

She was grateful to have her rent on hold and for the government support - but said messages from politicians could be frustrating.

"I find it quite hard to watch, in fact I don't watch a lot of their announcements... it sometimes feels condescending because they're on full pay and telling us to be kind and patient and that this will end, but they're not taking a drop in anything."

Parkinson said some businesses, which are unable to operate at all until lower alert levels, are doing it harder than others. She suggested more targeted support may be one way of helping them.

But Infometrics economist Brad Olsen said the government needs to be very wary of any sector specific initiatives.

"They do get into the position where the government will be picking winners or losers - and creating winners or losers - across the economy by who they do or don't support.

"If the focus is trying to ensure that businesses who are in a compromised position get the support that they need, then having revenue targets like we've got with the wage subsidy remains not only the most efficient but also the most effective way to support New Zealand workers."

Overall Brad Olsen said far fewer businesses are applying for the wage subsidy this time around - partly due to confidence in the economy, resilience of businesses and the public perceptions around taking the money.