Government won't extend quake subsidy scheme

6:10 am on 31 May 2011

The Government says an employee subsidy scheme that has enabled many embattled Christchurch businesses to retain staff will not be extended beyond Tuesday.

The Government has spent $200 million subsidising 70,000 workers following the devastating earthquake on 22 February.

Immediately after the quake, the Government gave eligible employers money to keep paying their staff - $500 a week for full time workers and $300 for part time staff.

People made redundant got state funding while they found another job or became eligible for a benefit - $400 a week for full time staff and $240 for part time.

That support, extended in mid-April under tougher eligibility criteria and with the amounts gradually shrinking, ends on Tuesday. Businesses previously relying on the grants must now fund their own wages.

Social Development Minister Paula Bennett says the Government cannot keep subsidising businesses that may no longer be viable.

The Council of Trade Unions is calling for the scheme to be extended again to bridge the gap until an anticipated influx of jobs rebuilding the city eventuates.

CTU earthquake recovery co-ordinator Marty Braithwaite says people are generally optimistic there will be employment opportunities as the city is rebuilt, but there is concern that it will be some time before these jobs are created and some will not be able to wait that long.

Mr Braithwaite says continued state support until people are redeployed would be an insignificant amount of money compared with the $5.5 billion set aside in this year's Budget for rebuilding Christchurch's infrastructure.

However, Paula Bennett says it makes no sense for the Government to continue subsidising businesses that may never resume operating - particularly when other businesses have managed to re-establish themselves.

Ms Bennett says the Government is helping in other ways - for example, connecting unemployed people with new jobs more quickly.

New jobs are becoming available daily in Christchurch and people are coming off benefits, she says.

Fears for business

Christchurch business owner Matthew Carpenter says the end of quake wage subsidy will put his company at risk.

Mr Carpenter owns a retail appliance business with three stores in the city employing 16 staff and told Checkpoint he will now have to make some tough decisions.

"We will have to look really hard at our staffing and our cost structures. We've been running since February on two-thirds of our normal turnover and, in reality, we're back to the position we were in November last year.

"There's a lot of uncertainty and pretty much week-by-week trading - no guarantee of survival."

Mr Carpenter says redundancy is one option that he will have to consider.

Meanwhile the owner of the Ministry Nightclub, Bruce Williamson, says the assistance meant he was able to re-open last week at new premises. He says without the Government's help, his business might not have survived.