14 Aug 2020

Cabinet extends wage subsidy for third time as second lockdown continues

7:47 pm on 14 August 2020

Prime Minister Jacinda Ardern has announced that with ongoing raised alert levels, the wage subsidy scheme will be extended.

Ardern this evening announced that level 3 restrictions would continue in Auckland - and level 2 restrictions across the rest of New Zealand - for a further 12 days, ending at 11.59pm on 26 August.

The settings will be reviewed on 21 August.

She also confirmed the wage subsidy scheme would be extended nationwide until the end of the level three restrictions.

"We will use what tools we have to protect jobs, incomes and businesses as well as people's health," she said.

"We do have an underspend currently for the second extension. We had an estimate that it would be roughly $2.6 [billion] to $3.9 billion, in terms of the drawdown on that. It's actually come in closer to two [billion dollars]. There is already an appropriation we can draw on for a wage subsidy extension."

Ardern said details for the scheme would be finalised over the weekend, but it was important to remember that level 2 would allow for more economic activity than level 4.

Finance Minister Grant Robertson said the extended wage subsidy decision was made knowing a level 3 situation in Auckland would impact the rest of the country.

"Making the wage subsidy (extension) nationwide is a reflection of that."

This sort of situation was why money was held back in the Covid-19 recovery fund, he said.

He told RNZ's Checkpoint the most immediate need was for businesses who had not been able to reopen in level 3.

He confirmed some of the criteria for the scheme may change, and one of the things being considered was changing the requirement for businesses to show an estimated 30 percent loss as a result of the Covid-19 coronavirus.

"We've also got a situation now where many New Zealanders have used their sick leave entitlements, and so that is one of the things we are looking at is whether or not we remove that requirement.

"What's really important for us is that every New Zealander has the confidence to be tested, and to know that if in the event that they do test positive they will be supported."

He said applications to the second wage subsidy were still open until 1 September.

The Ministry of Social Development had indicated it would be able to implement the new wage scheme extension within five days, he said.

The Minister of Finance, Grant Robertson, provides his weekly Treasury update.

Photo: RNZ / Dom Thomas

Other schemes to be changed to allow greater access

Robertson said changes to other business support schemes were also being considered, and Cabinet had agreed in principle to extend the Covid leave scheme.

"We will make changes to the criteria for the Covid leave scheme to improve access to it," he said.

"We are doing this in part to emphasise the importance of getting tested and then self isolating if you test positive. We do not want people to be afraid to be tested because they think their livelihoods or job or income may be at risk."

He said the details of an extension to the mortgage deferral scheme announced earlier by the Reserve Bank Governor Adrian Orr.

Tweaks to the small business cashflow loan scheme were also on the table. Further details about all these schemes would be announced on Monday, he said.

However, there was no intention to change or extend the Covid benefit - the increased amount of money for people who had lost jobs due to Covid-19 from March through to October, he told Checkpoint.

Other industry-specific moves may also come into play.

"We continue to look at sectors and see what else we can do," Robertson said.