28 Aug 2020

Wage subsidy extension: $167m paid out to 47,000 businesses

5:52 pm on 28 August 2020

Close to 157,000 jobs are being supported by the government's new wage subsidy scheme.

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Photo: 123RF

The Resurgence Wage Subsidy was announced after Auckland went back into Level 3 lockdown and is available to businesses across the country.

To be eligible, businesses must have experienced a 40 percent drop in revenue over a two-week period between 12 August and 10 September, compared to last year.

Applications opened last Friday and just-released figures show that more than $167 million has already been paid out to almost 47,000 businesses.

One of them is Rotorua Canopy Tours.

General manager Paul Button said after the busy July school holidays, visitor numbers were already dropping off - even before the alert level three restrictions were announced in Auckland.

"Business levels were really low post-school holidays anyway and what it did, the market was just a bit of a dribble and what [lockdown] did is it essentially turn the tap off," he said.

"Our payroll was bigger than our revenue."

Button said they applied for the new two-week wage subsidy straight away.

But Button said this lockdown hasn't been as stressful as the last one.

"We've restructured to the point where the team is a lot smaller, and we knew that everybody was going to have jobs at the end of it.

"The wage subsidy wasn't about who are you going to keep and who are you not going to keep, it was just softening the blow, and ensure you don't go as far backwards as you were going to."

Auckland restauranteur Krishna Botica has sent in her application to cover 65 staff working across three eateries - Cafe Hanoi, Xuxu Dumpling Bar and Saan.

Before the latest lockdown, Botica said they'd been on track for a good August, with restaurant month bringing in plenty of bookings.

Instead, they're back to takeaway pick ups and deliveries.

"We can pay our rent, with the wage subsidy we can pay our staff and we're not going backwards - but we're not going forwards either."

Without that help, Botica said there would be no future for her restaurants.

"We were up-to-date with our bills, but without the wage subsidy, our wages just blow out completely.

"It would be a very, very quick demise."

Finance minister Grant Robertson expected more businesses would end up applying for the new wage subsidy in the coming weeks.

He said others may also find they are now eligible for the earlier eight-week wage subsidy extension, which is open until 1 September.

Meanwhile, new figures from the Ministry of Social Development show there hasn't been a big spike in people going on to the benefit or Covid income relief payment, as wage subsidy payments have ended.

Robertson said between 5 and 21 August, more than 325,000 jobs came off the wage subsidy.

In that same period, just over 6000 people went on to income support.

"I think what that reflects is businesses have been adjusting, we did see that very strong period for the economy through late June and into July, and so it's a good sign for the economy."

However, Robertson acknowledged that it would be tough for those who had lost their jobs and were now receiving the Covid income relief payment or benefit.

At the moment, almost 338,000 jobs are being supported by the various wage subsidy schemes.

The government expects the wage subsidy extension and the new wage subsidy to support 930,000 jobs.

The new scheme is being paid for by an underspend on the extension, which means the government does not have to dip into the $14 billion it set aside in case of a second wave of Covid-19 cases.

All up, the government has paid out more than $13.4 billion dollars in wage subsidies, to support more than 1.7 million jobs.

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