17 Aug 2020

Finance minister outlines new wage subsidy scheme in alert level 3

6:07 pm on 17 August 2020

The Finance Minister has announced that workers whose jobs may be affected by the re-emergence of Covid-19 in Auckland will be supported by a new wage subsidy scheme and a simplified leave scheme.

Missed the announcement? Watch it here again:

Grant Robertson set out the criteria for a new nationwide wage subsidy scheme covering the period Auckland is in alert level 3.

"This is a very focused extension of the wage subsidy scheme...it is possible for us to extend it out further if that is needed," Robertson said, which could be in the current term and could look forward to 10 September.

Level 3 restrictions in Auckland and level 2 restrictions across the rest of New Zealand will end at 11.59pm on 26 August. Robertson said Auckland made up 40 percent of GDP and had a huge spillover impact on the rest of the country.

He said an estimated 930,000 jobs would be supported by the new scheme, and the extension of the existing wage subsidy scheme - which is open until 1 September for eligible businesses.

"The government is again moving quickly to cushion the blow for businesses and workers," he said.

"We know in New Zealand that the best economic response is a strong health response. We've seen the benefits to the economy by going hard and early to get on top of the virus, with activity in June and July running above levels seen last year as the economy reopened after lockdown and business got going again."

The criteria for the new wage subsidy are similar to the current extension: In particular, a business must have had, or is predicting to have, a revenue drop due to Covid-19 of at least 40 percent.

For this new scheme, the revenue drop applies for any consecutive period of at least 14 days within 12 August and 10 September compared to last year.

"You have to nominate one period of 14 days within that period."

The costs are expected to be covered by the previous underspend on the extended wage subsidy.

Robertson said the government has also removed the revenue drop and the 'negatively impacted' tests for the Leave Support Scheme.

"This means businesses with workers who have been told by health officials or their medical practitioner to self-isolate will receive the equivalent of the wage subsidy to help cover that person's wages for the time they cannot be at work."

The mortgage deferral scheme is also being extended to 31 March next year.

It has been run by the banks, and Robertson said he had received very few complaints about that scheme

"An awful lot of businesses had got themselves up and running again...for many of them it was a blow to their confidence more than anything else."

Robertson said further work was being done to ensure support continues to be adaptable and flexible for alert level movements, including on the Small Business Cashflow Loan Scheme and potential further changes to the Leave Support Scheme.

The new wage subsidy scheme will be open for applications by 21 August.

Businesses around the country have been calling for a much longer extension to the subsidy than the government is offering. It's being anxiously anticipated by those industries which are being hit hardest by another lockdown, such as hospitality and tourism.

National Party's finance spokesperson Paul Goldsmith said the additional wage subsidy was essential, but as a long-term economic solution, there could not be failures at the border.

"The foundation of any economic plan to get New Zealand back in shape is to have effective border containment and if we are not doing that and if we are not testing the people who work at the border properly, then people find that astounding and that is a huge risk to take," he said.

Goldsmith said the second lockdown would cost more jobs and put families under intense pressure.

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