LIVE: Government announces new wage subsidy scheme
UPDATED: A new wage subsidy scheme and simplified leave scheme will be implemented by the government in response to the re-emergence of COVID-19 in the community.
Finance Minister Grant Robertson has set out the criteria for the new nationwide wage subsidy covering the period that Auckland is at COVID-19 alert level 3. The revenue-drop test for the COVID-19 Leave Support Scheme has also been removed.
“The Government is again moving quickly to cushion the blow for businesses and workers,” says Robertson.
“The new wage subsidy will help support cashflow and confidence. Along with the existing wage subsidy extension, which is open until 1 September for eligible businesses.”
The criteria for the new wage subsidy are similar to the current extension, a business must have had, or is predicting to have, a revenue drop due to COVID-19 of at least 40 per cent.
For this new scheme, the revenue drop applies for any consecutive period of at least 14 days within August 12 and September 10 compared to last year.
He says an estimated 930,000 jobs will be covered by the new wage subsidy and existing extension
Treasury also estimates that a number of businesses that weren’t able to access the extended wage subsidy before it expires on 1 September will now become eligible to do so.
The costs are expected to be covered by the previous underspend on the extended wage subsidy.
Robertson says Auckland represents 40 per cent of New Zealand’s GDP and making the scheme nationwide recognises the specific nature of the current outbreak and Auckland’s position in the New Zealand economy.
“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.
“To further support wide-scale testing, we’ve removed the revenue-drop and ‘negatively impacted’ tests for the COVID-19 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.
“Our focus is on doing everything we can to support our strong public health response. That means removing barriers to a person getting tested, including fears that a positive result would put their employment at risk or that they wouldn’t receive income while they couldn’t work because they had used up their sick leave.”
The mortgage deferral scheme is also being extended from its current end-date of September 27, to March 31, 2021.
Robertson also confirmed that further work is being done to ensure support continues to be adaptable and flexible for alert level movements. This includes work on the Small Business Cashflow Loan Scheme and potential further changes to the Leave Support Scheme.
“At the same time as putting these measures in place to cushion the blow, we are continuing to roll out our comprehensive recovery and rebuild plan around New Zealand by investing in training, creating jobs through infrastructure investment and supporting businesses through the tax system,” says Robertson.
The new wage subsidy scheme will be open for applications by August 21.
EARLIER: The Minister of Finance Grant Robertson is providing an update on government financial support for businesses and individuals impacted by the current COVID-19 alert level restrictions.
Some details were announced on Friday - the subsidy will last as long as level 3, and businesses from up and down the country, not just Auckland, will be able to apply for it.
It was also implied by Robertson that in terms of criteria, it will look broadly similar to the previous two rounds of subsidy.
Prime Minister Jacinda Ardern says it is important to remember that level 2 will allow for more economic activity than level 4.
"We will use what tools we have to protect jobs, incomes and businesses as well as people's health."
Currently Auckland is at alert level 3 and the rest of New Zealand is a level 2.