The help firms will get if there is another Covid lockdown

Tuesday, 26 January 2021

Most businesses would dread going into another Covid lockdown, but the Government has planned ahead what financial support would be available if the worst happens.

Finance Minister Grant Robertson set out the assistance that would be offered “next time around” before Christmas.

And while wage subsidies would again do the heavy lifting when it came to propping up the economy, some of the help would be new.

Robertson said the Government wanted to provide certainty to businesses and workers about what support would be on offer if there was a resurgence of Covid.

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Wage subsidies would fire up again if the country, or any region, needed to move back to alert level 3 or 4, payable at the rate of $585.80 a week for each full-time employee and $350 per part-timer.

There was controversy last year about firms claiming the subsidies when they were entitled to the money but later turned out not to really need it.

But the Government would stick to broadly the same approach it took last year, to get the help out the door quickly.

Businesses would be entitled to wage subsidies if an alert level 3 or 4 lockdown lasted for a week a more.

As with the subsidies provided in Auckland in August, businesses would need to suffer a 40 per cent decline in revenues that was due to the lockdown to qualify.

One change is that calculation would be based on comparing their fortnightly revenues with those during the six-week period preceding the lockdown, rather than the previous year.

So it would pay businesses to go into a higher alert level in good health.

The first round of wage subsidies earlier last year was more generous as businesses only had to show or expect a 30 per cent revenue drop.

Businesses would need to keep evidence that their revenue drop was due to the lockdown and have been cautioned that ministers would monitor the scheme to see if “further integrity measures were required”.

The same rules regarding keeping workers employed would apply.

Robertson has also promised new support for businesses in the event of a move back into alert level 2.

A one-off cash grant of $1500 plus $400 per employee, capped at $21,500 per business, would be offered to firms that suffered a 30 per cent drop in their fortnightly revenues due to level 2.

The law paving the way for these “resurgence support payments” hasn’t yet been passed by Parliament, but the Government says they would be legislated for retrospectively if they were needed earlier.

Robertson forecast the new support would be particularly useful for the likes of hospitality businesses.

Businesses would also be entitled to a new one-off “short-term absence payment” of $350 per eligible employee if they had workers who had been ordered to stay at home while they waited for the result of a Covid test and who couldn’t work from home.

That would be in addition to the existing Leave Support Scheme that provides businesses with support if staff need to self-isolate after a positive test.

The Government has $10.3 billion left in its Covid-19 Response and Recovery Fund to help pay for the measures and believes that would be enough to meet the cost “multiple resurgence events”.

BusinessNZ chief executive Kirk Hope says the Government has got the support measures roughly right after tweaks to the wage subsidy scheme last year.

People who complained about the morality of particular companies taking wage subsidies needed to have “a better understanding of what the scheme was designed to achieve”, which was to support employment, he said.

But Kirk hoped that if there was a need for another lockdown it would be more “constrained”, which in turn would be likely to limit the number of controversies about the payments next time around.