More than $700m of the Covid-19 wage subsidy repaid before alert level change

Monday, 22 February 2021

Businesses had repaid more than $700 million of the wage subsidy before the country went into lockdown 3.0 last week.

Auckland spent three days in alert level 3 lockdown, while the rest of the country operated under level 2 restrictions after Covid-19 cases were discovered in the community. The Government announced it would provide further financial support for those businesses adversely affected.

But the latest figures from the Ministry of Social Development showed that before the alert levels changed, as at February 12, $713.9m of the earlier tranches of the wage subsidy had been repaid by 16,780 employers and sole traders.

The scheme was announced in March last year to ensure workers would not lose their jobs while their employers were forced to shut under Covid-19 restrictions.

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As at February 12, $713.9m of the wage subsidy had been repaid by employers and sole traders.

But after mounting pressure on companies paying out dividends and reporting record profits, many companies repaid their wage subsidy.

A fourth round of the wage subsidy for businesses affected by the shifts in alert levels this week will be available from February 23.

By the end of last year, businesses and sole traders had repaid $536.4m of the wage subsidy.

Over the scheme’s lifetime, more than 750,000 businesses claimed about $14 billion through the scheme.

Last week Finance Minister Grant Roberson announced a fourth round of the wage subsidy for those businesses affected by the shifts in alert levels.

The grant system was announced as part of a package in December that could be rolled out if any part of the country were at level 2 or above, and halved the original 14-day window used to test for a revenue shortfall.

Businesses that suffered a 30 per cent drop in revenue over a seven-day period compared with a typical similar revenue period in the six weeks prior to the alert level rise, could apply from Tuesday.

The payment consisted of a $1500 lump sum, plus $400 per employee up to a total of 50 full-time equivalent staff for the seven-day period where revenue fell more than 30 per cent. The maximum payment was $21,500.

Last week the Government also announced it had expanded its Flexi-wage initiative, offering businesses $276 a week when they hired workers struggling to enter the job market.

The $311m extension widened the eligibility criteria, to include job seekers disadvantaged in the labour market but not receiving a benefit.