Government yet to decide if firms can get wage subsidies for level 2 impacts

Wednesday, 8 September 2021

Businesses in Wellington are opening up, but confusion reigns over the circumstances under which firms outside Auckland can claim wage subsidies for the current fortnight.

The Government has yet to decide whether businesses outside of Auckland should be able to claim wage subsidies if the revenue drops they experience are because of level 2 restrictions.

A spokesman for Finance Minister Grant Robertson said the issue was “something we are giving consideration to”.

Hospitality NZ chief executive Julie White said the confusion was a big issue for the industry and said she would be meeting with Robertson, Tourism Minister Stuart Nash and Commerce Minister David Clark to discuss the matter on Friday.

As the rules are currently framed, many businesses outside Auckland might only be able to claim the subsidies for the fortnight between August 17 and August 31, despite spending three weeks at level 3.

* Firms report fresh problems applying for wage subsidy after Thursday night botch

* Government to ask Parliament to approve big new spending 'buffer'

The Social Development Ministry requires that businesses applying for the second fortnight of subsidies, for the period between August 31 and September 13, declare they have or expect at least a 40 per cent drop in revenues “that can be attributed to the effect of the continuation of alert levels 3 and 4”.

Hospitality NZ chief executive Julie White will be meeting with ministers on Friday to discuss the ‘confusion’.

The Government has made clear that businesses anywhere in the country can claim the subsidies any time any part of the country is at level 3 or 4, even if they themselves are in a zone that has dropped to level 2.

But the rules as they are currently stated mean that is only the case if they can attribute their 40 per cent revenue drop to some combination of the time they spent at level 3 and the knock-on effect of Auckland remaining at level 4.

Whether the Government’s intention may be to allow businesses outside Auckland to claim the subsidies for level 2 impacts, simply by dint of Auckland remaining at level 3 or 4, is understood to be uncertain.

BusinessNZ chief executive Kirk Hope said the matter “needed to be resolved”, especially as the rest of the country outside Auckland came out of level 3 in the middle of the secondly fortnightly claim period.

“That just makes it more difficult to meet the requirements at what is still a pretty challenging time for a lot of businesses,” he said.

Many businesses outside Auckland would be struggling because of the ongoing controls on the number of people who could be allowed inside venues, he said.

However, the Government is believed to be grappling with dilemmas.

If it takes the more generous option of allowing businesses to claim wage subsidies for Covid impacts at level 2 regardless of whether that was due to a loss of custom from Aucklanders, that could encourage some hospitality businesses and others to stay closed even if they could just eke out a living at level 2.

On the other hand, the ministry’s existing declaration could require firms to make a seemingly impossible call on what proportion of the revenues they were losing was due to the lack of Aucklanders walking through their doors, and what proportion might be due to a drop in local custom.

White said the ongoing level 4 lockdown was having a direct impact on many of Hospitality NZ’s members across the country.

But she said she would be lobbying for the Government to remove the restriction for Covid-related revenue drops to be directly attributable to level 3 or 4 alerts, or for some form of targeted assistance for its members.

Businesses outside Auckland were confused and many were assuming they would be allowed to still claim the wage subsidies if they had a 40 per cent drop in sales regardless of whether they could specifically attribute all of that to level 3 and 4 impacts, she said.

But she agreed that was not what the rules currently state.

“Covid confusion is really pushing operators across the edge when it comes to mental health,” she said.

“It is reasonable and fair they should get a targeted support and that targeted support should be even getting access to the wage subsidy at level 2.

“What we don't want is for the industry to shut down because that has a multiplier effect for suppliers, the workforce and communities. I think it is ‘make or break’ this time.

Robertson told Parliament on Tuesday that he expected claims for the fortnight of subsidies ending on August 31 would total about $1.2 billion, once they were all tallied.

He will table an Imprest Supply Bill Parliament on Wednesday that is expected to seek permission to spend billions of dollars more than it had planned in the Budget, in part as a “buffer” for the costs associated with the Delta outbreak.