Third round of wage subsidies, but sales drops need to be pinned on Auckland

Monday, 13 September 2021

Applications for the third round of wage subsidies will open on Friday.

Some businesses will be able to claim a third fortnightly round of wage subsidies after Prime Minister Jacinda Ardern confirmed Auckland would remain at alert level 4 until at least midnight next Tuesday.

But claiming the subsidies outside Auckland is about to get harder.

The subsidies are available to businesses in Auckland and to firms elsewhere in the country that expect a drop in revenues of 40 per cent or more as a result of Auckland being at alert levels 3 or 4.

Applications for the support will open on Friday, covering the period for two weeks from September 14.

“Eligibility is not determined by the alert level your business is at, but rather a drop in revenue caused by any part of the country being at alert level 3 or 4,” Ardern said.

* More resurgence support payments coming for battling businesses

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

Finance Minister Grant Robertson confirmed the rules would not allow businesses outside Auckland to claim the subsidies because of impacts they may be experiencing as a result of being at level 2, simply by dint of Auckland being at a higher alert level.

It is understood an exception has been made for the second round of subsidies covering the period August 31 to September 13, during which businesses outside Auckland moved from level 3 to level 2.

Firms outside Auckland claiming the subsidy for the fortnightly period just closed will not need to be able to prove the time they spent in level 3 or the extra time Auckland spent at level 4 caused their 40 per cent revenue drop, it is understood – just that it was due to the Delta outbreak

Ardern and Robertson’s comments confirm that, from this week, firms will not be able to claim the subsidies unless they can pin their sales drops to the situation in Auckland.

That would mean that, outside Auckland, the subsidies would now be “quite targeted”, she said.

Ardern said the rules might allow a rental car firm in the South Island that was heavily dependent on business from Auckland to claim, for example.

A spokesman for Robertson said last week that consideration was being given to the option of letting businesses outside of Auckland claim wage subsidies because of the revenue drops they experienced as a result of level 2 restrictions.

But on Friday ministers appeared to instead settle on extending the availability of Resurgence Support Payments, which are mainly designed to help small and medium-sized firms with their general expenses.

The approach to wage subsidies would appear to limit the scope for hospitality businesses outside Auckland to elect to remain closed during level 2 while continuing to claim wage subsidies.

Ministry of Social Development services manager Jason Dwen said just under $1.8 billion had been paid out to a total of 274,246 businesses since the wage subsidy scheme was reactivated last month.

Dwen said that in most cases applicants were receiving the subsidy the same day they applied, or the next business day.

However, a number of businesses have reported delays receiving the payments, or applications being declined for reasons they are not easily able to understand.