Govt reveals income support, finance guarantee plans being prepared

24th March 2020 By Staff Reporter | news@tourismticker.com | @tourismticker

The Government has unveiled a number of initiatives to help businesses and workers get through the following month as the country goes into lockdown.

Prime minister Jacinda Ardern raised the Covid-19 alert level from 2 to 3 on Monday afternoon and said it would lift to level 4 in 48 hours. Level 4, the highest alert status, would require people to stay at home, schools to close, travel to be severely curtailed and all businesses except for essential services to close.

Finance minister Grant Robertson said that the $150,000 wage subsidy cap – announced last Tuesday as part of the Government’s $12.1bn economic response to Covid-19 – would be lifted, enabling larger businesses to keep more of their staff on.

The Government said it would also:

• expedite work on new income support measures for all workers above and beyond the wage subsidy scheme.
• with the Reserve Bank and retail banks agree in principle to significant temporary support for mortgage holders and a business finance guarantee scheme for those impacted by Covid-19.
• agree to freeze all rent increases and to look to extend no-cause terminations to protect tenants.

“These significant measures – along with previous moves to raise benefits and tax changes to support cashflow – are focussed on cushioning the blow for workers and businesses as we respond to this unprecedented global crisis,” said Robertson.

“As we have said before, we cannot guarantee to stop all job losses, but we are doing our best to cushion the blow.”

The forecast cost of the wage subsidy scheme had risen from $5.1bn to $9.3bn, assuming 50% of businesses in the country would access the 12-week scheme.

“The $9.3bn is an estimate, not a cap or a floor,” said Robertson.

“This means the support will be there to meet the demand. We are doing what it takes to put support in place for workers and businesses.”

A number of other changes had been made to the wage subsidy scheme:

• New businesses, that is, less than a year old, along with high growth firms would also be eligible if they could demonstrate the revenue loss assessment against a similar time period, e.g. a 30% loss of income due to Covid-19, in March 2020 compared to January 2020.
• Self-employed people with variable monthly incomes were eligible if they could demonstrate the revenue loss assessment against the previous year’s monthly average, e.g. a 30% loss of income due to Covid-19 in March 2020 compared to the average monthly income in the period March 2019 to March 2020.
• The scheme did not cover registered charities, non-governmental organisations, incorporated societies and post-settlement governance entities.

Other criteria still applied, including the 30% revenue reduction and for businesses to maintain their employees at 80% of their pre-Covid-19 income. The same twelve-week period applied to the wage subsidy scheme.

The new criteria would apply from midnight tonight.

Applications for the support could be made with the Ministry of Social Development.