Budget 2020’s wage subsidy extension sees a $3.2 billion boost to the scheme, paying for eight additional weeks to the businesses most hard hit by Covid-19.
"The extension will focus on businesses who are still doing it tough," Finance Minister Grant Robertson said. "For many businesses the struggle in the face of Covid-19 is not over.
"We know that a number of them are far from trading at normal levels, particularly in the tourism, hospitality and retail sectors."
From June 10, businesses that have lost or expect to lose at least half of their revenue in the 30 days prior will be eligible for the wage subsidy extension.
Already, $10.7 billion has gone to employers to keep their staff on via the original wage subsidy scheme.
Mr Robertson said the subsidy extension would be open for applications for a 12-week period and paid as an eight-week lump sum under the same rate.
The original scheme was $585.80 per week for full-time workers and $350 for part-time workers paid in a lump sum over 12 weeks. Businesses needed to have had a 30 per cent or more decline between January to June 2020.
On March 17, the wage subsidy scheme was estimated to cost $5.1 billion, but it jumped to $8-$12 billion just 10 days later. Today’s announcement pulls the total allocated to the scheme to $13.9 billion.
"Beyond the wage subsidy, our direct business support package ($4b - of which $3.2 will go to the wage subsidy extension) includes increasing support to research and development," Mr Robertson said.
"We are launching a $150m short-term temporary loan scheme to incentivise businesses to continue research and development programmes that may be at risk due to Covid-19."
Social Development Minister Carmel Sepuloni said the scheme extension intends to “give firms, and their workers, some breathing space while they come to terms with the new business environment and plan for the future”.
“We want to give viable businesses every chance to succeed and keep employing New Zealanders post Covid-19.”
Businesses had been calling out for certainty around the wage subsidy scheme, with operators earlier this week making a plea to the Government for its extension.
Andrew Crawford of Sounds Air told the Covid-19 select committee the business would not survive when the wage subsidy ends.
"The damage’s been done… The money has been chewed up."
Haka Tourism Group's Eve Lawrence, said there was "no doubt" an extension was needed on the wage subsidy.
"Not only does the 12-week cap need to be lifted for specific industry and extended to potentially 26 weeks if not further... we also believe the revenue threshold needs to be raised.
She suggested New Zealand mirror Australia and offer a subsidy for impacted businesses for six months.
Economist Cameron Bagrie yesterday told the committee he thought it should be extended but as a loan and brought up to the level of the minimum wage.