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Call for Government's wage subsidy to be extended with 'massive' hit coming to the economy

The Covid-19 hit on the New Zealand economy will be "massive", says economist Cameron Bagrie, who says the Government's wage subsidy needs to be extended "because this thing is far from over". 

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"The key issue here is how quickly is the economy going to go back to pre-Covid levels? I suspect it's going to be quite some time,” he said. Source: Q+A

Mr Bagrie told TVNZ1's Q+A moving into Alert Level 3 was "turning the dial". 

"We're moving back into work in a gradual fashion, but the economy hits the business sector is taking is massive. 

"Some pent-up demand is going to occur, we're all going to rush out and buy some KFC, but for a construction sector firm, they're not going to get that work that was lost in the month of April.

"The key issue here is how quickly is the economy going to go back to pre-Covid levels? I suspect it's going to be quite some time."

He said the benefit of the wage subsidy was "that it's very transparent", with people able to search which companies receive it. 

"There's the firms who genuinely needed it... there's firms who were unsure what revenue would be like and have taken it to park the money and if they didn't need it probably going to pay it back. 

"Then there's firms who didn't need it but saw an opportunity," Mr Bagrie said. 

"I think some firms risk some pretty reputation brand damage if they get found out they've taken the money and they didn't need it. 

"It's taxpayer money. There's a big shade of grey here."

He said the subsidy should be extended, "and it's going to need to be extended because this thing is far from over".