Coronavirus: Wage subsidies could be broadened if New Zealand's Covid-19 alert level is raised

Focus: Full announcement of Finance Minister Grant Robertson and Health Minister David Clark’s coronavirus financial package. Video / Mark Mitchell

A rise in the alert level in response to Covid-19 could trigger a broadening of Government wage subsidies, while the Government could soon be providing working capital to private companies.

Pressure is mounting on the Government to step up its response to the Covid-19 outbreak, amid concerns a nationwide lockdown could cripple the economy if immediate steps are not taken.

Last week, Finance Minister Grant Robertson unveiled a wage subsidy programme which could see private companies given up to $150,000 each, or around $585 for each full-time worker, for 12 weeks. The subsidy could cost $5.1 billion by the end of June.

Critics warned that larger employers would see little benefit, as it would only cover the cost of around 20 full-time workers.

But in the days since, the likelihood that far more businesses than previously expected could be ordered to close has risen, after Prime Minister Jacinda Ardern announced a new four-level alert system on Saturday. Medical experts have called for the alert level to be raised.

Robertson is expected to announce new economic measures to attempt to counter the disruption, especially if Ardern raises the alert level from two to three.

BusinessNZ chief executive Kirk Hope said he expected the Government to announce further wage subsidies and a conclusion of talks over a mechanism under which the Government would step in to provide working capital for businesses.

On Friday, Finance Minister Grant Robertson held a teleconference with business leaders where he is understood to have asked for ideas on how to cope with Covid-19. Photo / Mark Mitchell.

"I'm expecting it by the end of the day, and if it's not today, it will be early tomorrow," Hope said of the working capital facilities. He added that some companies were in a precarious position.

"In order to continue to employ people, some of the businesses are running out of runway, if you like."

On Friday, Robertson held a teleconference with members of the New Zealand Initiative.

Although the conference was held under Chatham House rules, one person familiar with the details of the call said Robertson acknowledged the Government needed ideas from employers to counter the crisis.

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The responses are said to range from immediately declaring logistics companies to be defined as essential services, in order to allow supermarket shelves to continue to be stocked if the country is placed in lockdown.

Elsewhere, the Herald has been told by multiple sources that some professional directors are privately questioning whether they should place their companies into insolvency because almost all of their revenue has suddenly stopped.

The Herald understands that meetings about the Government playing a role in providing working capital are under way and advanced, but may not be completed today.

Dr Oliver Hartwich, chief executive of the New Zealand Initiative, said there appeared to be increasing pressure from the medical community for the alert level for Covid-19 to be raised.

"I can't evaluate that as I'm not a scientist, but as an economist, it is preferable from my perspective to have a short, sharp lockdown, maybe over three weeks or whatever it takes, than to have this level two or level three stuff, going on over the next 12 months."

Hartwich said a strategy of suppressing the virus "would have my support".

National has been calling for the Government to broaden its response.

Finance spokesman Paul Goldsmith said he had been speaking to businesses during the weekend about the impact of Covid-19, many of whom were "particularly struggling with that relatively arbitrary 21-person cap, which I presume they'll do something about today".

"They should be going harder and faster and we support them to do that," Goldsmith said.

"It's a combination of massive fiscal impulse required, particularly on that wage subsidy front, just to stop everything grinding to a halt."