The Government's extended wage subsidy scheme is expected to cover 470,000 jobs - and will cost about $510 million, the Government says.
Grant Robertson has asked the Treasury to come up with "sustainable" options to cushion the economy in the event of further Covid-19 outbreaks, with the latest outbreak raising the likely cost of the wage subsidy scheme by $1.6 billion, even if it is quickly stamped out.
The Finance Minister confirmedthat a new round of the wage subsidy, which provides close to $600 a week for each full-time employee of qualifying businesses, would be offered for the duration that Auckland is under Covid-19 alert level three.
The third round of the scheme, Treasury expects the latest extension will cost about $510 million, subsidising the wages of around 470,000 workers.
But the latest restrictions, including both Auckland's latest lockdown and social distancing requirements nationwide, are expected to see many businesses which did not previously qualify for an earlier extension of subsidy do so because their revenue will drop to 40 per cent of what it was last year.
Robertson told reporters that he had been advised that this could push up the cost of an earlier extension of the scheme, of eight weeks, climb by $1.1b.
"I think this is the right response in the circumstances," Robertson said, adding that many businesses outside Auckland would be hit by restrictions in New Zealand's largest city.
It would have been "administratively difficult" to offer a wage subsidy only in Auckland, Robertson said.
Robertson said he had asked officials to work out how different types of support could be used to provide a "sustainable path forward, if it was a much smaller and refined region".
The range of support offered included small businesses loans from Inland Revenue, Covid income support payments and a scheme which sees the Government underwrite loans offered by the banks, Robertson said.
National said it supported the latest extension of the wage subsidy scheme, but it highlighted the heavy cost of allowing Covid-19 into the country.
Finance spokesman Paul Goldsmith said the Government should already have worked out how to respond to regional outbreaks.
"They've had several months and they haven't worked out how to handle one region for the wage subsidy."
Canterbury Employers Chamber of Commerce chief executive Leeann Watson said the nationwide extension was a relief, with businesses in the city hit by both a loss of Auckland visitors and the costs of social distancing requirements.
"The reality is that a number of businesses, particularly those in the hospitality, tourism, and accommodation sectors, are really struggling with this second wave of restrictions."
As well as the extension of the wage subsidy, Robertson also announced a simplification of the Covid-19 leave support scheme, removing the tests around which businesses qualify in order for workers required to self isolate to have their wages supported.
Robertson also confirmed that the mortgage deferral scheme, which allowed homeowners to stop mortgage repayments for up to six months, will be extended by another six months to the end of March, 2021.
While the scheme does not save borrowers money, with interest continuing to accrue, banks are able to grant a deferral without the Reserve Bank treating the loans as in default.
The scheme saw massive demand early on, with borrowers granted deferrals on more than $14b worth of loans in the first three weeks of the scheme, figures from the New Zealand Bankers' Association showed.
This has climbed to $20.9b by the end of July, however in the month of July the figure rose by around $700m, a sign that fewer are taking up the scheme, or that some had resumed repayment.
NZBA chief executive Roger Beaumont said some customers would be eligible for another six months deferral, but banks would be discussing whether they should resume payments.
"Customers who can resume loan repayments should do so. Many customers have already restarted payments on deferred loans. That shows they understand the benefits of getting back on track if they can."
BNZ chief customer officer Paul Carter said that in recent months "tens of thousands" of customers had used a combination of deferral, reduced payment or interest only payments.
"We have seen a slowdown in the number of customers taking advantage of support measures over the past few months and some have resumed normal repayments, but as this latest situation shows, the outlook remains uncertain and we encourage customers to get in touch with us to discuss their options."
