Short wage subsidy window causing 'unnecessary financial and mental stress', business adviser claims

Changes to the wage subsidy application for this lockdown are causing unnecessary stress for businesses, says an adviser. Photo /Getty Images

The short window businesses have to apply for the wage subsidy after the 14 day revenue assessment period and its restrictive two-week wait for reapplications is causing unnecessary financial and mental stress, says a small business adviser.

But the Ministry of Social Development says it is not considering allowing a longer lead time for applications and the majority of businesses are applying over the course of the two week period, not just at the end.

The MSD also says applicants must wait two weeks before a subsequent application so the periods for which they are applying don't overlap, resulting in a double payment.

The deadline for the second round of the August 2021 wage subsidy was 11.59pm on Thursday night, with the third round opening at 9am on Friday morning.

MSD has received more than 564,977 applications for the August 2021 wage subsidy schemes and approved 441,579, paying out more than $1.8 billion.

Geoff Neal, an adviser who has worked with small-business clients for over 20 years, says businesses are grateful for any support right now, and know how hard MSD and Winz staff are working.

"But these wage subsidy rule changes are not working well. They're causing unnecessary financial and mental stress for both sides."

He said businesses were only getting around 48 hours to apply for the wage subsidy from the end of the 14-day period they must assess to know if their revenue is down 40 per cent.

Businesses can apply earlier based on an estimate of their revenue drop but have to be able to prove it, and if it is wrong they will need to pay the money back.

Jason Dwen, general manager of centralised services at MSD, said while businesses may choose to wait until the very end of the application period to apply, they can apply at any time over a two week period.

"The majority of businesses apply over the course of that two week period, not just at the end."

Dwen said there were three days between the closing of the revenue decline period on September 13 and the closing of applications on September 16.

Dwen said from its introduction, the scheme had allowed applicants to predict their revenue decline.

"This was to ensure funds could be paid out early to businesses, given the uncertainty of the length of Alert Levels. Many applicants have opted to predict their revenue decline, and if it wasn't ultimately experienced, they have repaid what they received. For others, their predictions were realised and no repayment has been necessary."

He said applicants were not required to provide upfront verification in every instance.

"Some applicants will need to meet additional integrity checks which require verification."

Dwen said this decision recognised the need to provide the subsidy quickly at a time when public health circumstances required it.

"Allowing applications to be sent in and processed some time after the closure of the fortnightly application period is not something we are considering."

But Neal said many businesses wanted to submit actual revenue figures at the end of a lockdown period.

"This is faster, easier, more accurate, more ethical, reduces administration costs for all parties, and avoids repayments too.

"Claiming the Wage Subsidy in error and then having to refund it back is a massive waste of time, money, and energy for both the business and MSD/Winz/taxpayer."

Businesses have also been told they must wait two weeks from their first application before making their second one or they will be automatically declined.

Dwen said this was so that the periods for which they are applying don't overlap.

"This could result in double payment for the same period."

But Neal said the new two-week stand-down rule between applications was adding further stress for businesses.

"What matters is that businesses apply for the correct revenue periods, not when they apply."

More than $1.8 billion has been paid out in for the wage subsidy scheme during the August 2021 lockdown. Photo / File

The close-off period for the first tranche of the August 2021 wage subsidy on September 2 was chaotic, with MSD accidentally closing the application process early, locking people out of applying between 8pm and 10pm and then giving a last-minute extension until 7am the next morning.

The human error was a result of preparations being made for the second round of the subsidy.

Dwen said its IT specialists had significantly increased the capacity of the wage subsidy online system to process applications.

"The outage two weeks ago was due to human error, not capacity issues."

But he encouraged people not to apply at the last minute.

Neal said the Government had done a poor job of communicating with businesses about when the application periods closed.

"MSD should have emailed all businesses on their database from previous wage subsidies to let them know about the support available, and any deadlines."

Dwen said it regularly updated the Work and Income website with the latest wage subsidy information, including relevant dates and deadlines.

Louse Upston, National's social development and employment spokeswoman, has also called for the application deadline to be extended after questions put to Labour's Social Development Minister Carmel Sepuloni in the House revealed MSD had only put the deadline information up on its website two days beforehand.

"Applications opened on 20 August 2021, the Government could've informed New Zealanders of the exact deadline then. It beggars belief the Government didn't think to put the deadline on a website many Kiwis went to for information about the wage subsidy earlier.

"For this reason alone the Government must extend the application deadline for the first fortnight all of New Zealand was in lockdown. I have written to Finance Minister Grant Robertson and Social Development Minister Carmel Sepuloni requesting an extension."

She said the Government must make amends for its incompetence and botched communications.

"Many New Zealand businesses and their employees have been left stressed given the uncertainty these bungles have caused."

*This story has been changed from the original version which implied that the window for applications had shortened from eight days to two.