A multimillion-dollar scheme set to provide income relief to those newly unemployed as a result of Covid-19 has a mother relieved her bills can be paid for when she retrains but left a migrant worker feeling hopeless.

And a budget adviser is concerned the time span is not long and may end up an expensive taxpayer benefit.

The Government yesterday announced a $570 million scheme for temporary income support payments to New Zealanders out of work because of the pandemic.

Fulltime workers will be eligible for $490 a week and part-time workers will get $250, which is also available for students. Both payments are paid tax-free and only available to residents and citizens.

Finance Minister Grant Robertson said the payment should help the newly jobless adjust and find new employment or retrain.

The amount was worked out based on roughly how much the wage subsidy scheme was after-tax.

Students who have lost part-time work as a result of Covid-19 may also be eligible for the part-time rate.

The 12-week scheme is forecast to cost about $570 million which incorporates $1.2 billion of payments offset by $635 million of saved benefit payments, with small administrative costs.

Migrant workers will not qualify for the payment and continue to only be able to access support through Civil Defence.

It will be funded from the Covid Response and Recovery Fund.

But the announcement brought no relief for one Rotorua chef who was "sad" to hear he did not qualify for the Government's income relief.

The man, who did not want to be named, said he and other employees at the company he worked had lost their jobs, but, as a migrant worker, he did not qualify for the income relief.

He had studied and worked in New Zealand since November 2018, and his work visa would expire in November next year.

But if he does not find a job, he will be forced to return to India before then.

"I have to work to be able to stay," he said. "It's really tough ... We're human beings."

• Covid19.govt.nz: The Government's official Covid-19 advisory website

He had applied for jobs in Rotorua, Taupō, Whakatāne and Auckland but said the crisis had meant jobs were scarce.

He was worried about paying off his $40,000 student loan if he was forced to return to India. One New Zealand dollar is equivalent to 46.29 Indian rupee. He was currently in talks with Immigration.

A Rotorua woman, who spoke on the condition of anonymity, said the support would help her pay the bills and look after her children while she upskilled.

She had worked as an event manager and had been in redundancy talks with her work since before lockdown.

"When we get made redundant, this extra support will be very helpful as I work in tourism - there are no jobs.

She hoped to train as a social worker.

Rotorua Budget Advisory Service manager Pakanui Tuhura said the funds would provide a lifeline in the short term, but time would tell if it was useful or "a very expensive 12-week benefit exercise".

The money would help those who are eligible to maintain the necessities of life through winter and allow the economy time to settle down and hopefully begin to regrow, Tuhura said.

"It won't cover all the other costs in the household but it will provide sufficient relief, if spent wisely, to ensure these households will have a roof over their heads, food and warmth."

While he commended the Government, he was concerned about how to determine someone has become unemployed due to Covid-19 and has been unable to find work, the amounts set for payment, and the span of 12 weeks.

"Not all households are the same, and rather than setting an arbitrary amount perhaps there should have been a range of payments that could be used by comparing to actual household needs."

He said if someone was only partially employed prior to Covid-19 and now found it difficult to get by, the stated amount may not cover their expenses.

"In this case, there should have been some way to apply for a higher amount based on need."

He said he was unsure 12 weeks was long enough to get people back on their feet given the delays in setting up new employment opportunities.

He said a lot of opportunities will now come from new enterprises or government-supported infrastructure spending which would require some to retrain.

"If people are able to retrain and take up employment within the 12 weeks then it would be well worth it.

"However, if there is no employment at the other end of the 12 weeks then the Government would have spent a lot of taxpayer funds on a very expensive 12-week benefit exercise."

He said the key to the success would be for people who took up the payment being committed to seeking and finding employment.

Rotorua Mayor Steve Chadwick said this was an "extremely stressful time" for many in the community, including those who were newly unemployed and now faced with uncertain futures.

"I'm sure any assistance will be very welcome as they either look for new employment or consider and investigate training options and make their transition."

Social Development Minister Carmel Sepuloni said the temporary income support payment would give people newly out of work "breathing space" when in normal times they might have been able to get a new job more easily.

She warned unemployment would get worse before it got better.

People who receive the Covid payment will be required to:

• Be available for, and actively seeking, suitable work opportunities while they receive the payment.
• Take appropriate steps towards gaining new employment.
• Identify and take opportunities for employment, re-deployment and training.