The Government's extended wage subsidy scheme is expected to cover 470,000 jobs - and will cost about $510 million, the Government says.

The new two-week wage subsidy is open for applications from August 21 until September 3.

Applications can be lodged by the end of this week, Finance Minister Grant Robertson said.

Today's wage subsidy extension comes after a fresh outbreak of Covid community transmission last week.

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The revelation sent Auckland back into alert level 3 and the rest of the country into level 2.

The criteria for the new wage subsidy announced today is similar to the current extension, which was to lapse on September 1.

• Businesses must have had, or are predicting to have, a revenue drop due to Covid-19 of at least 40 per cent.

• For this new scheme, the revenue drop applies for any consecutive period of at least 14 days within August 12 and September 14 compared to last year.

• In addition, firms which have had 14 consecutive days where revenue has dropped - from August 12 going out until September 10.

• The overall scheme will cost $1.6 billion - that does not come from the $14 billion Covid-19 fund.

"This is also a reminder that the existing extension to the wage subsidy remains open to applications until September 1," Robertson said.

"Businesses that haven't yet accessed that scheme should reassess if they now meet the criteria, following the recent increase in alert levels."

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Robertson said the Government had not considered extending the Covid-19 income relief scheme.

Some $200 million will be invested into a University of Auckland campus expansion. This will result in hundreds of jobs, Robertson said.

The Government was looking for the greatest level of consistency as possible.

"This is a very focused extension of the wage subsidy scheme," he said.

He added that it could be extended if needed.

Robertson said he would "of course" give the Electoral Commission more money if it needed to hold the pushed-out election.

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As for any further wage subsidy schemes in different parts of the country, if needed, Robertson said that would be assessed at the time, if that happened.

He said today's announcement was the right response, given what has happened.

Mortgage deferral scheme also extended

An extension to the mortgage deferral scheme has also been agreed in-principle as part of the plan to support households after the existing scheme expires on September 27. This will continue until March 31 next year.

"The latest Covid-19 outbreak is obviously disappointing, especially for businesses that have just got up and running again," he said this afternoon.

"But we have a plan in place to deal with it.

"We have always said that the best economic response is a strong health response."

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On the mortgage deferral scheme, Robertson said there is still a need for it.

But it was a "significantly reduced" need from where New Zealand was in April and May.

The Government will also modify the Covid-19 sick leave scheme to make it more accessible.

Details, Robertson said, will be finalised over the weekend and announced on Monday.

He said the sick leave scheme was "designed for the times".

"We just want to make sure that no one sees a barrier to being tested," he said when talking about why the scheme was needed.

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The "balance of the package" which would be in focus when it came to the small business package.

Robertson said for many businesses it was a question of confidence.

"We wanted to be able to say 'we're going to support you through this period of time."

How the schemes will work

• The new wage subsidy is forecast to cost about $510 million and cover 470,000 jobs.

• The criteria for the new wage subsidy are similar to the current extension: In particular, a business must have had, or is predicting to have, a revenue drop due to Covid-19 of at least 40 per cent. For this new scheme, the revenue drop applies for any consecutive period of at least 14 days within 12 August and 14 September compared to last year.

• The Treasury also estimates that a number of businesses that weren't able to access the extended wage subsidy before it expires on 1 September will now become eligible to do so. This is expected to cover about 460,000 workers, at $1.1 billion.

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• The costs are expected to be covered by the previous underspend on the extended wage subsidy.

• The Ministry of Social Development has advised the new wage subsidy scheme will be open for applications by the end of the week, Friday 21 August.

• Making the scheme nationwide recognises the specific nature of the current outbreak and Auckland's position in the New Zealand economy. Tourism operators that had been expecting visitors from Auckland, companies that supply and trade with Auckland businesses and hospitality and retail businesses around the country are all affected by the measures to fight the virus.

On Friday Robertson said Cabinet had made an in-principle decision to extend the wage subsidy, and modify the Covid-19 sick leave scheme, to make it more accessible.

Terms of the extension are expected to be released at 3pm today.

Robertson has already confirmed that the extended wage subsidy would apply nationwide "given the significance of Auckland's economy to the wider country, and due to the impact alert level 2 would have on sectors like hospitality and retail".

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The latest extension is only likely to last for the duration of Auckland's level 3 restrictions, currently expected to be two weeks.

But Robertson has highlighted that businesses which did not initially qualify for the initial extension of the scheme, which started in June, may now do so because of a likely loss of revenue due to increased restrictions.

"Businesses that haven't yet accessed that scheme should reassess if they now meet the criteria, following the recent increase in Alert Levels," Robertson said.

Applications for the initial extension of the wage subsidy scheme close on September 1. To qualify, a business must be able to demonstrate that they have seen a 40 per cent drop in revenue over a month.

Meanwhile Robertson is also expected to confirm the details of an extension to the mortgage deferral scheme, which allows households to stop repayments on their mortgages, currently for six months.

Interest continues to accrue on the loans, however granting the deferral would not require the bank to report the loans as non performing to the Reserve Bank.

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Currently the scheme is meant to end on September 30, but Reserve Bank governor Adrian Orr confirmed last week that it will be extended, although the terms were still being finalised.

One person familiar with the scheme said it was likely to be extended to March 31, 2021.

When the scheme was first put in place, tens of thousands of households quickly opted into it.

Launched at the end of March, figures from the New Zealand Bankers' Association showed that by mid-April repayments had been entirely deferred on 40,918 loans worth $14.5 billion, while payments had been reduced on a further 41,436 loans worth $14b.

However the take-up has slowed and some people who initially opted to defer repayments have now resumed doing so.

By the end of July, the latest NZBA figures available, repayments had been deferred on just over 61,000 loans, worth a combined $20.9b, an increase of around $700m over the previous month.

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Meanwhile repayments had been reduced on a further $27.5b by the end of July, NZBA figures showed.

Later this week Robertson is also expected to outline further tweaks to the Business Finance Guarantee Scheme, a $6.25 billion scheme which was meant to see the Government lend money alongside banks to small and medium sized businesses.

Announced in March, the scheme was to offer loans of up to $500,000 over three years, for businesses with turnover of between $250,000 and $80 million.

The scheme initially saw little take-up, with Treasury coming under fire for demanding security over the loans, while certain sectors, such as agri-business, were excluded.

At the start of May, Robertson announced changes to the scheme to include small businesses and agriculture, as well as allowing the banks to write loans without obtaining a general security agreement.