Grant Robertson clarifies apparent loophole in COVID-19 wage subsidy scheme update

The Finance Minister has clarified an apparent loophole in an update made to the wage subsidy scheme, where it appeared that part-time workers could be paid more than their pre-COVID-19 wage. 

Grant Robertson announced on Friday that businesses taking the wage subsidy scheme must pass on the full amount to their workers, if they're unable to match 80 percent of the worker's wage before COVID-19. 

The scheme, unveiled earlier this month, was designed to help businesses struggling to pay their workers as the coronavirus stung the economy and eventually led to most Kiwis having to stay at home and not work in the current lockdown. 

The Government tried to help those businesses keep paying their staff through the scheme, by providing $585.80 a week for full-time workers who worked 20 hours or more per week before COVID-19 and $350 a week for part-time workers. 

But $350 a week is more than what many part-time workers would have been earning before COVID-19, and with the Government telling businesses to pass on the full subsidy to workers, many part-time workers would essentially get a pay boost. 

National MP Paul Goldsmith pointed out how a student doing four hours a week and earning $75 would get the full part-time subsidy of $350 a week, and someone with three part-time jobs, each worth $100 a week, could get three subsidies of $350 a week.

"This surely can't be the Government's intent," Goldsmith, the Opposition's finance spokesperson, said on Saturday. 

The Finance Minister said he wants to make it "absolutely clear" that if a person's income is normally less than the subsidy they can be paid their normal salary. 

"This is particularly an issue for part-time employees some of whom normally earn less than the $350 per week," Robertson said. "We urge employers to use normal hours in the period before COVID-19 to assess the amount to be paid."

Robertson said the scheme is a "high trust system" in order to ensure that money reaches workers and businesses as soon as possible, and he urged employers to "use the money provided by the scheme for the purpose it was intended". 

Robertson said no employer who has applied since the announcement on Friday needs to re-apply. The Ministry of Social Development will be processing those applications in accordance with this clarification, he added. 

On Friday, Robertson said the sick leave scheme - part of the multibillion-dollar COVID-19 economic support package unveiled earlier this month - has been folded into the wage subsidy scheme to prevent double-dipping of Government money. 

The original sick leave scheme was designed when there were fewer people in self-isolation, which is not longer fit for purpose, because the whole country is now self-isolating in lockdown. 

When the wage subsidy scheme was first announced as part of the $12.1 billion support package, it was estimated to cost $5.1 billion. 

But the scheme has since been adjusted to have no cap - ensuring all businesses, not just small-to-medium-sized ones, can access it - and Treasury is now estimating the scheme to cost between $8 billion and $12 billion. 

The money is paid out by the Ministry of Social Development in lump sums, meaning the employer of a full-time worker should get a lump sum of $7029.60 to pay the worker, for a period of 12 weeks - the length of the scheme set by the Government. 

Demand for the scheme is high, with the Government already paying out $2.7 billion for more than 400,000 workers, according to Robertson.