The reason Jacinda Ardern thinks the COVID-19 wage subsidy should not be extended

Prime Minister Jacinda Ardern does not think the wage subsidy needs to be extended to cover the additional four days of lockdown because the combined schemes have provided 22 weeks of support in total. 

National Party leader Judith Collins says it is unfair on businesses that the latest wage subsidy extension is only paid out for two weeks, despite the Government extending alert level 3 in Auckland for an additional four days. 

But Ardern does not think an extension is necessary, because the alert level 3 and 4 periods have equated in total to about nine weeks of constraint on businesses, and the combined wage subsidies have been available for a total of 22 weeks. 

"As a Cabinet we weighed up a number of factors when considering the two week wage subsidy which has been applied across New Zealand," Ardern said in Parliament on Wednesday during Question Time. 

"That included that Auckland has had a combined lockdown at level 3 and 4 in total of around nine weeks and the wage subsidy has been available for 22 weeks in total, far exceeding the level 3 and 4 levels."

The new wage subsidy, which was made available nationwide, was for two weeks of additional support at the same rate as the other wage subsidies, which paid out $585.80 for full-time workers and $350 for part-time workers. 

The first subsidy had already been extended and is still available for applications until September 1, and Ardern said there may be businesses that had not previously met the 40 percent drop in revenue that will now be able to access that second extension. 

She said Cabinet also considered that businesses can still access the small business loan scheme until December 31, which provides interest-free loans for up to a year of up to $100,000 for businesses employing 50 or fewer workers. 

There is also the COVID benefit payment for people who lose their job between March 1 and October 30 as a result of COVID-19, which is paid at the same rate as the wage subsidy for 12 weeks and that remains open until November 13. 

"Finally, we also considered the fact that we do need to manage the Government's finances responsibly,' Ardern said. "Every dollar in the wage subsidy is unfortunately a dollar that is also borrowed."

Collins told The AM Show on Wednesday morning the Government was "silly" not to extend the wage subsidy for the extra four weeks, after Ardern said on Monday a four-day extension would be too complex.   

Collins asked Ardern in Parliament if she was aware that an extra four days of lockdown would cost a business with 10 staff at least $6000 in wages with no revenue to pay for it. 

The Prime Minister said she would encourage those businesses to contact the Ministry of Social Development to check their eligibility for the latest wage subsidy or to access the previous subsidy extension available until September. 

"If they've already received that in the past, they will almost certainly be eligible for the extra two weeks, and therefore will have received 22 weeks of support for what equates to nine weeks at level 3 and level 4," she said. 

Finance Minister Grant Robertson said if a business has received all 22 weeks of the wage subsidy, it would have received around $12,887 per full-time worker, which would represent $128,000 for a business with 10 full-time workers. 

Collins said she is concerned about businesses coping through those extra four days of lockdown because the subsidy only covers wages and not all the other costs associated with keeping a business open and having no revenue.