Businesses hit financially by COVID-19 lockdown eligible for retrospective pay-outs

Finance Minister Grant Robertson and Prime Minister Jacinda Ardern.
Finance Minister Grant Robertson and Prime Minister Jacinda Ardern. Photo credit: Getty

Businesses hit financially by the lockdown will be eligible for retrospective pay-outs from the Government as part of a scheme passed in Parliament this week. 

The resurgence support payment for businesses affected by COVID-19 was announced by the Government in December, permanent financial compensation scheme to be activated in the wake of alert level changes. 

The scheme kicks in if alert level 2 or above is initiated for a week or more. Businesses can access it if they experience a 30 percent drop in revenue over seven days. If it is a seasonal business, they must show a 30 percent revenue drop compared with a similar week last year.

Businesses get a base of $1500 and $400 per worker up to a total of 50 full-time employees. The maximum payment a business can receive is $21,500.

Auckland entered a three-day alert level 3 lockdown on Monday after the discovery of COVID-19 in the community, while the rest of New Zealand entered level 2. With only a few new cases found this week, Auckland shifted to level 2 until next Monday, while the rest of the country now enjoys level 1. 

Because Auckland will experience alert level 2 and 3 settings for a week, businesses across the country will be eligible for the compensation scheme. It doesn't just apply to Auckland businesses, because many rely on our biggest city being open to generate income. 

"That decision recognises that many businesses rely on Auckland for revenue so it is only fair that the payment is available nationally," said Finance Minister Grant Robertson. 

The payment will be retrospective, meaning businesses will be compensated for their losses over the days when they experienced alert level 2 and 3 settings. Businesses can apply for the payment from Tuesday via the Inland Revenue website. 

When the scheme was first announced, businesses had to show a revenue drop over 14 days, but Robertson said this week the Government decided to reduce it to seven. It meant the law needed to be changed urgently on Tuesday in time for a possible lockdown extension. 

"This payment recognises that some businesses face one-off costs or impacts to cash-flow when we step up an alert level to follow public health advice," Robertson said on Tuesday. 

"The payment is structured to provide the most support to smaller firms who are most likely to face cash-flow issues but will be available to all businesses and sole traders."

The scheme sits alongside the Government's other support packages, including the new short-term absence payment, which provides financial support for businesses with workers who need to stay at home while awaiting a COVID-19 test result. 

It's a one-off payment of $350 to employers to pay workers who need to stay home while awaiting a test or while someone who is their dependent is doing so. 

The Government's leave support scheme helps businesses pay workers told to self-isolate because of COVID-19. It's paid as a lump sum and covers two weeks per employee at $585.80 for those working 20 hours or more a week and $350 for less than 20 hours a week. 

The wage subsidy scheme will also be available nationally when there's a regional or national move to alert levels 3 or 4, for a period of seven days.

The support would be provided in two weekly payments for the duration of the alert level period, rounded to the nearest fortnight. The wage subsidy scheme has so far paid out more than $14 billion to protect 1.8 million jobs.

Crown accounts for the six months to the end of December show tax revenue was $800 million above forecast, with 5.5 percent more than expected as domestic spending remained higher than predicted. 

Crown expenses were $52.3 billion, $400 million less than forecast. Net core crown debt was 32.6 percent of GDP, $1.5 billion less than predicted.