National says people instructed to self-isolate should be paid their full wages so they're not tempted to go back to work and risk infecting other people with COVID-19.
There is already an existing scheme, but the amount on offer - a maximum payment of $1176.60 for two weeks - is below minimum wage for a full-time worker, and the person's employer has to claim it.
National's scheme, which would be capped at "twice the average ordinary time weekly earnings" - about $2500 per week - would go directly to the employee.
"The Ministry of Health has to make it very clear to people when they need to self-isolate. But you've also got to make it easier for people to do the right thing," leader Judith Collins told The AM Show on Wednesday.
"We think that if we actually said look, rather than expecting people to take a pay drop to stay at home when they've been forced to self-isolate and do the right thing for the whole country, how about we pay them 100 percent of their wages for those two weeks?
"We know that's a big cost, but it's nothing like the $500 million every week this lockdown in Auckland is costing the country. You do need to find those who simply flout the rules, and actually take it seriously."
Economists have estimated the cost of each level 3 lockdown in Auckland at between $300 million and $500 million a week in lost GDP. Collins said the party hadn't done any costings on the policy.
There has been a war of words between the Prime Minister and one of the recent infected cases, who worked a shift despite Jacinda Ardern and the Ministry of Health saying she had been told to self-isolate. The case maintains she never received this advice.
A mother told to self-isolate broke level 3 lockdown rules last month by going for a walk with a friend, who later tested positive for COVID-19. Director-General of Health Ashley Bloomfield has declined to push for a prosecution, saying it's important that people feel they can come forward with information about their movements so the outbreak can be quashed.
"We can't afford to give this virus an inch, and if taking a punitive punishment approach could deter people from coming forward and getting tested, we've got a bigger problem on our hands," he said on Tuesday.
Collins said in some cases, punishment was needed.
"But the fact is, is that make it easy for people to do the right thing. The other thing is check up on people. If they're meant to be self-isolating, it's not just phone calls, it's not just emails - it's also going around and checking they're in their homes.
"The failure to do that has actually cost everyone else the ability to go to work."
National's COVID-19 response spokesperson Chris Bishop said the party's scheme was based on the previous National Government’s Compensation for Live Organ Donors Act, which paid 100 percent of the wages and salary of people who take time off from work to donate organs.
"Self-isolating is the right thing to do, but if doing the right thing means you will be financially penalised then people will be more likely to go to work instead and put the rest of us at risk."
Minister of Social Development Carmel Sepuloni at the weekend urged people to get in touch with Work and Income to find out what assistance was available, if they had to self-isolate after getting a test or because they were told to by the Ministry of Health.