Coronavirus: Government will introduce wage subsidies to help businesses keep staff on

10 Mar 2020

CLICK HERE FOR ORIGINAL ARTICLE BY: Stuff, Henry Cooke


Prime Minister Jacinda Ardern.



Coronavirus: Government will introduce wage subsidies to help businesses keep staff on


The Government will introduce a targeted wage subsidy for businesses hurt by coronavirus, allowing them to keep on employees that they otherwise couldn't afford.


There will also be some targeted tax help for businesses hurt by the virus' economic effect, with possible deferred payments and relief for small businesses impacted.


The "business continuity package" was agreed to by Cabinet on Monday and will be finalised in the coming days, before detailed announcements are made next week.


Details of a longer-term package which could be used if the economy worsens is also being worked on.



It will include training options for workers who are losing work because of the virus.


Finance Minister Grant Robertson met with the chief executives of the major banks on Monday, and has been receiving data from Xero on how businesses were weathering the storm.


He said banks were also looking at reducing loan repayments for hurt businesses, with some moving to interest-only repayments.


Wage subsidies were used to help businesses after the Canterbury and Kaikoura earthquakes, but Robertson noted the impacts of Covid-19 were much more complex and widespread.


"The rapidly changing situation we face is different from others that the economy has experienced in recent years. It is clear in previous situations such as the earthquakes which businesses were impacted, where they were, why, and how," Robertson said.


"It is different now. We are seeing different businesses in the same industries in the same regions impacted differently. This requires a tailor-made response."


He said Treasury and Inland Revenue were working on tax policy options to reduce the impact for hurt businesses.


"The focus here is on more flexibility for small businesses to meet their tax requirements, targeted relief to support effected businesses and maintain employment, and support for measures for business investment."


Treasury and the Ministry of Social Development were also working on measures to keep anyone who lost a job supported and if possible help keep them in the labour market.


These responses are expected to be quite time-limited.


Cabinet agreed to direct officials to work on a longer-term package to be used if the economy worsened, but Robertson stressed that this would not necessarily be used - the Government just wanted to be ready.


This could be unwrapped before the May Budget if necessary.


Prime Minister Jacinda Ardern ruled out any pause of a planned minimum wage hike, which ANZ had called for earlier on Monday.


National's finance spokesman Paul Goldsmith said the Government needed to work faster.


"Affected businesses are struggling and need tangible support now. They now have to wait another week before they see any sort of relief package," Goldsmith said.


"Businesses need certainty and relief in the short term followed by broader economy-wide changes, like tax relief, so the economy can quickly bounce back from the downturn."


There have been five confirmed cases of Covid-19 in New Zealand now.


All of those infected appear to have either been infected overseas or by a family member who had recently travelled overseas.


The Government have already rolled out industry-specific measures for the Crayfish and forestry sectors, and announced in-principle that it will remove benefit stand-down periods.


It has also pushed for all Governments to pay their bills to small businesses as soon as possible.


Covid-19 has infected over 100,000 people and killed over 3000.


There are 54 medical staff who have come into contact with the virus who are currently self-isolating.


About 2000 Kiwis are self-isolating.



Stuff


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