$3.2 billion for wage subsidy extension

An extra $3.2 billion in wage subsidies will be offered to businesses struggling as a result of the coronavirus pandemic,

Finance Minister Grant Robertson said the extension to the wage subsidy scheme is the centrepiece of a $4b business support package announced by him yesterday ‘‘to help keep people in work and position businesses for recovery and growth’’.

The Government has so far paid out $10.7b in wage subsidies to employers that have experienced or predicted a 30 per cent drop in revenues in any month between January and June because of the pandemic.

The additional $3.2b will be more tightly targeted, with only businesses that have experienced or are forecasting a 50 per cent drop in revenues during the 30 days prior to their application able to apply.

The aid is intended to help the worst-hit businesses keep staff on their payroll for an additional eight weeks, from when the existing subsidies terminate at the end of June.

‘‘This is a targeted version of the wage subsidy scheme,’’ Robertson said. ‘‘We are expecting a significant take-up from those sectors. For other businesses — they are starting to return to normal.’’

Robertson did not rule out further extensions to the wage subsidy programme when questioned on that possibility.

But he said the Government wanted businesses ‘‘to use this time to plan and re-orient themselves’’.

Businesses will be able to apply for the new subsidies during a 12-week period from June 10 and the subsidies will be paid out as a lump sum of $4686 per fulltime worker and $2800 per part-time worker – which equals the same weekly rate as the existing scheme.

The wage subsidy extension is less generous and costly than an $8b relief scheme proposed by the National Party to provide cash grants of up to $100,000 and lowinterest loans of up to $250,000 to all businesses that could show a drop-off in sales of 50 per cent over two consecutive months.

Infometrics economist Brad Olsen said the wage subsidy extension was important and a good move.

Its size reflected its ‘‘much more targeted nature’’, he said.