Wage subsidy change a ‘kick in guts’ says struggling cafe owner

We have to balance the need to be careful with public money while helping the most vulnerable businesses. Finance Minister Grant Robertson

An Auckland cafe owner says the change in wage subsidy criteria has made it unnecessarily hard for struggling firms to access financial support.

The fourth iteration of the Covid19 wage subsidy requires organisations to have experienced a 40 per cent drop in revenue over a 14-day period between February 28 and March 21, compared to a typical 14-day period between January 4 and February 14 (six weeks before the change in alert levels).

A lump sum payment of $1171.60 per full time staff member and $700 per part time member is paid out in the subsidy, covering a two-week period. This payment is made up of $585.80 per fulltime staff member and $350 per part-time staff member per week.

But one Mt Eden area cafe owner, who wishes to remain anonymous, says he does not understand why the criteria to access the subsidy has been changed this time round.

“They have shifted the goal posts — it is way harder to get,” says the owner-operator.

“The majority of businesses will not qualify for it all, and the only ones that might are those that have shutdown completely that whole week, and even then it will be quite hard to get.”

Prior to the latest wage subsidy scheme, eligibility to access funding was based on revenue comparisons recorded in the same year prior.

This time, the comparisons are drawn from the previous six weeks.

The business owner claims the tightening around eligibility for the wage subsidy is unfair and comes when revenues for many industries, including hospitality, are beginning to stall after experiencing some recovery through 2020.

Using his own business as an example, the man says it has gone further into debt and now required to repay loan payments while revenue is down $3000-4000 each week.

He says not being able to access the wage subsidy due to the change in criteria, despite his revenue falling, came as a kick in the guts.

The man says the change in criteria has made it much harder to claim a 40 per cent drop in earnings over what was already a “soft” sixweek trading period for many.

He says other clauses in the criteria mean it does not allow for the drop in revenue to be observed during Auckland’s initial 3-day lockdown.

Finance Minister Grant Robertson said the wage subsidy resurgence package was set out in December in consultation with the business community.

“We are continuously updating our support for business and workers if the country is required to go into higher alert levels. We have to balance the need to be careful with public money while helping the most vulnerable businesses,” Robertson told the Herald.

“We set out our resurgence package in December in consultation with the business community, which was activated last month when the country moved to higher alert levels.”

He said flexibility in the criteria for eligibility had been retained for firms that have highly seasonal revenue, which could still use a prior year comparison period.

The Restaurant Association has called for the Government to review the eligibility criteria for the last wage subsidy scheme, but says its efforts have fallen on “deaf ears”.