The government has changed the revenue fall threshold for Kiwi businesses to get access to its new extended wage subsidy scheme, a move that is expected to see an additional 40,000 local businesses eligible for the subsidies.
On 5 June, the government announced a change in criteria for the extended wage subsidy scheme following feedback from businesses, changing the required revenue drop threshold from 50 per cent to 40 per cent.
As reported by Reseller News in April, a growing cohort of New Zealand's leading IT services companies have already made use of the government's initial wage subsidy scheme, which required eligible businesses to have experienced a 30 per cent revenue drop due to COVID-19.
The current wage subsidy scheme is open for applications until 9 of June. The new extended wage subsidy scheme comes in from 10 June.
Under the extended scheme, up to 230,000 businesses are now forecast to be eligible for the eight-week scheme, introduced in a bid to keep local business afloat amid continuing disruptions arising from the COVID-19 pandemic.
It is anticipated that the new measures will see up to 910,000 workers covered.
The changes to the extended wage subsidy scheme mean it is now forecast to provide between $2.6 billion and $3.9 billion of support to businesses to help them with their wage bills, up from a top estimate of $3.2 billion under the old threshold.
The amended revenue test under the extended scheme means that businesses must have a revenue loss of at least 40 per cent for a 30-day period in the 40 days immediately prior to the application date (but beginning no earlier than 10 May 2020) versus the nearest comparable period last year.
Meanwhile, small businesses are being given more time to apply for the Small Business Cashflow Loan Scheme, with the application date being extended from 12 June to 24 July.
“We moved quickly to put the wage subsidy in place to cushion the blow,” Finance Minister Grant Robertson said in a statement. “We’ve also shown we will move quickly to make changes so support is targeted to where it is needed most, based on feedback from our regular engagement with the business community.
“While many New Zealanders are now back at work and our economy is one of the most open in the world, there are businesses that will feel the impact of this global pandemic for longer. The tourism, retail and hospitality sectors will in particular be supported by the extended wage subsidy and cashflow support,” he added.
To date, the wage subsidy scheme has paid out nearly $11 billion to date, covering 1.66 million jobs, while more than $1.18 billion has been disbursed to more than 70,000 small businesses under the Small Business Cashflow Loan Scheme.