Wage subsidy scheme extended by 8 weeks, now up to $14b

Author
Jason Walls, NZ Herald,
Publish Date
Thu, 14 May 2020, 2:17PM
(Photo / Getty)
(Photo / Getty)

Wage subsidy scheme extended by 8 weeks, now up to $14b

Author
Jason Walls, NZ Herald,
Publish Date
Thu, 14 May 2020, 2:17PM

The wage subsidy scheme has been extended by a further eight weeks as the Government looks to limit the economic damage caused by Covid-19.

A further up to $3.2 billion has been poured into the scheme, taking the total Government spending on the programme to almost $14 billion.

But there are some significant changes, including a modification to eligibility.

Today's Budget also provides support from struggling small businesses to "thrive in the digital economy" as well as Government-backed loans for R&D.

But the centrepiece of today's budget was the wage subsidy scheme extension.

And the scheme has been opened up to more businesses as well.

Now, high-growth and new firms will also be able to apply for the scheme – this includes Callaghan Innovation recognised R&D start-ups.

"The inclusion of R&D start-ups in the scheme will provide support to firms which will be crucial for our economic recovery, and will help them to retain their highly skilled personnel," Finance Minister Grant Robertson said.

Some $50 billion of spending was earmarked and allocated in today's Budget.

Robertson said the Government was "acutely aware" of the damage Covid-19 was having on workers and businesses across the country.

"Many New Zealanders will be back at work now, but we know there will be some businesses that are still struggling."

He name-checked the tourism, hospitality and retail sectors as those particularly feeling the pain of the pandemic.=

The application for the expanded scheme is open for 12 weeks and will be paid as an eight-week lump sum to employers at $585 a week, for full-time workers.

The Government has also earmarked $230 million for encouraging entrepreneurship and "risk-taking".

This includes $150 million for a fund to provide loans to R&D-intensive businesses – there is a $100,000 cap.

Revenue Minister Stuart Nash said the Government expected most R&D reforming firms would be able to access the loans, up to the equivalent of 50 per cent of a business' annual R&D expenditure.

There are no details on interest rates, only that the loans will be offered on "favourable terms".

The scheme will be up and running by early June, with more details still to come.

Today's Budget also sets aside $80 million to encourage entrepreneurs and businesses to develop new products by enabling them to claim tax deductions for unsuccessful or abandoned assets.

Nash said this was an important way of encouraging investment, as it gave businesses to confidence to take risks.