Lockdown costs $1b as Government digs in heels over wage subsidy extension

Author
Amelia Wade, NZ Herald,
Publish Date
Tue, 25 Aug 2020, 5:39PM
Grant Robertson. (Photo / NZ Herald)
Grant Robertson. (Photo / NZ Herald)

Lockdown costs $1b as Government digs in heels over wage subsidy extension

Author
Amelia Wade, NZ Herald,
Publish Date
Tue, 25 Aug 2020, 5:39PM

Finance Minister Grant Robertson has dug in his heels about not extending the wage subsidy by four days to cover keeping Auckland in lockdown until Sunday night.

He says struggling businesses had 22 weeks of support from the scheme - with the majority of that time in alert levels 2 and 1 with little or no restrictions.

"We recognise this has been a tough time but there has been a lot of support provided."

And in Parliament this afternoon, Robertson revealed Treasury estimates the two weeks of restrictions to contain the resurgence of Covid-19 caused a $1 billion hit to the economy with each week costing $500 million.

After 14 days of lockdown-lite to contain the outbreak, Auckland was set to move out of alert level 3 on Wednesday but Cabinet moved to extend the restrictions until 11.59pm on Sunday as a precaution.

The wage subsidy scheme was pushed out to cover the initial two weeks the city was in lockdown but Prime Minister Jacinda Ardern said yesterday it would not be extended further to cover the extra four days because "it would require an entirely different process and regime".

The hospitality sector warned about 10 per cent of businesses could close as a result of the extension with it keeping doors shut for another full weekend.

"Our businesses are crying out for help and yet we're still being denied targeted support," said Marisa Bidois, chief executive of the Restaurant Association.

Hospitality New Zealand Chief Executive, Julie White, said sector would be in a "state of carnage" because of the ripple effect across the country.

"Our backs are up against the wall; we've suffered huge economic pain and we're pleading as an industry that is on its knees. We urgently need targeted support - where's the appetite from Government to come to the party on this?"

Robertson this afternoon stood firm on not extending the scheme saying the Government had provided "a great deal of support" for businesses since March with the subsidy and initiatives like the cashflow loan scheme and tax changes.

"All of these things have contributed to supporting businesses. And it's not a matter of doing this on a day-by-day or hour-by-hour basis, 22 weeks of wage subsidy support is significant."

And of those 22 weeks, 13 of those were under alert levels 1 or 2 with some or no restrictions and businesses could operate pretty freely, Robertson said.

The Government had to be conscious every dollar it spent was borrowed and there needed to be a balance between the immediate response and the reality Covid would be with us for some time, he said.

Robertson said he'd always been clear the Government couldn't save every business or job but that they would cushion the blow.

"I don't believe we are penny-pinching. I think this is a situation where we provided a great deal of support since March for businesses."

National finance spokesman Paul Goldsmith, here with leader Judith Collins at Parliament today, said the strict lockdown was expected to cost a further $1.6 billion in extra wage subsidies. Photo / Mark Mitchell

National's finance spokesman Paul Goldsmith said the strict lockdown was expected to cost a further $1.6 billion in extra wage subsidies.

"That doesn't include the costs in jobs lost and the impact that has on families.

"That is even without extending the wage subsidies to two weeks and four days, which is the least the Government can do for businesses on their knees begging for help in Auckland.

"The current community outbreak is putting real pressure on families, workers and business owners throughout the country – what they need most of all is some reassurance that we will do everything we can to avoid it happening again."

Goldsmith said the Government was refusing to take responsibility for the economic impact of the lockdown.

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