26 Mar 2020
On 17 March, the Government announced an unprecedented economic support package in response to COVID-19. We provided you with information on what that might mean for you. Over the last few days, with changes in the Government’s response to COVID-19, further support has been signalled. The Government, retail banks and Reserve Banks are injecting an additional $10.25 billion into the economy. Support is targeted to businesses and households.
The Government has removed the cap on wage subsidies that can be paid to employers. This will inject an additional $4 billion into the economy over the next 12 weeks. The initial cap of $150,000 per business is now gone, providing additional support for medium-to-large businesses.
Employers, including those who are contractors, sole traders, self-employed, registered charities and incorporated societies, can apply for a wage subsidy of $585.80 per person for those working 20 hours or more per week and $350.00 per person for those working less than 20 hours per week. If eligible, a lump sum payment per employee for 12 weeks will be provided to employers.
These wage subsidies are available for businesses that show a minimum 30 percent decline in actual or predicted revenue over the period of a month when compared to the same month last year, and that decline is related to COVID-19. Businesses must make best endeavours to retain employees and pay them a minimum of 80 percent of their normal income for the subsidised period.
Business Finance Guarantee Scheme
The Government and banks have developed a $6.25 billion Business Finance Guarantee Scheme for small and medium-sized business, into order to protect jobs and support the economy. The Business Finance Guarantee Scheme will provide short-term credit to cushion financial distress for small and medium-sized firms affected by the COVID-19 crisis. Loans will be limited to $500,000 and will apply to firms with a turnover of between $250,000 and $80 million per year.
Details of the scheme are still being developed. An initial press release on the scheme can be found on the Reserve Bank’s website.
Finally, the Government, retail banks and the Reserve Bank are looking to provide support for individual households and small-to-medium businesses with rent and mortgage payment requirements.
To support renters, the Government has agreed to freeze rent increases and is looking to extend no-clause terminations to protect people during this period.
To support homeowners and small-to-medium businesses, a package of support is being developed. This package includes a six-month principal and interest payment holiday for mortgage holders. Further information on this support is in development. The Reserve Bank’s website will be updated with further details as they develop.
What is an essential service/business?
The current definition of an essential business for the building and construction sector from the COVID-19 website is:
- Any entity involved in building and construction related to essential services and critical infrastructure
- Any entity involved in building and construction required immediately to maintain human health and safety at home or work
- Any entity that performs or is involved in building and resource consenting necessary for the above purposes.
To further clarify this definition, an essential business is:
- Any entity or occupation involved in the supply of electricity, gas, water, waste water (sanitation), or
- Any entity or occupation involved in building and construction required immediately to maintain human health and safety at home or work
- Any entity that has regulatory responsibilities in relation to building consenting and compliance and resource consenting necessary for the above purposes.
Note: most building work required urgently for the purposes of maintaining human health and safety will not require a consent.