Source: New Zealand Parliament – Hansard
WEDNESDAY, 26 AUGUST 2020
Mr Speaker took the Chair at 2 p.m.
QUESTIONS TO MINISTERS
Question No. 1—Prime Minister
1. Hon JUDITH COLLINS (Leader of the Opposition) to the Prime Minister: Does she stand by her statement that the reason the Government will not extend the wage subsidy to cover the additional four days of lockdown is because “it would require an entirely different process and regime”?
Rt Hon JACINDA ARDERN (Prime Minister): That wasn’t exactly my quote, but on Monday I was asked why we didn’t just tack on an extension to the two-week wage subsidy. My reply to that question was: “It is not a simple exercise to simply tack on additional. It would require an entirely new application [processing] regime. Our focus is getting the money out the door quickly for everyone who’s already applied.” As a Cabinet, we also weighed up a number of other factors when considering the two-week wage subsidy that has been applied across New Zealand. That included that Auckland has had a combined lockdown at levels 3 and 4 in total of around nine weeks, and the wage subsidy has been available for 22 weeks in total, far exceeding the 3 and 4 levels. In addition to the short two-week extension, thousands of additional businesses have become eligible for the eight-week wage subsidy payment as a result of the shorter lockdown. The other financial support the Government is offering was also considered, including the Small Business Cashflow Loan Scheme, tax changes, and specific sector support packages. Finally, we also considered the fact that we do need to manage the Government’s finances responsibly. Every dollar in wage subsidy is, unfortunately, a dollar that is also borrowed.
Hon Judith Collins: [Interruption] Is she, in essence—
SPEAKER: Order! Which member was that—made that noise? Well, I think Mr Hudson has a recognisable voice, or there are three other members in the quadrant that might have made it. Who made a noise—a loud noise—as the Hon Judith Collins started her question?
Hon Member: It was a sentence.
SPEAKER: All right. Well, that’s honesty and transparency.
Hon Judith Collins: Is she, in essence, saying it’s just too hard?
Rt Hon JACINDA ARDERN: I refer to the answer I gave in my primary, which is no.
Hon Judith Collins: Is she saying that workers could lose their jobs just because the Government thinks it’s too difficult to extend the wage subsidy for four days, and, anyway, businesses have had enough help?
Rt Hon JACINDA ARDERN: That’s absolutely not what I’m saying.
Hon Judith Collins: Well, then, what is she saying?
Rt Hon JACINDA ARDERN: I’m saying that we have considered that over the levels 3 and 4 period, which has been the most constrained, that is equated to about nine weeks of constraint, particularly for the Auckland region. But the wage subsidies that have been available now total 22 weeks. It’s also worth considering, as I acknowledged in my primary answer, and we did consider this, that some businesses would not have been previously eligible for the wage subsidy extension, keeping in mind that that is an eight-week payment. A number of businesses, because of this more recent lockdown, are now eligible for that eight-week payment. In fact, we have received in the order of 37,000, if I recall correctly, applications for the wage subsidy extension. That demonstrates that businesses are actually accessing eight weeks of support in some cases, not just two.
Hon Judith Collins: Does she understand that the wage subsidy does not actually end up with businesses because it is for the subsidy towards wages for workers, and that businesses who have been in lockdown do in fact have other costs as well as wages to pay, when they’ve got no income coming in?
Rt Hon JACINDA ARDERN: Of course we have kept that in mind all the way through, which is why we’ve also had access to things like the no-interest business loan scheme and why we have put in place initiatives to reduce tax liability, also, for small business.
Hon Judith Collins: Why when New Zealand went into lockdown for seven weeks the first time, did the Government pay 20 weeks of wage subsidy, yet this time round it’s only paying two weeks’ wage subsidy despite the lockdown being more than two weeks—for two weeks and four days?
Rt Hon JACINDA ARDERN: My recollection is that that isn’t quite an accurate portrayal of the first and second—of course, keeping in mind that we have had different alert levels for all those periods as well. What we’ve tried to do, rather than just attach it to an alert level, we’ve attached it to an analysis from the business around revenue loss. So if a business can demonstrate, over a period of time, that they’ve had a revenue loss in the order of 40 percent, and they can include in that this two-week period, they will, for instance, be eligible not for two weeks of subsidy but for eight weeks of subsidy. So that demonstrates it’s never just been about alert level; it’s been about the impact of that alert level on a business—after all, you wouldn’t expect the likes of a supermarket who has had an increase in purchasing being eligible for a subsidy.
Hon Judith Collins: Would she be surprised to learn, then, that an extra four days lockdown would cost a small business with 10 staff at least $6,000 in wages, with no revenue to pay for it?
Rt Hon JACINDA ARDERN: I would encourage any small business who has been adversely affected by the more recent lockdown to contact the Ministry of Social Development and check their eligibility for the wage subsidy extension. If they’ve already received that in the past, they will almost certainly be, then, eligible for the extra two weeks and, therefore, have likely received 22 weeks of support for what equates to nine weeks of level 3 and level 4.
Hon Grant Robertson: In light of that question, can the Prime Minister confirm that if a business has received all 22 weeks of the wage subsidy, it would have received $12,887.60 per full-time worker, which would represent $128,000 to a business with 10 full-time workers?
Rt Hon JACINDA ARDERN: Yes, I can confirm that. And, of course, there are a number of other supports that those businesses would likely be eligible for, including the voucher scheme we’ve put through to support businesses who may be, for instance, trying to transition into an online environment, which means that more businesses can continue to operate at level 3 than perhaps they could at level 4. There are a suite of Government initiatives to support small business through this very difficult time.
Hon Judith Collins: Is she still committed to the Flexi-wage scheme that she announced earlier this month, considering that she said it would be paid for from the underspend of the wage subsidy, which has now been spent?
Rt Hon JACINDA ARDERN: Of course, we’ve said that when it comes to the COVID-19 Response and Recovery Fund, which has in the order of $14 billion still available for it, in our view, that needed to kept for times like these. I note the Opposition have committed half of that to roads, when it’s our view that, in fact, we need to keep that $14 billion available for moments like this and for the likes of that two weeks of extra support that’s been provided.