Business boost to transition to new COVID framework
We know that over the last twenty months the approach New Zealand has taken to COVID and Delta has saved lives and livelihoods.
Along with one of the lowest mortality rates in the world, we have also had strong economic growth, low unemployment and one of the lower levels of government debt in the world. New Zealand’s early success in dealing with COVID has given us options to deal with the Delta outbreak from both a health and economic point of view.
But for people in Auckland right now, I know that this is tough.
Over the past two months I have been asked several times whether I am aware of the impact restrictions are having on businesses and workers around the country - particularly in Auckland and Waikato.
I can tell you without a doubt that I am acutely aware of that impact.
I regularly speak with businesses, workers and their representatives around the country and I have heard their concerns. We have responded with significant support, and with changes and additions to that support over the last two months.
To date we have paid about $4.8 billion in support since this Delta outbreak began in August. That amount exceeds the new operating spending we would have for a whole year for the whole country in most Budgets.
But we are not through this outbreak yet and as we have done constantly over the past 20 months we are adjusting in response to the circumstances.
I know this outbreak has been particularly hard on Auckland and the coming weeks will continue to be tough as we lift vaccination rates so that we can move to the new COVID protection framework.
To support businesses through this transition, today we are announcing an enhanced business support package.
Firstly, we are significantly boosting the Resurgence Support payment. After the next scheduled payment on the 29th of October we will move to fortnightly payments at double the current rate. The first of these will open on the 12th of November.
Currently the RSP is a three-weekly payment of $1500 per eligible business and $400 for each full-time employee up to a total of 50 FTEs or $21,500
For the payments starting on 12th of November this will be $3000 per eligible business and $800 per FTE, up to 50 FTEs. This will make the maximum fortnightly payment $43,000.
In effect this means the RSP will be a weekly rather than three weekly payment as it is now, but for ease of application and administration it will be available in fortnightly instalments. We are not going to change any other settings at this time in order to ensure the payments can be made without disruption.
We made the decision to use the RSP because it means the support can be provided quickly using an existing mechanism and because the RSP provides businesses with the maximum flexibility as to what to use the money for.
The RSP is now targeting Auckland businesses, with 70 percent of payments going to Auckland having grown from 40 percent in the first payment. The next highest area is the Waikato with close to 10 percent of the claims.
This enhanced support will be paid fortnightly until Auckland has been able to move into the COVID Protection Framework.
As a reminder, the Wage Subsidy will continue to be available on the current criteria while areas of the country are still in Alert Level 3.
The cost of providing both the weekly RSP and the wage subsidy is estimated to be up to $940 million per fortnight through this transitional period.
The second element of the Business Boost we are announcing today is a $60 million fund for business advice and mental health support in Auckland.
This will be delivered through the established Regional Business Partner Network with grants for advice now not requiring a matching contribution from the business.
Businesses will be able to apply for up to $3,000 worth of advice and planning support, and then receive up to $4,000 to implement that advice.
This fund has been requested by businesses. It worked well in the first phase of COVID to support businesses to re-align themselves with a changed and challenging business landscape. Some businesses used it to develop a new on-line presence, others to change the focus of their production, or to target a different market.
As part of the package, $10 million is being provided for mental health and wellbeing support to small businesses. This will be delivered through a programme to be designed in conjunction with the EMA and Auckland Business Chamber of Commerce.
A couple of other announcements to mention today.
We know that COVID-19 restrictions are having an impact on low-income households, so we are making it easier for people to get assistance.
Currently a single person working 30 hours per week on the minimum wage is not eligible for hardship assistance from Work and Income. Minister Sepuloni is announcing today that from the 1st of Novmber we’re lifting the income limits for assistance to 40 hours at the minimum wage, or $800 per week and $1600 per week for a couple with or without children.
This is estimated to mean that 25,000 more grants will be made to low income workers over the next four months. Cabinet has committed to reviewing the use of this assistance and we may extend it as needed.
We are also developing further supports for individuals and families experiencing hardship as a result of the Delta outbreak, which I will be discussing with Cabinet in the next few weeks.
Cabinet has also approved a significant package to help lift Māori vaccination and support Māori community response to Delta, which Minister Henare will outline shortly.
Just before I finish I will turn to the assistance that will be provided under the new framework.
Cabinet has made in-principle decisions on financial supports which will become available when the new framework takes effect. I will be taking a paper to Cabinet in November confirming the details of that support, and any other outstanding decisions relating to the transition, but I will provide an overview of how that will look now.
Firstly, a transition grant will be made available to support particularly Auckland businesses when they move into the new framework. The grant will be based on similar criteria to the Resurgence Support Payment.
Once the framework is fully operational across New Zealand this will be the time to replace the current support schemes with something that will better reflect the new framework.
I will be proposing to Ministers financial support that targets the most affected businesses, for when areas of the country are in RED.
One of the issues that we are working through is what to do in terms of businesses who decide not to be part of the vaccine certificate regime. If we used the current settings based on revenue drops we may well end up supporting them, but not those who are using certificates. It is my personal preference that any payment will not be made available to those businesses that should be operating a vaccine certificate regime but choose not to, however this requires further work to be operational.
Across the board support will not be provided for areas designated as ORANGE or GREEN, because at these levels businesses will be able to operate as normal, with some requiring vaccine certificates to do so.
We are also seeking further advice on what support could be made available in the event of local lockdowns.
Throughout there will also continue to be ongoing support for people to isolate as a result of being exposed to COVID or being tested regardless of where the people affected are located.
As we have done consistently over the last twenty months we will continue to listen carefully to businesses and the wider community about the impact of Delta, and we will evolve and change our responses as required.
Delta has tested us and I know we have asked a lot of people as we have fought this outbreak. I thank you all for the sacrifices you have made while we get people vaccinated.
We are almost there, so as I have said many times before – please get vaccinated.
And if you are vaccinated, then please talk to anyone you know who is not and explain to them that we all need them to step up.
Tell them it’s to protect our most vulnerable and help us get back to a normal way of life as quickly as we can.