Covid Delta outbreak: Wage subsidy criteria harder to meet for those under level 2 restrictions

Businesses outside of Auckland are finding it harder to meet the criteria to access the latest round of the wage subsidy, even if they are experiencing a significant drop in revenue.

The third tranche of the August 2021 wage subsidy opened for applications on Friday andcloses at 11.59pm on September 30.

But those who apply for this round must declare that they have had or are forecasting at least a 40 per cent decline in revenue that is “attributable to the effect of the continuation of alert levels 3 or 4 from 17 August 2021”.

Leeann Watson, chief executive of the Canterbury Employers’ Chamber of Commerce, said proving the revenue drop was linked to Auckland’s alert level was challenging.

“It was challenging before we had a drop in restrictions [on Monday] as well.”

Under Delta level 2 restrictions businesses had a 50 person cap for inside venues. That was increased to 100 on Monday.

Watson said one of the things it had been talking to Government about was understanding that with the Delta level 2 restrictions, particularly the reduction from 100 people down to 50 – was quite a big shift from last year’s alert level 2 and it had come out of the blue.

“That in itself has caused a significant reduction in revenue. That is not necessarily tied to Auckland being in lockdown and so that has been a point of discussion we have raised with Government to say actually there are these issues. You can draw a link back to [Auckland] in some situations but that one is proving to be quite challenging.”

She said another one that it had had a lot of feedback from businesses on was supply chain issues.

“If businesses are not able to get the stock they need to sell then that has an impact on their revenue.” Although she said that was easier to draw back to Auckland being in alert level 4.

Watson said some businesses had had to make the tough decision on whether it was even viable for them to open with those tighter restrictions.

While lifting of the restriction to 100 people was useful it would not help all businesses.

She said one event management company she had spoken to could not operate in level 2 because of the restrictions.

“The restrictions themselves have created quite a big impact and those things haven’t necessarily been taken into account in terms of the criteria for the wage subsidy.”

Watson said the Government was saying it would look at the issues. “I hope that will happen … we need them to look at it pretty quickly.”

Last week Hospitality NZ chief executive Julie White described the new condition on the wage subsidy criteria as cruel and heartbreaking.

“The current Covid levels have suppressed all hospitality revenue, everywhere. Few people are going out, and the 50-person venue cap forces almost every open business to run at a loss.

“The difference between Level 4 and 2.5 is only the size of the loss. That wage subsidy is as desperately needed outside of Auckland as in it.”

White said bureaucrats would want very specific evidence about the effect of lost Auckland customers.

Some accommodation businesses could comply, but restaurants and cafes could not.

She said the effect of Auckland’s lockdown was clear as they were not going anywhere, and were even cancelling bookings through to Christmas.

“There is no bounce back this time. Everyone is holding on to their wallets.”

Robyn Walker, a tax partner at Deloitte, said the key issue for businesses outside Auckland was establishing why the 40 per cent revenue drop had occurred.

Walker said businesses should consider who their normal customer base was and if they had any evidence to support what proportion of their customers were ordinarily from Auckland.

“If a business spans different parts of New Zealand, can revenue be isolated between locations to determine what proportion of the revenue decline relates to the Auckland branch or division?”

Walker said businesses should also consider whether parts of their supply chain were contingent on goods moving to or from Auckland.

“Have your sales been reduced because of an inability to obtain non-essential goods out of Auckland?”

She said businesses could also consider whether fewer people may be buying their products online due to concerns over delivery time and whether the business may have been impacted by an inability of customers or employees to move across the Auckland border.

Walker said it was critical to ensure that evidence was collated to support that the wage subsidy claim is connected to Auckland’s alert-level status.

“The approach to take will differ by business, as there may be a myriad of reasons why revenue is down, and it may be difficult to establish a direct connection between revenue impact and alert level 3 or 4.”

Louise Upston, National’s spokeswoman for social development and employment, said she was receiving reports of confusion about whether businesses were entitled to the wage-subsidy at alert level 2.

She called for the Government to urgently improve the scheme.

“Government MPs have sent mixed messages about whether firms are eligible for the wage subsidy at alert level 2.

“On the one hand Labour MP Ginny Anderson made a deliberate public broadcast in Parliament last week to say all businesses in regions at alert level 2 were eligible to receive the wage subsidy.

“Ms Anderson’s remarks were not caveated by any statement about the need to connect the revenue drop to regions at alert level 3 or 4.

“Whereas finance minister Grant Robertson has clearly caught some businesses unaware by stating the revenue drop has to be directly connected to Auckland being at level 3 or 4.”

Upston said National had also received reports of Government departments providing different advice on this issue.

“This is yet another botch-up about the wage subsidy scheme at a time when Kiwi businesses and their employees are under stress.”

Walker said businesses outside of Auckland who may now struggle to meet the wage subsidy criteria could still apply for Resurgence Support Payments, for the Leave Support Scheme and Short-Term Absence Payment if they meet the eligibility criteria.

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