New Report: Government’s Current Wage Subsidy Scheme May Insufficiently Protect Kiwis

Published: Tue 7 Apr 2020 01:21 PM
Wellington, 7 April - The Government’s current wage subsidy scheme may insufficiently protect Kiwis from the worst effects of the Covid-19 crisis, according to a new report from the New Zealand Initiative.
Comparing New Zealand with Australia and Canada, the report Relief measures: comparing Covid-19 wage subsidy schemes by Dr David Law shows significant differences between the three in the construction of wage subsidy schemes.
Workers in New Zealand can receive up to 60% of the median wage over 12 weeks. Initially the total possible amount of funds for each stricken company was capped at $150,000, but that ceiling has since been removed.
The Government projects the scheme will cost between $8-12 billion, depending on how many firms and employees sign up.
In Canada, wage subsidies for companies of all sizes cover up to 75% of a worker’s wage, or 80% of the average Canadian weekly wage of $C1050 ($1255). The subsidies are also backdated to March 15 and will apply for three months.
While the Canadian Government is in parallel going to create a verification system to catch anyone trying to take advantage of the scheme, it expects the scheme will cost about $C72 billion ($86.06b).
The Australian Government has also introduced its own version of the scheme, called “JobKeeper payment,” which equates to about 70% of the median wage lasting for six months beginning on March 30.
Crucially, this sum constitutes about 100% of the median wage in the sectors most hurt by the pandemic such as tourism. It is expected to cost the Australian taxpayer $A130 billion ($133.5b).
“In this crisis, well-designed wage subsidy schemes are an important tool to minimise the economic consequences of the Covid-19 outbreak,” said Dr Law.
However, New Zealand’s assistance package lags both Australia and Canada’s schemes and he shows that it can boost its present scheme to match, or closely align with, their relief packages.
“New Zealand could be more flexible and generous in its wage subsidies, especially now that better information about how other countries are proceeding is available,” Dr Law said.
Read more:
Relief measures: comparing Covid-19 wage subsidy schemes is available here.

Next in New Zealand politics

David Clark resigns as Health Minister
By: New Zealand Government
Green Party Proposes Transformational Poverty Action Plan
By: Green Party
New protection for dolphins
By: New Zealand Government
Auckland water consent referred to Board of Inquiry
By: New Zealand Government
A New Firearms System Focused On Safety
By: New Zealand Government
Building a stronger health and disability system
By: New Zealand Government
Todd Muller Announces Caucus Reshuffle
By: New Zealand National Party
Winston Peters on EU travel: 'We're not going to compromise our country's health'
Infrastructure Investment To Create Jobs, Kick-start COVID Rebuild
By: New Zealand Government
Government Strengthens Managed Isolation System
By: New Zealand Government
ACT Announces List For 2020 General Election
By: ACT New Zealand
New Zealand To Host Virtual APEC In 2021
By: New Zealand Government
Clark’s Resignation Was Too Little, Too Late
By: New Zealand National Party
Taxpayer Victory! David Clark Resigns
By: New Zealand Taxpayers' Union
PM Jacinda Ardern on David Clark's resignation as Health Minister: 'It is one I agree with'
View as: DESKTOP | MOBILE © Scoop Media