Employers can apply for a support payment worth $4,000
New Zealand has announced a new targeted COVID-19 Support Payment for businesses that have been hit hard by the spread of the Omicron variant. Starting February 28, employers may apply for a support payment worth $4,000 per business, with an additional $400 per full-time employee, capped at full-time equivalent or $24,000. Payment will start on March 1, with three payments across six weeks, according to Finance Minister Grant Robertson.
The government, however, placed a higher threshold for revenue loss in order to qualify for the programme - a move which seeks to filter the recipients to just those that have been hit the hardest by the Omicron variant and related restrictions.
"Firms must show a 40% drop in seven consecutive days within the six weeks prior to the shift to Phase 2 of the Omicron response on February 15, compared to seven days after that date," Robertson said.
The necessity of the support payment came after several sectors, including hospitality and events, saw a "significant drop-off in business," according to the minister.
"There are a range of reasons for this, but it is clear that the impact is putting a number of viable businesses at risk of not being able to operate," Robertson said in a statement.
Meanwhile, Revenue Minister David Parker said the government is introducing a "top up" loan to increase the amount of funding available to businesses under the Small Business Cashflow Loans Scheme.
"The top up loan will allow those firms that have already accessed a loan to draw down an additional $10,000 with a new repayment period of five years and the first two years being interest free," Parker explained in a statement.
"Cabinet has also agreed to remove the first two years of accrued base interest from all borrowers who have, or will, take out a loan under the scheme. This change will mean interest will only start accruing at the beginning of year three," he added.
In addition, Parker said the government is also extending the Commissioner of Inland Revenue's ability to apply flexibility for tax payment dates to help firms.
Read more: New Zealand unveils three-step Omicron plan
'Not enough'
Amid the new financial support schemes from the government, Hospitality NZ doubted that it could help save most venues and accommodation providers from shutting down.
"Right now, I have to say it looks like it will not be enough. Many will now close, or at best hibernate. Either way, it means job losses," Hospitality NZ chief executive Julie White said in a statement.
"Many have exhausted all sources of private funds. Today they have certainty about the government's contribution. They can make their calculations and decide whether to continue," she added.
White pointed out the 40% revenue drop requirement for the COVID-19 Support Payment, noting that a lot of businesses were already seeing low revenue during January and never experienced a "significant upturn in revenue" after last year's lockdown.
There are about 21,000 hospitality venues available in New Zealand, and a survey last week revealed that half of them will not survive longer than three months, according to Hospitality NZ.
