After months of ongoing bungles at isolation centres, the inevitable occurred, and Covid-19 is back in the community and Auckland is back in Level 3 lockdown. The travel restrictions on Aucklanders are going to be particularly hard on the tourism sector across the country and the hospitality sector in and around Auckland.

In reaction to the outbreak, and Auckland moving to Level 3, the Government announced extensions to existing support schemes.
At least in the meantime, the following support measures have been announced:

  • the household mortgage deferral scheme will be extended; and
  • a modified COVID-19 Sick Leave Scheme will be put into place; and
  • a further extension to the Wage Subsidy scheme.

The details for those support packages have just been announced.

Mortgage deferral extension

The existing mortgage deferral scheme will be extended until March.

New wage subsidy scheme

Despite the latest outbreak, and the Level 3 Lockdown being limited to Auckland, the new wage subsidy will extend to the entire country. The reasoning for this is that the lockdown of Auckland impacts businesses outside of Auckland because of disrupted supply chains, and because of the
impact of Auckland customers. Further, Level 2 impacts hospitality and retail.

The new scheme will be for 2 weeks at the same rate of the prior wage subsidy schemes ($585.50 per employee for those working 20 hours or more, or $350 for those employees who ordinarily work
less than 20 hours). Businesses will qualify if that have had or predicting 40% drop in turnover for a period of 14 days within the period 12 August to 10 September when compared against a comparable 14-day period.
Applications will commence by the end of the week.

New leave subsidy

The modified sick leave scheme will be open for those required to self-isolate. It will be less restrictive than the old scheme as it will not require the employer’s turnover to be adversely impacted by COVID19. These are main reasons for this. One, the Government does not want peoples
fear of losing income to stop them getting tested. Secondly, the Government is conscious that many people will have exhausted their leave entitlements for the year already.

Applications will open by the end of the week.

Wage subsidy extension remains open

It is important to remember, the existing wage subsidy extension remains open until 11:59pm 1 September, so the disruption caused by this outbreak may mean that some employers who had been tracking quite well will now suffer the required 40% turnover drop in August and meet the criteria for the existing Wage Subsidy Extension.

The new scheme could not be applied for at the time the wage subsidy extension is being applied for. Obviously, the 8-week Wage Subsidy Extension would be favourable over the new 2-week subsidy.

Moving forward

Today’s announcements are short-term measures for what is hoped to be a short-term problem. Hopefully, the resurgence of the virus has been caught early enough that it is contained to the one cluster and Auckland will be able to move back to Level 2 on or about the 27th of August.

Recognising that there could be further outbreaks, officials have also been asked to investigate:

  • Longer-term support scheme
  • Longer-term leave scheme.

A lesson to take from this is that we are in for the long haul, and there will be speed bumps along the road. So, if own or manage a business that could be affected by Level 3 lockdowns, and you don’t already have a business continuity plan, we’d strongly suggest that work on that sooner rather
than later.