Auckland, May 26, 2020
New Zealand citizens and permanent residents losing jobs because of the economic downturn caused by Covid-19 can expect financial relief from the government.
People who were in full-time employment will be entitled to tax-free payment of $490 per week for 12 weeks from June 8, 2020.
Those who were in part-time jobs will receive $250 per week for 12 weeks.
Estimated to cost $570 million to the national exchequer, the Scheme incorporates $1.2 billion of payments offset by $635 million of Saved Benefit Payments, with small administrative costs.
Finance Minister Grant Robertson said that the initiative symbolises additional support for New Zealanders affected by what he called, ‘1-in-100 year Global Economic Shock.’
He said that it was time to have in place an Employment Insurance Scheme to support businesses and employees as New Zealand rebuilds the economy during the post-Covid-19 era.
He said the forthcoming payments will help New Zealanders to find new jobs or re-train.
“The Government’s priority is making sure people are in work and able to find new work if their job has been impacted by Covid. That is why we made $1.6 billion investment in the Budget to help people re-train. The Budget also invested to create practical jobs for New Zealanders through environmental work, construction and infrastructure. This payment will help Kiwis as they make these transitions,” he said.
Reiterating his earlier warning that the government will not be able to ‘save every job and every business,’ Mr Robertson said that a global economic crisis is at hand and that it may get worse.
The government is investing to cushion the blow on households and businesses to make sure that the economy is in the best position to respond, recover and rebuild, he said.
Mr Robertson said that the ‘Covid-19 Income Relief Payment’ is similar to the ‘Job Loss Cover Payment’ introduced by the National-led government following the Canterbury Earthquakes in February 2011 and to the ‘Restart Package’ for people who lost their jobs during the Global Financial Crisis 2008 and 2009.
“We know that these schemes reduced the impact on people who lost their jobs due to those shocks. They show how important it is for people to have a safety net to support themselves and their families as they look for new work or retrain,” he said.
Mr Robertson said that the idea of Unemployment Insurance was mooted by BusinessNZ and the Council of Trade Unions and that the ‘Future of Work Ministers Group’ has commissioned the work with various ministries and agencies.
“As we move from the respond and recover phases of our Covid response, and towards rebuilding the economy, we have an opportunity to reset some of the foundations of the safety net for working New Zealanders. Around the world, there are many examples of countries that created strong systems to cushion the blow of job loss through both income protection and retraining. These schemes ensure workers do not suffer large income drops if they are made redundant through no fault of their own, and save on redundancy costs for businesses going through restructuring,” he said.
Bolstering employment support
Social Development Minister Carmel Sepuloni said that New Zealand is in a better position than many other countries because of early action.
“We went hard and early to put support in place through the Wage Subsidy Scheme. Internationally, countries are facing increased unemployment due to Covid-19 and New Zealand is not immune. As a response to this, the Ministry of Social Development will not only be delivering the Covid-19 Income Relief Payment but also significantly bolstered employment support. People with partners, who are still working, may be eligible for this payment, as long as their partner is earning under $2000 per week,” she said.
Receipt of the payment comes with expectations from the Government, and responsibilities. People who receive the Covid payment will be required to (a) Be available for, and actively seeking, suitable work opportunities while they receive the payment (b) Take appropriate steps towards gaining new employment; and (c) Identify and take opportunities for employment, re-deployment and training.
Students – New Zealand citizens or permanent residents – who have lost part-time work as a result of Covid-19 may also be eligible for the part-time rate.
This fits with the Government’s intention for COVID response spending to be targeted, temporary and timely. It will be funded from the COVID Response and Recovery Fund.
Strong balance sheet
Mr Robertson said that New Zealand is in a good position to use the government’s strong balance sheet to invest to create jobs and support the private sector to cushion the blow of Covid-19 on households and businesses.
“International Credit Ratings Agency Moody’s reaffirmed our world-leading AAA rating. Moody’s said the investments made in the Budget were affordable and that New Zealand would continue to have some of the lowest debt and interest costs in the developed world due to our careful management of the Government books. We are now taking the next step in our plan to respond, recover and rebuild the economy,” Mr Robertson said.