Auckland, March 23, 2020
In an unprecedented move, last week, the Government announced a $12.1 billion package to combat the economic impact of Covid-19.
There are lifeboats for some and lifejackets for others.
The lifeboats go to key businesses like Air New Zealand, and many employers that will receive wage subsidies. Beneficiaries and over-65s get a lifejacket with higher benefit levels and a doubling of their winter payments.
Alongside this, DHBs see an increase in healthcare funding and there are some special assistance for the redeployment of workers. All together, the lifeboats, lifejackets and other assistance come to roughly equivalent of 4% of GDP.
The bad news is that even this will not be enough to offset job losses and business failure.
The other bad news is that many employers won’t meet the bar set for assistance.
Insufficient wage subsidy
Many large employers for example will find the wage subsidy not sufficient for the size of their workforce, meaning many of their workers won’t fit in the lifeboats.
Other small or medium sized employers might not meet the 30% decline in revenue criteria and thus be excluded. It would be a bitter pill to swallow if you are 29% below your normal revenue and still facing a wage bill you can’t afford.
And perhaps the biggest exclusion are for those working in a charity or nonprofit.
Despite the enormous size of the nonprofit sector and the vital role many nonprofits play in providing assistance to the most vulnerable New Zealanders, there doesn’t appear to be a lifeboat for any of these organisations.
Social service vital
New Zealand society has been increasingly relying on many not-for-profits to provide much needed social service assistance to the most vulnerable in ways that central government never could.
These organisations don’t require an online appointment two weeks in advance to be seen.
They also don’t require you to have three different forms proving where you live.
Community based social services exist to provide a lot of help in troubled times and these are troubled times. In the coming months, it is likely that many of these organisations will find themselves squeezed by a spike in requests for help from those laid off while at the same time facing a drop off in donations and funding as donors themselves face the new economic reality.
There are also other not-for-profits, like those working in the arts, who are heavily exposed when the border closes. With no access to international markets via trade fairs, the ability to tour or host music groups their funding sources disappear. Unfortunately their wage bills and costs do not. As it stands these organisations are ignored by Government plans, almost as if they don’t employ people.
Treasury needs to consider widening the lifeboat criteria to include nonprofit organisations. There needs to be some acknowledgment of the vital role many of these organisations play in supporting society, and the huge number of people they employ. It would be a shame if they were deemed too small to save.
Julian Wood is a Researcher at the Auckland based Maxim Institute.