People who have lost their jobs due to the COVID-19 crisis will soon be able to apply for a 12-week government payment that could put more money in their pockets than if they went on Jobseeker Support.
Those who became unemployed between March 1 and October 30, 2020 may be eligible for a new COVID Income Relief Payment.
People who lost full-time work will receive a weekly payment of $490, while those who lost part-time work will receive $250.
To put these figures in context, single people over the age of 25 on Jobseeker Support receive $250.74 a week. Couples with children receive $428.06, meaning those who lose part-time work might be better off on Jobseeker Support.
The payment won’t be taxed, whereas Jobseeker Support payments are taxed.
People won’t be eligible if they have a partner who earns more than $2000 a week (gross).
People who receive redundancy payments of more than $30,000 won’t be eligible either, nor will those who get income protection insurance payments or earnings-related ACC payments.
Recipients need to be able to show they're actively seeking work/training opportunities.
Applications open on June 8 and close on November 13.
Those already on main benefits will be able to apply to receive the COVID Income Relief Payment instead.
However the payment won't be paid retrospectively. So someone who's been on Jobseeker Support since March might be able to switch to the COVID payment from June 8, but won't be able to get back paid the difference between Jobseeker Support and the COVID payment.
COVID payment recipients may be eligible to receive supplementary and hardship assistance from the Ministry of Social Development. The income payment will be treated as income when assessing entitlement to these supports, which include public housing and rent payment support.
Recipients must be New Zealand citizens or residents who normally work and live in New Zealand.
The scheme is forecast to cost about $570 million. This incorporates $1.2 billion of payments offset by $635 million of saved benefit payments, with small administrative costs.
Treasury estimates around 230,000 people could end up receiving the payment.
The number of people on Jobseeker Support increased by 30%, or 43,426 people, in the two months to May 15.
See this sheet for more information on the COVID Income Relief Payment.
Here's a press release from the Government:
The Government today announced a new temporary payment to support New Zealanders who lose their jobs due to the global COVID-19 pandemic to adjust and find new employment or retrain
A new COVID Income Relief Payment is being introduced, alongside a wider work programme on possible future employment insurance as we rebuild our economy in a way that supports workers and businesses together.
The payment will be available for 12 weeks from 8 June for anyone who has lost their job due to the impact of COVID-19 since March 1. It will pay $490 a week to those who lost full-time work and $250 for part-time. The payment will not be taxed.
Finance Minister Grant Robertson said the payment acknowledges that the global economy is facing a 1-in-100 year recession, which is impacting on New Zealand, and supports the Governments priority of protecting jobs where possible and supporting workers back into jobs where necessary.
“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’s why we made a $1.6 billion investment in the Budget to help people retrain. 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.
“We’ve always acknowledged that we won’t be able to save every job or every business and we have not hidden the fact that this is a global economic crisis and things are likely to get worse. But the Government is investing to cushion the blow on households and businesses to make sure we’re in the best position to respond, recover and rebuild,” Grant Robertson said.
The scheme announced today is very similar to the Job Loss Cover payment introduced by the previous Government during the Canterbury earthquakes, and has a number of similarities to the ReStart package for workers who lost their jobs in the Global Financial Crisis.
“We know 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,” Grant Robertson said.
Grant Robertson confirmed that work is underway on the possibility of a more permanent unemployment insurance scheme in New Zealand. The Future of Work Ministers group has commissioned the work following a request from Business New Zealand and the Council of Trade Unions.
“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 don’t suffer large income drops if they’re made redundant through no fault of their own, and save on redundancy costs for businesses going through restructuring.”
Social Development Minister Carmel Sepuloni said today’s announcement of extra support for those hit hard by redundancy will help cushion the blow for people who are looking for work, or taking the time to retrain.
“New Zealand is in a better position than many because we went hard and early to put support in place through the wage subsidy. Internationally countries are facing increased unemployment due to COVID19 and NZ is not immune. As a response to this MSD will not only be delivering the COVID-19 income relief payment but have 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.
Receipt of the payment comes with expectations from the Government, and responsibilities. People who receive the COVID payment will be required to:
· Be available for, and actively seeking, suitable work opportunities while they receive the payment
· Take appropriate steps towards gaining new employment; and
· Identify and take opportunities for employment, re-deployment and training.
Students who have lost part-time work as a result of COVID-19 may also be eligible for the part-time rate.
The 12-week scheme is forecast to cost about $570 million. This incorporates $1.2 billion of payments offset by $635 million of saved benefit payments, with small administrative costs. 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.
“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 as we cushion the blow of COVID-19 on households and businesses,” Grant Robertson said.
“Last week, 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 went hard and early with support to cushion the blow of COVID-19 on workers and the economy, through the wage subsidy, business tax refunds and interest-free loans for small businesses. Now we’re taking the next step in our plan to respond, recover and rebuild the economy,” Grant Robertson said.
112 Comments
Am I wrong in assuming that income protection insurance is essentially unavailable at the moment? Either explicitly unavailable, or effectively so through prohibitive pricing.
Also, though I'm not an expert, I'd hazard a guess that even existing policies won't pay out for covid-induced damage.
The Press release today also highlighted Govt was looking at an "Unemployment Insurance" scheme for the future as well. Very American thinking if they do-been going 80 years there. US Employers required to pay a percent of payroll each qtr to each state's Uninsurance Fund. 1% of payroll to up to 8% payroll (if employer's experience rating is high)-but only up to certain annual limit. Result is laid off person receives healthy insurance payment-even if the partner is on a healthy wage/income. So they are not on the dole. Fund is replenished by Employers. Called a Payroll Tax--just like Social Security retirement beneifts-paid for by employer and employee combined-not Uncle Sam.
It's hardly insurance if it's compulsory and universal. As you say, that's a payroll tax. The point of insurance is that it's voluntary. If I consider myself in stable and secure employment, perhaps with good savings, taking out income protection insurance would likely be folly. Otherwise, it's quite rational, unless the premium is priced so high that it's not. Unfortunately that tends to make it expensive, since those seeking insurance are therefore likely to be higher risk (adverse selection). But that in itself is an important signal: get yourself in a good position to not need insurance, and you're likely to be doing society a favour.
If anything, I see rent prices supported by the move. Most job losses before this would have resulted in the person receiving jobseekers support at $250, as opposed to $490.
Remember, Auckland isn't NZ. $490 is quite a reasonable rent in in most areas, and multiple people per house can receive the grant at once.
No consequence the 12 week period coincides with the election.
Have to keep the masses happy at least until one get reelected. The hard decisions are yet to come, when the realization darns on government they cant keep propping up the economy, in the hope there'll be a mass reemployment in a short space of time.
While covid may have brought this on sooner, the reality is the banksters have maxed the general population out on credit so time ago; and unless deposit holders are prepared to accept no or negative returns, its going to take a big correction in asset prices and an extended period to recover from this situation.
Then recipients would be moved to the job seekers benefit if work has not been found. Resulting in downward pressure on rents.
Almost any measure -- whether it be masqueraded as stimulus or 'relief' -- that gives people cash in hand, will have upward pressure on rents.
I didn't mention mid to high income earners at all, nor did I conflate job loses with rent rises. It's simple, 490 is greater than 250. If not upward pressure, what is it?
I THINK no one should be afforded a higher unemployment rate because their lifestyle demands it. If you are jobless, you aren't a low, mid, or high income earner (in the traditional sense at least).
You're only eligible for the $490 rate if you lost your job after 1st March 2020 so most people in that category would not be going from $250 to $490, they'd be going from $SALARY to $0 (because they were not eligible for jobseeker) to $490. Because $490 is highly likely to be less than $SALARY, this won't be putting upward pressure on rents.
You are missing my point completely. This 'relief' measure will give more people more money than they would otherwise get if it were not introduced. As you pointed out, some would not usually be eligible for the jobseekers benefit, and some will be getting more than they would have if the $250 benefit was still the only option in place.
Follow me? It requires money to pay rent. More money increases your ability to pay your rent. I am not saying it will increase rent, but it will slow the rate of decrease that would have otherwise occurred.
Hopefully many businesses that employ people will contract instead of close because people in the community still have money available to spend, meaning employment stays higher than it otherwise would have and the overall recession is not as bad.
A lot of families right now who lose 1 working partner go down to $0 income from that partner because they aren't eligible for jobseeker benefit. Being paid $490/week would be a huge difference in such a situation.
If you are in a cohabiting relationship and one of you loses your job. No jobseeker payment for you. But now we have special middle-class unemployment insurance. Partner income limit $104,000 gross. Welfare payment $30000 per year gross equivalent. Advise would be if your partner is making say 110k. Get them to ask for a 3 month temporary 4 day week (due to COVID) Take the 20k Gross temp pay cut. Pay way less tax (6600 on last 20K). Then get the 25k tax free top-up from uncle Grant. If your partner is self-employed they could engineer this in a snap.
I really think more clarity on the wage subsidy is required.
Recently I have encountered some people working in the tourism sector, receiving the subsidy. However, it sounds as if the employer is effectively pocketing it.
The run-down I got was that the employees were receiving the subsidy and are required to work when there is work. However, they only get any top-up from the subsidy once they earn over the subsidy threshold (they operate on a pseudo-contracting/commission basis). My thinking is that they should be getting the wage subsidy regardless and receiving their normal compensation on top of that.
Perhaps someone smarter than I can comment.
The economist in me knows that this effectively passes the entire subsidy to the employer, not the employee. However, I don't understand whether this is a legit loophole or not..
I thought it clearly stated you can't sack anyone on a subsidy.
"My thinking is that they should be getting the wage subsidy regardless and receiving their normal compensation on top of that."
That was my understanding as well, although complex payment/commission schemes must complicate things. But just ring and ask.
Once the government decided they would collect tax on the payment it meant the payment would go through employers.
https://www.employment.govt.nz/leave-and-holidays/other-types-of-leave/…
Says this:
To be eligible for the wage subsidy businesses must declare that they:
will pay named employees, at a minimum:
* for any work they do at their normal rates
* at least 80% of income where reasonably possible (for employees working reduced hours while self-isolating)
* the full subsidy received for each named employee, except where a person’s income is normally less than the subsidy amount, in which case they can be paid their normal salary.
So my reading of that is that any work done should be paid at normal rate, and they should receive the subsidy on top.
I pay the full MSD subsidy to my staff. One of my part-time cleaners gets the $350 subsidy by she refused to work until level 2 because she said she was concerned getting CV. She has 3 kids and gets a benefit of $900/week, add the $350 MSD = $1'250/ week for not working, not bad...
Yes, I've worked for beneficiary advocacy and can confirm this is correct. A single parent with two children can easily afford $500/ week rent plus all living costs all paid via a benefit. If living in their own home, WINZ will pay the mortgage payments for beneficiaries. Accommodation supplement, temporary additional support, emergency extensions, medical allowances... plenty for those who can demonstrate need.
There is something uncomfortable about this.
We have had a fairly tight unemployment regime for years, but as soon as middle class citizens are effected the rules are changed because they are somehow different to people at the bottom of the economic pile and cannot be treated the same way. As ham'n eggs says above we almost are displaying a caste system.
I broadly agree, however I'm hoping that this is a stepping stone to making main benefits individually tested after the election. I believe that policy is supposed to cost about $5B per year.
They wouldn't reasonably be able to make such a change now - even doing it for a fixed period of time would be a bit odd for people who have long-term been on benefits anyway regardless of COVID-19, if it's supposed to be a COVID-19 response.
Yes, they should have just dropped the abatement/means-test for partner income for all unemployed. Much more equitable and something that should have been done ages ago anyway. And to be even better/more equitable - raise all unemployment benefits to the level of a single superannuitant.
My biggest concern is that it will lead to a generation of people who think they survived on the (un-taxed, non-means tested, 200% equivalent of the) benefit just fine, thank you very much, so there is no reason lazy beneficiaries can't.
Having a decent safety net in place lets people take risks, and in a small country like NZ, that's exactly what we need. Ideally, we should be looking to copy the Danish approach: flexible businesses that can hire and fire at will, and support for entrepreneurs who are willing to take a gamble on the next big idea - all backed up by a safety net that means a hiccup doesn't equate to losing the roof over your head.
I too, broadly agree. Having been a beneficiary I can honestly say it was one of the most soul-destroying experiences to encounter a govt dept that only wanted me off their books without any consideration or support as to my skills or what I could offer. To be so dependant on people who had so little regard for me they talked in my presence about me as if I wasn't there, to be progresively penalised for having a low paying job, and a constant invasion of my personal relationship status.. yes all of this is not something I would wish on anybody.
But depite my qualms about what appears to be a lack of fairness now that more middleclass voters are experiencing what other more disenfranchised sectors of the public have experienced for 20 years, I'd rather see this vehicle change the conversation. Anything is better than those tired old cliches of beneficiary bashing. Just try living on the dole. It's damn hard. Sure, if you meet the right conditions (already own your own house etc), then you can temporarily tap into more income than most. But before Covid, the percentage of beneficiaries who owned their own home? Ha. Not many.
yeah that's just for this quarter..then be another 20 etc etc etc..how long can we maintain this. People want hope that there are going to be new jobs, hope they can be productive. This is like telling them sorry no hope and here's some $ to help with the pain good luck.
Rip the plaster off, squeeze the puss out, and redress the wound. Couldn't be a better metaphor on what to do next, yet they are paying for votes with this sort of action. Unfortunately COVID-19 came in an election year meaning the Govt has no plan but to keep people happy until September. We need to re-purpose thousands of people into new jobs because in a post-COVID world, their old jobs may not ever come back - particularly in tourism. The sooner we do this, the better.
Nah nah, mass immigration is the saviour of our economy mate. Has been for years. Skills? No skills? Doesn't matter, come to NZ, rent a room in an apartment, work 20 hours a week at minimum wage, wait 2 years and you're a resident! Then you get free healthcare, free education and so on. What a deal!
If the government wants to help unemployed people, then the best thing that they can do is to increase the availability of Jobs. One of the quickest and most certain ways to do this is to get as many of the 200,000 temporary work Visa people back to their home countries (As kindly but firmly as possible) How many young back packers are still here taking work in the black economy? (TVNZ this evening answered this question, 150,000. The majority of those interviewed said that they were working in one way or another. How much tax is being paid). These folks need to go home. Similarly illegal immigrants?
When asked about the slumping business confidence of business owners in 2018, Jacinda Ardern said, “What I'm interested in is employee confidence, I'm interested in consumer confidence .. “
The main job creation zone will probably be low paid government jobs. NZ Rail all over again.
Whatever the question, mass immigration seems to be the solution. That and housing is what props up our economy mate. Has been for years. Skills? No skills? Doesn't matter, come to NZ, rent a room in an apartment, work 20 hours a week at minimum wage, wait 2 years and you're a resident! Then you get free healthcare, free education and so on. What a deal!
One of the things I don't like about the unemployment benefit is the stand down and the kibosh on savings. You have to wait until you become entirely dependent on the government before you can get it. There should be a threshold of at least $5k savings so people can afford to move house and come up with a bond for rentals out of their savings. Otherwise the government ends up paying for it anyway and it actually increases the chance people who lose their jobs out of this become benefit dependent.
The free money continues.
The blaming everything on the virus continues.
The rock star was bull dust, but ‘back to normal’ remains the lie (when debt is already maxed).
Those who called it were ridiculed as gloomsters.
Realists more like it.
I feel like I’m being robbed ....and the robbers are the state.
Oh.. so their strategy to help us through this, is not job creation or maintaining as many jobs as we can, it is ambulance at the bottom of the cliff strategy. Maybe if they put some details out on how they are going to create the 11k green jobs, the re build jobs etc etc..business would try and hold off, rather than making huge redundancies..but nothing.
Nice Strategy Labour.
We can't have that unemployment rate hitting 15% until the election is done and dusted can we?
Keep people off the Jobseeker benefit to ensure that the economic impacts of your actions are nicely hidden from the electorate for another 12 weeks - just long enough for the data to be released after the election.
And for good measure, no Regulatory Impact Statement on spending until the election either, so no pesky analysis on spending quality. Who said that COVID was not political?
Given the wage subsidy is transparent for the businesses that have applied for it, and how much they received, are you seriously suggesting that this new scheme will be a total black hole about which no data is revealed at all?
They'll either be proactively providing the figures of how many people are in receipt of it, or the opposition will demand such numbers.
If anything this will allow us to have a much better understanding of the impact on the economy, because the restrictions against receiving the money are much less than those for the jobseeker benefit, and it's also a much larger sum of money than what the jobseeker benefit provides so people will have an incentive to chase it.
Hang on one second. Lets look at this policy.
Just about every company that could fill in a simple form got given 12 weeks of wage subsidy per employee. They were meant to pass this on, but we all know what is really happening.
One of the conditions was that you cannot terminate an employee recieving the subsidy.
So who exactly will qualify for this payment? or is this the Govt's poor attempt at fixing the scam so that at least employees get something?
Yes.
Works well if Labour campaigns on making main benefits tied to the individual instead of assessing partners.
People will see "I'm getting $490/week right now which ends in October. If the current rules stay in place then once that runs out I'll only have jobseeker to fall back on, which due to my partner's income I'm ineligible for and will get $0. But if I vote for Labour, they'll change the rules and I'll be eligible to get $250/week".
Wow this is so easy to see through. Whenever I have lost my job in the past it was tough luck buddy, here you go try and survive on $200 a week and here is an extra $50 to pay your Mortgage !!!! They are trying to keep the ship afloat until the election because they know they will loose votes if it sinks. Blatent vote buying and its costing the future taxpayers Billions of dollars.
Before this mess, if you lost your job it was possible to get another one before too long. If you are dumped into the dole queue now it will be much harder to find work. I feel sorry for someone who lost their job pre-covid and has to survive on the standard dole while having a very poor chance of finding another one any time soon.
But it is clearly to fend off the worst until the election. National would do the same. You could argue it is politically acceptable targeted helicopter money to help prop the economy.
To me this was a missed opportunity to simply drop the current abatement system with respect to a partners income. In other words, to treat all individuals as individuals in relation to the unemployment benefit system. Given nearly every household is a two-income household at the moment - assessing a partners income is an antiquated idea.
There are downsides to that as well. Think about all the trophy wives / boytoys of rich men and women, living in 2+ million dollar houses doing nothing all day, while the husband hundreds of thousands a year. Should they get benefits?
There will never be a 100% fair system, although UBI or means-tested support could come close to it. The former is unaffordable, the latter is very complicated.
The possibility that genuinely wealthy individuals would register for a Jobseeker benefit is probably quite narrow. There are obligations when on the Jobseeker benefit - appointments you have to turn up to at WINZ; job vacancies you have to apply for; interviews you have to go to and so on.
So I think that particular downside would be negligible.
Exactly. This argument comes up all the time when discussing benefits, and is only ever made by people with no knowledge of how the benefit system works. As anyone who has ever dealt with WINZ will tell you, there is no way you would bother jumping through all their hoops for ~$300 a week unless you absolutely needed it.
And they needn't scrap it entirely, anyway. They could just make the first $150k earned by a partner exempt from the calculation. That would then exempt 98% of people, and probably 99.99% of people who are on a benefit long term, who are most penalised by the current system.
Don't know about that. We all had friends at university who came from very wealthy families yet received full student allowances. Creative accounting, "we're not technically making any money" etc.
There seem to be no worse folk at mooching than those who shout loudest their belief in capitalism / standing on one's own two feet. Rules for thee, not for me.
There is more to survival than rent! People losing their jobs will have food, school, essentials, we know insurance and utilities, are not in this together, they have kept rates and if you cant pay, bad luck. There is more to life than rent profits everyone! If the productive economy has any bearing on house prices then house prices and rents should retreat! the banks and the RBNZ are doing everything to keep house prices buoyant even in a cataclysmic economic downturn! So don't worry house investors!
The Government knows what not many have realized that this event is unlike prior redundancies. The partner who has been cabin crewing for Air NZ at $40k or so a year gets no Job Seeker benefit if her/his partner is still well employed. Tough to pay the mortgage with that type of a hit. With 10's of Thousands likely falling into this loophole the Government had to act. Right now they are out of work-on no benefit-and unreported in the stats.
That's subject I know well (for AirNZ international flights anyway). Cabin crew get paid a base salary close to minimum wage and then they get paid additional $ when they fly and an allowance when for the days spent overseas. The union is currently negotiating two packages, one for furlough the other for redundancies, if made redundant an employee gets a substantial payout dependant on the number of years worked at AirNZ. Also, in the future, we're likely to se a vast majority of "older" crew member because the employment contracts 15 years and older were much stronger (from the employee's perspective) than newer contracts, therefore AirNZ cannot terminate old contracts.
"...nor will those who get income protection insurance payments...." So income protection insurance, eh... what's the point of it if the government is just going to step in like that? At least make it additive, else you've just made an incentive for people to stop taking some additional responsibility for themselves.
The not-very-cheerful notion, which I don't see expressed in comments upthread yet on a quick scan, is that this is simply a prelude to a general raising of benefits across the board. The sequence which occurs to me runs something like this:
- Introduce a wildly discriminatory new benefit for a select group of potential Voters just before an Election.
- Wait for the inevitable cries from the existing beneficiaries: Injustice/Racism/Sexism/Colonialism/Ism-du-jour, and let these fester for a few weeks (as the Election draws ever nearer).
- Announce (with appropriate solemnity) a Welfare Review, modelled on that suggested by the working group - benefits raised between 12 and 47% IIRC - with effect from - drum roll and trumpet fanfare - September 1.
- Roll out lotsa Feelz, interviews, self-congratulations that we have Cut the Gordian Knot and downplay any heretical thought that we have actually enriched ourselves with our own munny - er - Debt
- Three More Years! Check.
What's not-very-cheerful about that? I'd be cheering from the rooftops if finally some government undid the despicable work of Ruth Richardson all those decades ago where our unemployment safety net was concerned. And by lifting base benefits we can reverse out all the other complicated transfers (i.e., A/S, WFF, emergency payments, etc.).
The only thing that isn't so cheerful is that it should have been done ages ago when the Working Group recommendations came out.
Kate, it's just that adding to a welfare net does zip to assist productivity, create jobs and all the other 'Rebuild buzzwords' that Paying for all that new welfare depends upon. To be sure, there may be less overhead in the sense of physical and mental health effects, but as we've seen, health and the caring services manage to absorb every cent of such savings in internal operations, and then cry out for More Munny anyway. And any welfare increase has to be paid for out of Tax or Debt - and the benefits of any such Cost tend to be very lagged: education being a classic example.
This isn't about the rebuild - it's about all of us not being satisfied to see so many of our sons, daughters, grandchildren and neighbours living below the poverty line;
https://www.stuff.co.nz/business/118778437/benefits-now-worth-less-than…
The unemployed are now 'us'.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.