Govt extends quake support packages for employers, employees by 2 weeks, announces tighter package to follow

Govt extends quake support packages for employers, employees by 2 weeks, announces tighter package to follow

The government will extend support subsidies for employers and employees affected by the February 22 Christchurch earthquake two weeks longer than first planned, then introduce a secondary package with tighter criteria. Together with the initial package, all assistance is expected to cost government NZ$260.6 million.

Prime Minister John Key and Social Development Minister Paula Bennett made the announcement this afternoon in the Beehive.

Government's initial support package for businesses and employees was announced at the end of February and was programmed to run six weeks. Initial estimates were it would cost NZ$120 million, but that is now expected to be NZ$170 million for the six weeks. The two week extension of the initial package, along with the secondary package, are expected to cost an additional NZ$96.6 million.

The secondary package will run for a maximum of six weeks from April 19 with stricter criteria than the first, which was largely a universal allowance excluding multi-nationals, companies with a nationwide presence and government departments.

Meanwhile Finance Minister Bill English and Revenue Minister Peter Dunne announced a tax support package for those in Christchurch affected by the quake. (See announcement below Key's announcement.)

New packages

Employer wage subsidy package:

The current Earthquake Support Subsidy (ESS) to help employers keep paying wages, will be extended for two weeks to 18 April, followed by a further six-week round with tighter criteria.

The next round will be available to employers who:

  • can’t operate because of physical barriers caused by the earthquake
  • can demonstrate ongoing viability to a business recovery co-ordinator
  • have already been receiving ESS round one

The next round will not be available to:

  • employers experiencing a loss of trade, or sole traders

Employee Job loss package:

The current Job Loss Cover for displaced employees will be extended by two weeks to April 18 then replaced with an Individual Support Payment.

“People who lost their jobs and have no option to stay with their original employer will get support as they look for alternative work,” says Ms Bennett.

The Job Loss Cover of $400 per week in the hand for full time workers or $250 in the hand for part time workers will continue until 18 April.

“When the Job Loss Cover finishes, if people haven’t found work they can re-apply for a benefit plus a special top-up payment,” says Ms Bennett.

This payment will provide a top-up payment to the benefit:

  • $50 for a single person
  • $80 for a couple without children
  • Plus $10 a week for each child, up to a maximum of $110 per week

See the release below from Key:

Prime Minister John Key today announced extended assistance for Christchurch businesses and workers following the initial Earthquake Support package launched last month.

Both the Earthquake Support Subsidy for employers and the Job Loss Cover for workers will be extended until 18 April, followed by a second round of assistance with tighter application criteria.

“The purpose of this initial package was to be a solid first step for Christchurch businesses and individuals on the road to rebuilding their lives and livelihoods,” says Mr Key.

“Following the extension of the Earthquake Support package, those businesses which are currently receiving the Earthquake Support Subsidy, and which remain viable but need short-term support, will be eligible to apply for the second round of the Earthquake Support Subsidy.

“There will also be an exceptions process for those businesses that do not meet the tightened criteria, but which can demonstrate a strong case for limited additional support”, says Mr Key.

Those businesses qualifying for the second round of the Earthquake Support Subsidy will receive payments at gradually-reducing rates each fortnight over the six-week period.

The second round of the Subsidy will, for the first fortnight, stand at the current rate of $500 gross per week for full-time employees, and $300 for part-time employees. This will reduce to $375 and $225 (part-time) for the second fortnight, and $250 and $150 (part-time) for the third fortnight.

Job Loss Cover for those workers who lost their job immediately after the earthquake will be extended until April 18. After that date, an Individual Support Payment will be introduced for six weeks, which will essentially be a top-up in addition to the unemployment benefit.

“The support recognises people who have lost their main source of income, and provides additional support as they move to find alternative work.

“This support is part of the Government’s wider economic recovery package for Canterbury,” says Mr Key.

Here is the tax package announced by English and Dunne:

The Government has put in place several tax relief measures to help Christchurch residents and businesses trying to get back on their feet after last month’s earthquake, Finance Minister Bill English and Revenue Minister Peter Dunne announced today.

“With the end of the tax year rapidly approaching, businesses and employers in Christchurch and around New Zealand need some certainty about the tax issues arising from the Canterbury earthquakes,” Mr English said. 

“These measures will make it easier for Christchurch businesses to comply with their tax obligations, recognising the disruption caused by the earthquakes,” he said.

The measures include:

Providing an exemption so businesses do not have to pay tax or gift duty on trading stock they have donated within four months of either the September 4 or February 22 earthquakes.

Making certain welfare contributions provided by employers tax free, within eight weeks of either earthquake.

Extending the redundancy tax credit, which had been due to end on 31 March, to 30 September this year.

Granting the Commissioner of Inland Revenue the discretion to extend statutory tax dates on a case or class-of-cases basis.

Exempting certain payments made to families who receive Working for Families tax credits as a result of the earthquake from counting as income.

Mr Dunne said that normal tax rules had not been designed for disasters of the scale of the Canterbury earthquakes.

“Therefore the Government has recognised that they simply would not be fair for people in these extraordinary circumstances,” Mr Dunne said.

"It is important we provide both income tax and gift duty relief to businesses donating trading stock to help alleviate the impact of the earthquake.

“Without this exemption, businesses would be taxed on a deemed profit based on the market value of any donated goods,” he said.

To qualify, trading stock must meet certain criteria outlined on Inland Revenue’s policy website at www.taxpolicy.ird.govt.nz.

Mr Dunne said the move to give the Commissioner of Inland Revenue the discretion to extend statutory tax dates was consistent with the flexible approach the Government and Inland Revenue had already been taking after both Canterbury earthquakes.

“Many businesses are dealing with lost records and disrupted systems and this is being recognised,” he said.

Mr English said the definition of income for Working for Families was being broadened from 1 April to include cash gifts, payments of expenses and certain other payments.

“Cabinet has agreed this should not apply to the support given to people adversely affected by the Canterbury earthquakes.”

The Commissioner of Inland Revenue would have the discretion to exclude such payments from counting as Working for Families income for up to a year.

Mr Dunne said he expected most of the legislation for these decisions to be enacted in early May.

“The Government’s objective is to get earthquake-stricken residents and businesses back on their feet and today’s decision will help and reflects a need for common sense, flexibility and pragmatism,” he said.

Announcements would be made in due course on depreciation recovery and the Government would consider other issues as they arose.

Detailed information on the changes is contained in fact sheets on the Inland Revenue Department’s policy website at www.taxpolicy.ird.govt.nz.

(Updates with tax package)

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Some countries have oil- we have fresh water PM.

Prime minister there is huge, sustainable business to do along the Westcoast exporting fresh water in stead of dirty coal - urgently !

 ..and great employment opportunities.

 http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=10908997

 http://www.guardian.co.uk/environment/2010/sep/06/ship-fresh-water-alaska-india

 ..and PM what about to other countries ?