Industry welcomes wage subsidy extension

At today's budget, the Government announced the wage subsidy scheme would be extended from June 10, running for eight weeks.

Businesses will be eligible for the extension if they have suffered a 50% drop in revenue in the preceding 30 days to making their application.

The scheme follows on from the Government's initial 12 weeks wage subsidy scheme, launched in March.

Advisers support the extension, aimed at businesses hit hardest by the Covid-crisis. 

Craig Pope of Wellington-based Pope & Co Mortgages said the scheme will help advisers "who haven't built up a very big trail book hang in there a bit longer for sure".

He added: "The bigger established advisers will be ticking along okay. If it helps some good advisers hang in there longer then the industry will be better off." 

Geoff Bawden, director of Bawden Consulting and Q Group, who used the initial subsidy to help pay for an employee's wages over the past few months, said the extension would help some businesses ride out the storm.

"I suspect it will help because there is always a lag in our industry between the time activity starts and cashflow generates," Bawden added: "That is because our Industry gets paid on settlement."

He added sole traders would benefit from the extension.

"Even if we are talking a sole practitioner with no outside staff they are still able to lodge a claim and I suspect there was very little new business generated during the lockdown. In these times you take whatever you can get and something that covers another eight weeks may just bridge the gap to enable cashflow to start building."

Katrina Shanks, chief executive of Financial Advice New Zealand, described the government's move as "positive".

"We know many adviser businesses have already accessed the wage subsidy scheme and this has assisted their ability to retain staff. For the lending adviser with the reduction in settlements there has certainly been a reduction in revenue and these scheme has been invaluable," Shanks said.

Shanks cautioned many businesses may not be eligible for the scheme, as the 50% reduction in revenue needed to qualify was a "high" bar.

She also warned adviser businesses may experience a decline in revenue later than other industries, with holidays and suspensions running out, leaving them unable to claim for the subsidy.