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Wage subsidies for quake-hit businesses

NZ Newswire logoNZ Newswire 17/11/2016

Wage subsidies will be granted to businesses seriously affected by the Kaikoura earthquake to help them retain staff.

Economic Development Minister Steven Joyce says the closure of SH1 north and south of Kaikoura has stranded businesses in the area and has had "a massive negative effect" on the fishing industry.

The subsidies will cover up to eight weeks at $500 a week for full time employees and $300 a week for part-time workers of businesses with fewer than 20 employees.

It's expected to cost up to $7.5 million for the initial eight week period, which will be reviewed for extension before Christmas.

"It's to support businesses in the first period following these quakes where their businesses are very, very significantly affected, particularly by the closure of State Highway 1 both north and south of Kaikoura and also by the sudden changes in the coastline which has had a significant impact on fisheries business," Mr Joyce said.

Social Development Minister Anne Tolley said for now the subsidy was about preserving jobs.

"This is really focused on making sure we're supporting people to stay in work so that when the recovery becomes clearer their jobs are secure," she said.

It covers individuals and businesses in Kaikoura, Waiau, Cheviot, Ward, Mt Lyford and Rotheram, but Mr Joyce acknowledged it may need to be extended over time.

"We've agreed, for example, not to include Hanmer Springs or Picton at this stage because both towns are fully operational and, in fact, the mayor of Hurunui wanted me to declare to you all today that Hanmer Springs is open for business and is very keen for business to continue," Mr Joyce said.

"But of course we don't know what the trade patterns are gong to be, we literally don't know how people are going to respond so this is an initial eight weeks in these towns but we retain the flexibility to respond further if required."

In order to be eligible businesses must be suffering a "significant drop in turnover" which the government will determine with the assistance of the Ministry of Social Development and local chambers of commerce.

"We're not out here to try and stop people from getting something which is going to keep their business going for a period. It's not going to be a high compliance process," Mr Joyce said.

BusinessNZ has welcomed the subsidy, acknowledging the approach was successful after the Christchurch earthquakes.

"Supporting wage payments is the most practical way to keep those communities operating and get business back on track," chief executive Kirk Hope said.

Labour has also welcomed the package "as far as it goes" but leader Andrew Little says it's clear more will be needed.

He said the government should not have imposed limitations on time or business size.

"I urge the government to also consider extending wage support for local councils to help them employ workers, who will miss out on potential seasonal work, supporting the building and recovery efforts," he said.

A separate package for dairy farmers is expected to be announced by Primary Industries Minister Nathan Guy in the coming days.

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