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Several children have used the Covid-19 wage subsidy to make a healthy profit, potentially on the order of thousands of dollars per child.
Documents released by the Ministry of Social Development (MSD) showed that some people had used the subsidy for windfall profits. They were mainly freelancers who earned small amounts of money.
The article cites as an example children who make a round of paper or hand out circulars.
MSD said that an example of someone who makes a windfall from the subsidy would be a “child or youth” who makes less than $ 2,340 a year or $ 45 a week.
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They would claim the part-time subsidy rate of $ 350 per week, or $ 4200 during the 12-week subsidy period.
In that scenario, the child would earn $ 1,860 more during the 12 weeks of wage subsidy than they would earn in a year.
MSD documents said the ministry was aware of problems with the grant design that had led to the children being able to make windfall profits.
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Several children have taken advantage of the salary to pocket thousands of profits.
The ministry said that people who “work very few hours and earn considerably less than the subsidy rate” were making windfall gains from the pay.
“An example of a self-employed worker who gets an unexpected payment through the plan is eligible children and youth under the age of 18 and below the tax threshold.
“MSD has received several requests for subsidies from these types of children who deliver newspapers or circulars,” said the newspaper.
The newspaper said that these children “would receive an amount through the subsidy much higher than their usual income before Covid-19 for their self-employment.”
ACT leader David Seymour said he took his hat off to the children.
“My hat is off to these enterprising kids, and the truth is that the government had to get money quickly in an unexpected crisis, so these kinds of oversights were inevitable,” Seymour said.
But Seymour said the quirk could have been avoided if the subsidy were better designed.
“The obvious failure of the government in designing the policy is that it should have ensured that it cannot claim more than its normal income,” he said.
There was bad news for these children: the Government in the same newspaper agreed that any benefit obtained when the wage subsidy was extended would have to be repaid.
The wage subsidy extension was an eight-week wage subsidy announced in the May budget. The payment was the same as the original grant, however it had more rigorous criteria.
Apparently, the kids who made a profit from the first version of the scheme could keep it.
