Porirua City Council will pay back $2.6 million in Covid-19 wage subsidy after clarification of the criteria set by the Ministry of Social Development (MSD) showed the council's revenue losses to be just under the required threshold.

At the time of applying for the subsidy, council staff spoke to MSD to explain rates revenue was not included, and why.

The application was approved by MSD and council was granted the subsidy.

Chief executive Wendy Walker said the application was made to protect the jobs and livelihoods of workers without placing a burden on our ratepayers.

"Nobody knew whether we would see a resurgence of the virus, and there was a real risk of job losses."

Rates revenue was not included in the application because rates are a statutory annual charge, recognised as revenue in July each year.

This was in line with international public sector accounting standards and generally accepted accounting principles, council said.

Using this as the basis for the application, council's revenue for April 2020 was down 44 per cent.

When MSD clarified the criteria and asked that revenue losses be assessed on a cash basis, the drop in revenue was 26 per cent, just under the 30 per cent threshold required for the subsidy.

"Despite being just lower than the threshold, 26 per cent was a significant drop in revenue, brought about by the closure of Te Rauparaha Arena, our aquatic centre, fitness centre, libraries, landfill, the application of rent subsidies and reduced fees from licences and sports club subsidies," Walker said.

"Fortunately, with lockdown ending and no resurgence in this part of New Zealand, the impact for our city has not been as severe as we feared it may have been. As our recently released annual report shows, we are in a stronger position than anticipated, which means we can refund the subsidy without jobs being affected. Although we will have to borrow to make up the loss of revenue, this will not significantly impact rates."

Porirua Mayor Anita Baker said she supports the actions of the organisation, which were made with the interests of ratepayers in mind.

"The wage subsidy application was part of an overall approach to lessen the impact of Covid on the people of Porirua who were going through uncertain and challenging times."