15 Aug 2020

Covid-19: Hospitality and retail welcome wage subsidy extension, but call for targeted support

6:01 pm on 15 August 2020

The hospitality and retail sectors are calling for more targeted aid to help them survive a second lockdown.

Christmas shopping in Wellington.

Photo: RNZ / Rebekah Parsons-King

Hospitality NZ and Retail NZ both welcomed yesterday's announcement of the third extension of the wage subsidy scheme across New Zealand amid the decision to prolong the Covid-19 alert level changes.

Hospitality NZ head Julie White said it was the right decision and took into account the importance of the Auckland market to the whole country.

She said Queenstown was particularly vulnerable.

Auckland Mayor Phil Goff, who also welcomed the extension, also acknowledged the impact the city and its people had on the whole country.

"Queenstown is full of Aucklanders, or was full of Aucklanders, over the last few weeks and it will hammer them."

However, White said the scheme fell short of providing long-term security to business owners who had lost all their income, such as those in hospitality.

"They have fallen short, we will need [them] to step up and recognise the impact on the income to hospitality, so we'll be touching base and asking them to re-look at a sector-specific package."

Retail NZ chief executive Greg Hadford said the retail economy was forecast to suffer a 40 percent hit over the lockdown period.

He said most retail businesses would struggle without government support.

"We will see a massive reduction in retail spending nationwide over the next 12 days. Retail businesses typically operate on very low margins, and are critically reliant on cashflow coming in the door."

Cafe owner Roz Cattell, who is also on the board of The NZ Specialty Coffee Association, said they were anxious yesterday while waiting for the news about whether the lockdown would be extended.

Heart of the City chief executive Viv Beck told Kim Hill that it wasn't going to be easy for the hospitality sector to get through this.

"I think overall it's probably a little bit better than some had speculated, but I think for us it recognises the impact on the variety of businesses.

"We're working through that now and seeing how we can assist as much as we can. But I think it's a bit of a perfect storm for us in the city centre and we're going to do everything we can to at least make sure people are familiar with the click and collect [services]."

Beck said that it was good to at least have clarity on the timeframe of the lockdown and for the wage subsidy to be extended, but the impact would be "massive" if the lockdown was pushed out again.

"I do feel for the people in the city, because a lot of my hospitality friends in the city, they are hurting. It's a hard road for a lot of people out there."

Earlier, Julie White of Hospitality NZ had also spoken about the initial lockdown on 12 August, saying the uncertainty of when Auckland businesses could reopen would result in a huge loss of working capital.

"Bars will have to pour their kegs down the drain and restaurants will be working out what fresh produce can be saved - it's not as simple as turning the lights off and locking the doors."

While the level 2 restrictions were also limiting for key hospitality operators, and came with additional staffing costs as well as potentially reduced income, White said.

"The government must provide urgent relief packages and allocate some funding from its $14 billion Covid Response and Recovery Fund to the hospitality sector."

Mayor backs wage subsidy extension, warns businesses on price gouging

On the other hand, Auckland's mayor is relieved the severity of his city's lockdown has not been ramped up or extended for too long.

Mayor Phil Goff said Auckland was experiencing its worst drought on record.

Auckland Mayor Phil Goff. Photo: RNZ / Dan Cook

Phil Goff told Saturday Morning that the wage subsidy extension would provide a vital lifeline for Auckland businesses and others affected by its slow down.

"We're really happy that there is this wage subsidy scheme that recognises the cost to businesses, particularly small businesses, and what that might mean in terms of jobs.

"The wage subsidy scheme was incredibly effective in keeping a surge of unemployment down and it's necessary again."

He said the restrictions were necessary and kept in line with the elimination approach.

"Businesses are showing a certain degree of resilience in adapting to the requirements. Undoubtedly, it's a setback for the city and country to have it back in, but not entirely unexpected.

"It's a shorter period of time than it might've been.

"What we didn't want is a Melbourne situation where there was a half-hearted approach to lockdown and then the thing spread and you ended up losing scores of lives, thousands of cases and you still paid the economic price."

Businesses that would not be able to operate under the restrictions would be paying a price under lockdown though, he said.

"When businesses can't operate, that puts jobs at risk. Some businesses struggled through the original lockdown, looked at the recovering economy and then 'here it comes again' and they kind of throw up their hands and say 'we give up'.

"This won't be nearly as severe but we'll look to working with the government as to how we can do things, as we did with the emergency budget."

He said the city's economy was still set to benefit from a $2.5 billion infrastructure spend from the council.

In a statement later, he also urged businesses to act responsibly during the lockdown.

"I am concerned to hear reports of price gouging, especially for items that Aucklanders consider essential at the moment, like masks," Goff said.

"We had similar concerns during the last lockdown and it would be unfortunate to see a repeat this time around.

"I appreciate businesses are operating under difficult circumstances right now and many are going above and beyond to help their customers. But if a few act irresponsibly, this can taint the many."

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