2 Dec 2021

Economic agency warns of further business closures if Auckland stays in red

8:47 am on 2 December 2021

Auckland's economic development agency is warning more businesses will close for good if the region doesn't move to Covid orange in a fortnight.

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Photo: 123rf

The actual number of financially stressed businesses is hard to quantify because many sell up before hitting rock bottom and insolvency statistics lag by months.

But one indicator, missed rates payments, shows the hardship is real, with $53 million owing to Auckland Council - a jump of 20 percent compared to previous years.

When Auckland enters the red light tomorrow, hospitality can finally take table reservations.

But Auckland Unlimited chief executive Nick Hill said not everyone will.

"The additional costs, the limits on the number of people, the challenge with finding staff, all of those things go together to make it extremely tough and in the short run a lot of those hospitality businesses may not even open under red."

In the new year, 100,000 vouchers to places like the zoo and discounts for council libraries and swimming pools will be on offer to entice people back into the city - but will that be too late?

Auckland is expected to empty out when the border opens on 15 December, and two days before, the government will review the city's traffic light level.

Hill said a move to orange would allow some businesses to pull through because it means no restrictions on customer numbers.

"I really hope that it does [move to orange] but the government's being really cautious and I'm sure some of the new [variant] encourages caution. It's not what we would advise we would be really keen for them to move to orange as soon as it's possible."

Auckland Business Chamber chief executive Micheal Barnett said it's crunch time.

"There have been more businesses that have either closed down or who are currently at risk and it's going to be the next few weeks that's going to determine how some of them may survive."

He said it is people's livelihoods.

"It's mums and dads and families that operate those businesses and it's their lives that are impacted."

Barnett said the city needs certainty about when it will move to Covid orange.

"Aucklanders are probably asking why not and if not what are the conditions under which we can move to orange. They want it as quickly as possible."

The flow on effect is being felt.

Auckland Council has $53 million worth of missed rates payments on its books for the last financial year ending July, a jump of $10 million or 20 percent compared with the year to July 2019.

Infometrics principal economist Brad Olsen said it was a substantial increase.

"It does highlight that there are still a number of parts of Auckland that are still really struggling throughout the Covid-19 pandemic, both households and businesses," he said.

"Cashflow for some households and some businesses is under extreme pressure in some cases with just a lack of money because of the impacts of Covid starting to come through quite clearly."

Hill said it's hard to predict what's ahead but it will be crucial to encourage New Zealanders to visit the country's largest city - something officials will work with the tourism sector on in the new year.

"There is a stigma. We're really keen to encourage the rest of New Zealand to come to Auckland," he said.

"The more we can stimulate Aucklanders to get around and enjoy the region and discover new parts and support local businesses, the same argument applies to New Zealanders."

He's hoping Auckland's stigma as the epicentre of Covid-19 will be history in the new year.

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