More wage subsidies coming after level 3 alert extended in Auckland

Friday, 14 August 2020

Travellers arrive from Auckland at Nelson airport during level 2.

The Government will provide further wage subsidies to businesses after extending the level 3 alert level in Auckland until August 26, Prime Minister Jacinda Ardern has announced.

Ardern said the subsidies would be available to businesses nationwide but other details would be worked on by Finance Minister Grant Robertson over the weekend and announced on Monday.

Robertson said the criteria and eligibility requirements for the extension to the wage subsidies would be similar to previous criteria.

In the past, businesses have had to show a 30 or 40 per cent drop in revenues due to Covid-19 in order to claim.

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The wider fall-out on tourism sector is one reason for ensuring new wage subsidies can be available outside Auckland, Finance Minister Grant Robertson says.

The public health measures were affecting businesses around the country, Robertson said.

“This includes tourism operators who are expecting visitors from Auckland, companies that supply Auckland businesses, and the hospitality and retail sectors in other parts of the country now operating under level 2.”

The latest Covid-19 outbreak was obviously disappointing, especially for businesses that had just got up and running again, he said.

“We have always said that the best economic response is a strong health response.”

Robertson noted the Government had ring-fenced $14 billion of unspent money from its Covid Fund in case there were further outbreaks.

“There is also money remaining in the existing wage subsidy allocation that will help meet the costs of this further extension,” he said.

The wage subsidies could be available within five days, he said.

The Cabinet had also agreed to consider modifying the Covid Sick Leave Scheme in the wake of concerns people who were required to self-isolate might not have sick leave entitlements and some businesses might not be eligible for the scheme under current settings.

Traffic jams at police roadblocks in and out of Auckland had led to the Road Transport Forum warning of possible “mayhem” in the shops.

Decisions on that would also be made on Monday, he said.

“We want everyone to feel confident that if they return a positive test that they will be looked after.”

He reiterated a statement from the Reserve Bank that it had agreed an extension of mortgage payment deferrals with the banks, with details also expected to be finalised next week.

Economist Shamubeel Eaqub said the Government was doing the right thing.

”We will see businesses going under and jobs lost because of this. That's why the wage subsidy is crucial so business can survive and people can stay at home,' he said.

Investors are expected to breathe a sigh of relief that the Government decided against widening the country’s level 3 alert beyond Auckland.

Hamilton Hindin Greene investment adviser Mark Hampton said sharemarket investors had probably priced in a continuation of level 3 restrictions in Auckland.

Business NZ chief executive Kirk Hope says level 3 is not a lockdown and it is important for businesses to think about what they can still do.

An extension of the alert level much further south of Tokoroa would have created a bit more panic, he said.

'But his time around everyone seems to be a little more tolerant,' he said.

'We know businesses can cope and governments can step in.'

Companies should be more efficient at working from home as they had 'a really good crash course in that three months ago', he said.

'It is a similar story in Australia, where the situation in Melbourne has got far worse and the Australian market has shrugged that off to some degree,' Hampton said.

Any reduction in alert levels probably would have seen “a good little bounce on Monday”, while a move to level 4 would see a big sell-off, he said.

Speaking before Ardern’s announcement, Business NZ chief executive Kirk Hope said it was important for businesses to recognise what they could still do at level 3 and have plans at the ready in case the alert level was widened.

Trade Me founder Sam Morgan says the return of Covid-19 has not resulted in progress from the Government in advancing the roll-out of his proposed CovidCard.

“It has been referred to as a lockdown, which it isn’t,” Hope said.

Level 3 was “really difficult” for businesses in the public arena such as bars and restaurants in Auckland that were now shut and they would probably need support, he said.

“But business can still be done under alert level 3 and businesses have adapted to that.

“That is the important distinction between 4 and 3; that there can still be quite a lot of economic activity and that is important to remember,” he said.

Hope said level 3 represented a better balance between the health and economic outcomes than level 4.

ANZ chief economist Sharon Zollner says the cost of not getting on top of virus would be higher.

“You can get most of the health outcomes without some of the worst parts of the economic outcomes which we saw with level 4.

“Generally businesses are saying we don’t want to go back to level 4 and my understanding is the Government is really listening to that.”

Auckland Business Chamber chief executive Michael Barnett, who has been outspoken about the economic damage that a lockdown would do to the city, said there were some good things that came out of the Government’s announcement.

More wage subsidies would give a lot of comfort to the community, he said.

But “Auckland’s economic pain” would not just be contained to the city, he said.

‘’The crossover of economies of Auckland, north and its immediate south into the golden triangle, is immense.

Auckland Chamber of Commerce chief executive Michael Barnett says the cost of lockdowns is too high.

”If you look at who’s been going to Rotorua or who’s been going to Queenstown and travelling locally, it’s been Aucklanders, so that’s going to have an impact, he said.

ANZ chief economist Sharon Zollner said there would be an economic impact from having 20 per cent of the Auckland economy not operating.

But she said it was “very clear” from what had happened in Melbourne that the cost of not getting on top of the virus was infinitely higher.

“It’s unfortunate that it’s come to this but I’m feeling optimistic,” she said.

“We’ve had two days of data that are better than I feared … we could have been dealing with 10 clusters around the country.”

If New Zealand could get on top of the second outbreak quickly, find the source and “sort whatever gap in the system had allowed it”, it might give people more confidence about the future, she said.

Some firms would not be able to cope, but hospitality was going to be under pressure this year anyway, she said.

'We'll never quite be able to separate the impact of the lockdown and the closed border.'

Road Transport Forum chief executive Nick Leggett said having different parts of the country at different alert levels posed some problems for moving goods around the country.

Leggett warned on Thursday that there was a risk of “mayhem in shops” as trucks delivering supplies got caught up in road blocks in and out of Auckland.

But he said on Friday that police had responded quickly to address the forum’s concerns.

“The police took hold of that and listened and everything we have heard since is that it is going pretty well at the moment.”

Suzanne Wilson also opposes nationwide “lockdown”.

Traffic delays caused by having different alert levels in different regions could make it harder for drivers to stick to their legal driving hours and could have animal welfare implications when stock was being moved, he said.

“We want as much of the economy operating as possible because New Zealand has to rebuild, but that is in the hands of the Government – they will make that based on the advice they have got,” he said.

Trade Me founder Sam Morgan had forecast the Government would announce that the whole country would go to alert level 3.

Morgan said that was based on comments Director-General of Health Ashley Bloomfield had previously made about the implications of cases of Covid-19 being found outside Auckland, and assumed that New Zealand’s strategy was still “elimination”.

He forecast earlier this week that contact tracers at the Ministry of Health would not be able to catch up with the disease using their existing manual contact tracing tools.

That meant lockdowns were currently the only way of getting on top of outbreaks, he said.

Annick Withinshaw took her French language classes online during the national lockdown earlier this year, and though she was hoping Wellington wouldn’t join Auckland at alert level 3, or higher, she has the skills to carry on teaching.

Morgan has called for the Government to provide all New Zealanders with a CovidCard that he has helped develop as a non-profit initiative to help track infections.

But the events of the past few days had not resulted in progress, he said.

Comments from Health Minister Chris Hipkins on Friday clearly showed the minister “doesn’t understand” how CovidCards would improve manual contact tracing, Morgan said.

Restaurant Association chief executive Marisa Bidois said that industry had already proven it could operate a safe contactless service at level 3.

Leon Mooney, owner of the Saltworks co-working space business in Christchurch, will face Covid-19 restrictions with unwavering optimism.

Suzanne Wilson owns the Icing Training business which provides leadership training for business leaders.

She was due to be running courses in Wellington, Hamilton and Christchurch, and was bitterly disappointed to be grounded in her home city of Auckland on Friday.

“We got ramped up again after the first lockdown, which took a great effort. It took a lot of work to keep relationships going to get everybody back into training,” she said.

“Obviously, I can’t leave Auckland now,” she said.

Wilson wanted to see “evidence-based decisions” from the Government, and was opposed to a nationwide lockdown.

She had been resigned to being grounded in Auckland for up to two weeks at alert level 3 but “if we go longer, than two weeks, potentially the training part of my business would be in jeopardy”, she said.

Wellington-resident Annick Withinshaw took her language teaching and Zumba fitness training businesses online during the national lockdown, and was prepared to do it again, if the need arose.

“It was a steep learning curve,” she said, but it was embraced by the families of her school-age language students.

“A lot of them were really grateful for their children to be doing something positive for an hour,” Withinshaw said.

It gave her the confidence that the business could survive another lockdown, but repeated lockdowns could impact the finances of her clients, and a New Zealand locked off from the rest of the world meant some of the things people took French for, such as preparing for trips to France, or New Calidonia, could no longer happen.

People in Wellington were watching what was unfolding in Auckland, she said, and hoped they would not see cases identified in the capital.

About 85 businesses operate out of Leon Mooney’s Saltworks co-working office in central Christchurch, but since the Covid-19 outbreak in Auckland, around a quarter have opted to work from home.

Office talk had been dominated by discussion about whether Christchurch would join Auckland on a higher alert level.

Mooney was proud of how the Government and the “team of 5 million” had behaved since the pandemic reached New Zealand.

During the lockdown in March and April, Saltworks didn’t charge its tenant businesses.

“That was really tough,” said Mooney.

“Would we be able to do it again? Time will tell,” he said.