Coronavirus: Auckland's level 3 costing 250 jobs, up to $75 million a day

Wednesday, 19 August 2020

Auckland Mayor Phil Goff on Auckland remaining in Covid-19 alert level 3 for 12 days.

Auckland is losing 250 jobs and up to $75 million a day in economic activity during the renewed Covid-19 alert level 3, according to a new assessment.

Auckland Council’s chief economist David Norman believes even a relatively brief “Wave Two” lockdown could cost 4000-8000 jobs by June 2022, depending on duration, and economic activity losses of $3-5 billion.

“We may see higher rates of business failure or rising unemployment than in Wave One, as businesses have used financial reserves,” said Norman in a report to Mayor Phil Goff.

Auckland’s premiere location, Queen St, is deserted at the start of Covid-19 alert level 3

“Many businesses pushed to breaking point by Wave One will be pushed out of business even with a relatively brief lockdown,” he said.

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Norman’s assessment was compiled on Monday as the region entered its first full week of alert level 3 restrictions, which have closed non-essential businesses and will run until at least August 26.

“Despite the wage subsidy, Auckland has lost around 24,000 workers since [the previous] lockdown began,” he wrote.

Auckland Council chief economist David Norman says 210,000-240,000 people cannot do their jobs under the supercity’s level 3 lockdown restrictions.

The current level 3 restrictions mean around a quarter of Auckland workers – some 210,000-240,000 people – cannot do their jobs.

An estimated 31 per cent, or 280,000, can work from home but at reduced productivity, “making the businesses they work for less profitable and thus less likely to survive lockdown”, said the report.

Norman’s stark assessment was that jobs were lost on the first day that Auckland went back into alert level 3, on August 12, and uncertainty would be the death-knell for some businesses.

“Some who know they cannot make it through a repeat of April and May will simply choose to fold,” he said.

Longer-term, Norman believed the April-May lockdown’s economic impact will have snowballed to $19b by June 2022, with a further two weeks each at level 3 and 2, adding $3b.

The report looked at what support might be needed for Auckland, with Norman calling for an extended wage subsidy targeting the 210,000 who are currently off work.

Auckland Council itself could face another revenue hit if the lockdown becomes lengthy, on top of the $450m cut which prompted the passing of an Emergency Budget, with staff and spending cuts.

Norman assessed that Auckland received 20 per cent of the special Government funding for “shovel-ready” projects, even though the region generated 40 per cent of tax revenue.

“There appears a perception that Auckland is big enough to pay for many things itself,” he said.

He said further funding in line with Auckland’s share of population and gross domestic product was needed, and funding needed to flow, not just be announced, by the expiry of wage subsidies.