Auckland business leader Michael Barnett wants Government to listen closely to smaller businesses about improving COVID-19 support schemes

An Auckland business leader wants the Government to listen closely to small and medium-sized businesses about ways to make COVID-19 support schemes more effective.

With COVID-19 still raging around the world and New Zealand yet to begin vaccinating the general public outside of our border and health workers, the threat of the virus entering the community remains. 

Michael Barnett, the Auckland Business Chamber chief executive, says businesses are getting used to the routine that comes with living in a COVID-19 world. 

"It's a lifestyle for some of these businesses as they shut down, they open up again, they reach out for support, they reach out for subsidy," he told The AM Show on Thursday.

"I do think the Government does recognise what is happening there. I just don't think they are close enough to the small-medium business sector to really understand."

One business owner calling out for more support is Rolly Doyle, the owner of Ponsonby's The Brewers Room. He had to close his previous establishment, The Bluestone Room, last year after struggling through the first lockdown as well as the impact of the City Rail Link construction.

"It's just been a disaster. No one has made any money. Most people have been simply trying to pay the way, break-even," Doyle told The AM Show. 

"Every time you go into a lockdown, there is another two or three weeks you have to take to get out of it. You build yourself back out and then, boom, you get hit again."

He says the Government has "no idea whatsoever" about the challenges being faced by small businesses. 

A new report from RetailNZ found spending was up 9.2 percent in February compared to January but "results were mixed unevenly across the sector". 

"The strong average sales reported mask the fact that many businesses are seriously hurting, and have not been able to pivot effectively into the new normal, or to manage lockdowns effectively."  

A RetailNZ survey during the February level 3 lockdown showed 54 percent of retailers reported sales had fallen that month across New Zealand.  

"This rose to 70 per cent for retailers in Auckland. This shows that despite the Alert Level changes happening for a shorter period of time than previous outbreaks, the effect on retail is significant."

It also showed that retailer confidence had dropped since September.

Barnett said some businesses are struggling to meet the eligibility criteria of support schemes. 

"Some of them over the early part of the year, they have operated, but they have operated at what I call 'soft'. Their turnover has been there, but it hasn't been low enough to qualify."

He gave the example of a design retail store. 

"They ordered their stock months ago so they get to February and they have got full stock, but they have ordered and they have stuff coming forward," Barnett said.

"So they sell everything they have got in stock, their turnover is up, they have got no margin, they have got nothing to pay their costs, and because their turnover is up, they don't get the subsidy."

To qualify for the March 2021 wage subsidy, a business needed to experience or expect a 40 percent decline in revenue in the 14-day period between February 28 and March 21, compared to a typical 2-week period between January 4 and February 14. 

Barnett said having one blanket subsidy for all businesses wasn't effective anymore. He wants it to be more targeted and flexible.

"I think it is understanding some of those sorts of things that government needs to get a little bit closer to and I see that as part of my job," he said.

"It is not simply anymore. When we started last year, it might have been straight forward for the Government and I think they did a great job with the subsidy. It was [one-dimensional]. This year we have a very different environment." 

While the wage subsidy is focused on supporting employees during lockdowns, businesses can also apply for the Resurgence Support Payment if they show a 30 percent drop in revenue or capital-raising ability over a seven-day period due to an increase in COVID-19 alert levels. This support can go towards keeping the actual business viable and to deal with one-off costs. 

In February, Finance Minister Grant Robertson said the revenue drop would be assessed over seven days rather than 14. 

“We acknowledge the concerns of the business community about alert level rises and have made this change as we want to get money out the door quickly to affected businesses.

"This payment recognises that some businesses face one-off costs or impacts to cashflow when we step up an Alert Level to follow public health advice. The payment is structured to provide most support to smaller firms who are most likely to face cashflow issues but will be available to all businesses and sole traders."