Coronavirus: Business community calls for weekly subsidy for employers, just like employees

Businesses are being assured a "pretty big bounce" looms once the lockdown is over, but there are growing concerns many won't survive to see it without more financial assistance.

Auckland will be at alert level 4 until at least mid-September, while the rest of the country moves to level 3 in the coming days, provided no more cases of the highly infectious Delta variant crop up. 

Economist Cameron Bagrie says if last year is anything to go by, losses incurred during levels 3 and 4 will be recouped.

"As we move down the alert levels, you're going to see a little bit of the pent-up demand; stuff that's been deferred that we need to do or have to - little things such as getting a haircut, restocking various items," he told The AM Show on Tuesday.

"We're going to see a pretty big bounce in the December quarter following what's going to be a pretty awful GDP number for the September quarter. A lot of it is dependent upon how long the lockdown continues to go. At the moment you can write off the month of September."

At between $50 and $100 million a day, Bagrie estimates the GDP hit will be about 6 to 7 percent - around about half the hit GDP took in the July quarter last year, as businesses struggled to figure out how to operate under the restrictions and the entire country stayed at the same alert level until the virus was completely wiped out. 

Despite a brief lockdown in Auckland in August last year, that quarter saw GDP rise 13.9 percent - an all-time record, about equivalent to the losses incurred in the previous two quarters. 

"We're going to see a bounce in the December quarter probably of equal magnitude, if the experience of 2020 is to go for," said Bagrie. "One caveat here… we certainly haven't seen the same degree of policy stimulus - that money that's being pumped into the economy this time around to support businesses."

He said businesses are eating into their working capital, hoping to make it out the other side. But whether they'll have enough left to relaunch is a concern.

"A big thing that tends to bleed businesses is not the hit to demand - it's the pressure on working capital as you go to open up, because that's when you start to run through the cash pretty quickly."

Cameron Bagrie.
Cameron Bagrie. Photo credit: The AM Show

It's a worry shared by the Auckland Chamber of Commerce, which has started a petition calling for more financial support for employers. 

"In the last couple of weeks firms have needed to dig into their reserves and they've been happy to do that. Having it extended for another couple of weeks is going to provide a significant amount of pressure," chief executive Michael Barnett told Newshub.

"We're calling on the Government for some extra help now. We've started a petition calling on the Government to meet a weekly subsidy to go to businesses similar to the resurgence package... we've had over 10,000 signatures already."

There is a range of help on offer - the Resurgence Support Payment for example - but Barnett says it's not enough. 

He wants money dished out weekly in a similar way to what employees get through the wage subsidy - that gets paid to employers but has to be spent on wage costs, the intention being to stop businesses hemorrhaging workers, then having a shortage when restrictions are lifted. 

"Businesses have a huge amount of cost around rent and rates and financing costs... they should be getting a subsidy as well," said Barnett.

The Christchurch business community wants more too. Leanne Watson of the Canterbury Employers' Chamber of Commerce said while many businesses are looking forward to contactless operations under level 3, Auckland staying in level 4 will have a $1 million day effect on the region. 

"We need to recognise that for many of these sectors have been struggling since January last year when our borders closed, this is ongoing - issues around other overheads they must meet when they're on a limited income, things like covering rent and other overheads such as power. 

"Even though they can't operate at all in lockdown, they still have to actually meet those ongoing overhead obligations."