COVID-19: New support payment for Omicron-affected businesses 'never going to be enough' - economist

New Zealand's economy is bracing for impact as the rising costs and challenges of the COVID-19 pandemic continue to grow.

The Government is finally acting, announcing on Monday a targeted support scheme for businesses in the face of Omicron.  

But independent economist Cameron Bagrie told AM there's still plenty more that needs to be done.

"It's never going to be enough, at all," he said. "Hat tip to the Government for rolling at least something out and it looks like that package, at least the first round, is going to be in the order of a couple of hundred million dollars. 

"Problems? Issues? Well, there's a pretty high barrier to accessing it - your turnover's got to be down 40 percent.

"If your turnover is down 40 percent, you tend to be in strife street in regard to where you're going to be - but it's something." 

To reduce the burden on businesses heavily impacted by Omicron, the Government on Monday announced the COVID support payment of $4000 per business plus $400 per full-time employee for firms who can prove a 40 percent drop in revenue over a week. Payments are capped at 50 employees or $24,000. 

But Bagrie said many businesses need long-term support.

"Personally, I'd like to see the Government rolling out some form of a bigger, more active loan scheme because I think an awful lot of businesses are going to take a long time to come back to good health - it's going to take one or two years."

Finance Minister Grant Robertson said on Monday the Omicron hit to the economy should last about six weeks. 

"We have set a higher threshold in terms of revenue loss than previous support in order to target those most affected," he said. "We looked closely at whether we could offer sector-specific packages but the definition of who is in what sector, and the need for cash flow to be provided quickly, meant that was not a feasible option to reach the most affected."

The previous resurgence support payment, designed to help businesses with their fixed costs, only required firms to show a 30 percent revenue drop. That payment dished out $2.2 billion to impacted businesses.

Thirty-two percent of small-medium businesses have had fewer sales since the country moved into the red traffic light setting, while 27 percent said their customer numbers were lower than usual and 22 percent said there was more pressure on cash flow, a recent MYOB survey shows.