Lockdowns are costing businesses dearly (Photo for Stuff by Jason Dorday)
There are two narratives on the economic impact of Covid-19 running through politics at the moment.
One narrative is that everything is fine, nothing to see here, everyone will be alright, please move along. The other one is about the real-life stress and disheartenment facing many small business owners and their staff – hardworking folk who have spent years building up what they have – who have been disproportionately affected by the Delta restrictions and are being hung out to dry.
Adverse effects lockdowns
When businesses fail through a lack of cash following government-imposed lockdowns, thousands more people will inevitably go onto the Jobseeker (unemployment) benefit. Life savings will be lost, and homes sold in mortgagee sales.
The dreadful social and health costs of these outcomes, together with the financial cost to the Government over the long term, means the government should be doing everything in its power to stop this from occurring.
Aucklanders – and indeed the whole of New Zealand – were promised a roadmap out of the worst of the current restrictions this week but were dealt more of a maze.
Businesses, not only in Auckland, but around the country, need certainty around when they will be able to operate or expect customers. This means targets and dates, not wishy-washy steps with no actual goals or tangible objectives.
Uncertainty erodes confidence
A lack of certainty cuts to the core of confidence, and poor confidence is an economic killer.
The government’s myopic focus on managing health outcomes from Covid has led to a devastating impact on our economy. As an example, Retail New Zealand’s quarterly report for September 2021 found that more than a third of retailers are unsure whether they will still be open in 12 months’ time, thanks to the ongoing restrictions imposed by the government in its response to Covid-19.
But the flow-on effects are more insidious than that.
Quay Street in Auckland CBD during the current lockdown (RNZ Photo by Robert Smith)
This week, we acknowledged more than 600 New Zealanders who took their lives over the past year. It is estimated that 60,000 operations have been delayed as a result of Covid-19.
Given the extension of the lockdown in the Auckland region and the new lockdowns in Hamilton and Northland, it is more important than ever that the government moves quickly to better support our business community. Cash is king for businesses and it always has been.
Our view is the government should implement the following strategies.
Three Strategies of National
First, in order to deal with the issue of cash, the government should implement National’s policy to pay 50% of the rent of small businesses who meet the wage support subsidy criteria of having experienced a 40% decline in revenue. This payment would be on the basis that the landlord agrees to a 25% reduction in the rent.
In the event of there being a dispute, we propose a ‘supercharged binding arbitration process to deal with disputes promptly.
In a further element in helping businesses with their cash needs, we would extend the Covid-19 temporary loss carry-back scheme to apply for the 2022 tax year. By reducing the future tax burden to businesses, this would be a further way of providing cashflow relief for them.
(RNZ Photo of Oriental Parade, Wellington by Samuel Rillstone)
Secondly, the government needs to learn to trust business owners and their staff. It should be better supporting businesses by urgently implementing saliva testing as part of the Covid-19 response which will allow staff to test themselves easily and on a regular basis; results will be available almost immediately – much faster than the current PCR nasal test. Not only will this assist the Government to assess outbreaks, but it would also allow people to better manage their own workplaces.
The third strategy comes from my observations as a local MP. Too many people seem to be refused an exemption to cross the border when their work is critical for businesses to operate at full capacity. By way of example, if concrete foundation specialists can’t get to work, then all the subsequent building work cannot commence. This means fewer houses are built at a time when we have a desperate shortfall.
Officials need to take a more strategic approach to approving these exemptions, especially as the trades are able and willing to operate under strict Covid-19 separation and testing protocols.
This lack of confidence from the building sector is reflected in the October NZIER Quarterly Survey of Business Opinion which found that building and construction has gone from being the most optimistic to the most pessimistic of the sectors surveyed. Some 43% of firms expect a deterioration in general economic conditions ahead.
Mental Health Programme
Fourthly, the government needs to implement a mental health programme for small business owners and their staff. Small businesses do not have ready access to mental health specialists, and National believes they should. We believe that these services are best delivered locally using the Business New Zealand network and regional chambers of commerce agencies to coordinate this support nationally.
What will be particularly offensive to many is the glibness with which the Minister of Finance brushed off concerns in the Finance and Expenditure Committee last week by saying, yes, there will be businesses who will not make it through this, but the rebound on the other side has shown that the New Zealand economy does well when we get on top of this, and businesses come back.
Well, this time is different. The government has already said that. We are told ad infinitum that Delta is different. The government needs to start heeding its own words. This time the restrictions have gone on for much longer, and many small businesses did not enter Delta with the cash reserves they had last year – because they used them up in the previous lockdowns.
Businesses that fail won’t be around to bounce back.
Andrew Bayly is Member of Parliament elected from Port Waikato. He is National Party’s Shadow Treasurer and Spokesperson for Revenue, Infrastructure and Statistics. Email: email@example.com; Facebook: @AndrewBaylyMP