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HomeNEWSWage subsidy welcomed, yet more support is needed

Wage subsidy welcomed, yet more support is needed

Businesses around the country are calling for a much longer extension to the wage subsidy than the government is offering.

Finance Minister Grant Robertson will be providing more details on the scheme today, after it was announced government support would be available for the duration of level 3 restrictions.

It’s being anxiously anticipated by those industries which are being hit hardest by another lockdown, such as hospitality and tourism.

Some details were announced on Friday – the subsidy will last as long as level 3, and businesses from up and down the country, not just Auckland, will be able to apply for it.

It was also implied by Robertson that in terms of criteria, it will look broadly similar to the previous two rounds of subsidy.

Reaction from industry leaders has been mixed, with a degree of frustration at the lack of targeted support for different sectors.

The wait for further details has been also criticised, with many owners and managers sweating over having to pay their staff without any incoming revenue.

“The issue with us is probably the uncertainty, and the length of time it actually takes for decisions to be made,” said Scenic Hotels managing director Brendan Taylor.

Within the first day of the new lockdown being announced, he said Scenic Hotels had 600 cancellations, and he’s expecting all seventeen hotels to take up the subsidy for the 250 employees.

It’s been a similar story for a number of other hotels, all over the country.

“I would’ve thought on Friday [it] would have been a no-brainer, that they could’ve just rolled out what they were going to do in regards to wage subsidies. I would’ve thought they would’ve had a plan for this.

“It’s not just us, it’s all our staff – they’re looking at this and thinking, ‘here we go again, are we going to have a job tomorrow?'”

Retail NZ has welcomed the wage subsidy, but says more support is required.

“Retail NZ estimates that the retail economy will suffer a 40 per cent hit over the next 12 days,” Greg Harford, Retail NZ’s Chief Executive said today.  The extension of Level 3 in Auckland means that many businesses will be struggling to make it through without new Government support, and the chilling effect of Level 2 will also be impacting retail businesses across the country.  Retail NZ is pleased that the Government is extending the Wage Subsidy, but other support will be required to help manage fixed costs.

Greg Harford for Retail NZ.

“Under Alert Level 3, most retail premises in Auckland must remain closed to the public, although supermarkets, dairies, petrol stations, and pharmacies can remain open.  All retailers can open their online sell stores, and are allowed to sell to the public via contactless click and collect, but we will see a massive reduction in retail spending nationwide over the next 12 days .  Retail businesses typically operate on very low margins, and are critically reliant on cashflow coming in the door.”

Period of the current level 3 restrictions ‘not long enough’

While the announcement to move to level 3 was bad news for all businesses, it was possibly even more stressful for Chand Sahrawat, the co-owner of three Auckland restaurants.

“We were in Queenstown celebrating my husband’s birthday, and just the timing of it was quite hard as well – it wasn’t something you anticipated, or you had the rest of the day to do anything about.

“We found out close to the end of service on Tuesday night and had to do Zoom calls with our staff, and had to arrange to do everything remotely.”

Now back in Auckland, just one of her three businesses remains open, doing deliveries.

The wage subsidy extension has brought some short-term security and relief, but she still has questions.

“We have our fingers crossed that the government has a plan, because we’re really worried about how to sustain our staff,” she said.

“We have 60 staff onboard, and we’re really worried about how we’re going to pay them, especially with shutting two restaurants and only operating one at very low demand of takeaways and revenue coming in.

“We’re hoping that there is at least a 4-6 week subsidy out there, and it is at 30 percent, because that helps us qualify and look after our staff.”

On Friday, Robertson announced they had made “an in principle decision to extend the wage subsidy to cover the period of the current level 3 restrictions.”The Minister of Finance, Grant Robertson, provides his weekly Treasury update.

Finance Minister Grant Robertson. Photo: RNZ / Dom Thomas

Unless level 3 is extended, the subsidy will run for just two weeks, well short of the 4-6 weeks that Sahrawat is calling for.

For the tourism sector, there’s hopes it will be even longer than that.

The director of tourism retailer, Aotea Gifts, Richard Hanson, said it would be preferable to have a longer-term plan for the entire industry. With no international travellers, they have a customer base on nearly nothing.

“[Australia has] wage subsidy through to March 2021, so that’s given their whole tourism industry … the confidence to keep those skills onboard, and keep going.

“There will be a period [of wage subsidy], but it definitely won’t be the long-term continuity that you’ll expect to see on the Australian side of things.”

He also criticised the government’s targeted package for tourism businesses, describing it as “picking winners.”

Calls to make support schemes more accessible

Discussions this past weekend have centred around the criteria for eligibility, which will either be at 30 or 40 percent.

Further assurances from the finance minister that the criteria won’t be too dissimilar to the previous schemes has concerned First Union transport, logistics and manufacturing division secretary Jared Abbott .

“We really need to ensure that workers who work in businesses that have closed down are covered; that there’s a subsidy for immunocompromised workers, and also those that are in households that need to quarantine, and obviously also for parents that need to look after their children that aren’t in school.”

He said some essential service businesses weren’t able to access the subsidy for those staff, because they weren’t turning up to the workplace. The issue there, he said, was that these are jobs where working from home is impossible.

Another scheme will be addressed today as well, with the finance minister pledging on Friday to examine the government’s leave support scheme.

The reason it’s being addressed is to improve access: “We want to make sure anybody who has been asked to stay home, because they are required to self-isolate, or because they are immunocompromised, are confident to do so,” Robertson said.

“We are doing this in part to emphasise the importance of getting tested. We do not want people to be afraid to get tested, because they think their livelihoods, or jobs, or income are at risk.”

First Union’s Jarrod Abbott said it is “without a doubt” that people have been avoiding taking a day off work to be tested because they have used up all their sick leave.

“For most people that are trying to get off on five days sick leave a year, most of that will have been used up already, because of the extra precautions needed around this Covid era where any time you have a runny nose you naturally stay home at work now.

He said they’d like to see a blanket rule of 10 days sick leave for everyone, while particularly vulnerable workers – such as those at cold stores, or those who do shift work – should be given more than that.

This story originally appeared on RNZ and has been expanded by The Register.

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