Josh Fitzgerald, owner of The Barrio Brothers, Flying Burrito Brothers, and Rye - American Kitchen and Spirits. Photo / George Novak
Josh Fitzgerald, owner of The Barrio Brothers, Flying Burrito Brothers, and Rye - American Kitchen and Spirits. Photo / George Novak
The Covid-19 wage subsidy may have been a "success story" for Tauranga businesses but one local leader fears there will be more redundancies when it ends in September.
Another, however, says the end of the scheme will not have much of an effect on the city's small businesses as theeconomy appears to have returned to "relatively normal" despite future uncertainty.
Tauranga business owners say the wage subsidy was great while it lasted but they understood it was something that couldn't last forever.
Prime Minister Jacinda Ardern announced earlier this week the $11.9 billion scheme, introduced in March and extended in June, would not continue beyond its current cut-off of September 1.
The scheme paid businesses $585.50 per week for each full-time employee if the business suffered a 40 per cent loss of revenue within a month due to Covid-19.
Ardern said extending the wage subsidy risked delaying "the critical work that businesses may need to do to pivot into the new Covid environment".
The Bay of Plenty Times published in its finance series on Saturday that business owners' biggest post-lockdown concerns are for their cash flow and the impact of wage subsidies coming to an end.
Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / Andrew Warner
Tauranga Chamber of Commerce chief executive Matt Cowley said the staff wage subsidy had been the leading success story from the Government's support for businesses during the Covid-19 lockdown.
"The money went straight to paying staff wages to keep them employed. It was not a subsidy for businesses.
"It helped many employers and employees design plans about how they will endure a social and economic lockdown."
Cowley said communities would have faced many more redundancies if the staff wage subsidy was not available.
"I am confident that there will be further redundancies as the subsidy deadline passes in September.
"The staff subsidies have created a softer landing across the economy than not having the subsidy at all."
Priority One chief executive Nigel Tutt. Photo / File
Priority One chief executive Nigel Tutt said he did not believe the end of the wage subsidy would have much of an effect on Tauranga's small business community.
"Most indicators show the economy is back to a relatively normal state, albeit with some future uncertainty.
"The wage subsidy did an excellent job for the time it was there and was used by many businesses in need."
Hospitality New Zealand regional manager for the Bay of Plenty, Alan Sciascia, said it would make "these difficult times even more difficult" particularly for the hospitality and tourism sectors that had been hit the hardest.
"While we appreciate the assistance provided by the subsidies has enabled businesses to retain staff we accept it can't continue forever.
Hospitality New Zealand regional manager for the Bay of Plenty, Alan Sciascia. Photo / Supplied
"The wage subsidy has helped in the short-term however the biggest issue for businesses is long-term survival over the next three to five years while the economy recovers."
Sciascia hoped commercial rates for hospitality tenants would be reduced in order for many businesses to survive.
Retail NZ chief executive Greg Harford said most retailers had been unable to access the wage subsidy extension, so it won't have a huge direct impact on most retail businesses in the Bay.
"However, the end of the wage subsidy will be impacting jobs across the Bay of Plenty tourism and hospitality sectors, which may mean that household spending is significantly reduced.
"The consumers in those households will likely have less disposable income as a result, and this will translate through into reduced retail spending. This will put added pressure on retailers."
Waimarino Adventure Park owner Blair Anderson. Photo / Supplied
Waimarino Adventure Park owner Blair Anderson said the initial wage subsidy needed to happen and the extension was a lot more targeted to the tourism and hospitality sector, which needed it the most.
But he agreed the Government needed to stop giving out money and he believed the tourism industry would come back fighting.
"If and when tourism gets going, the ones that are still around will be stronger."
Josh Fitzgerald, owner of The Barrio Brothers, Flying Burrito Brothers, and Rye - American Kitchen and Spirits. Photo / George Novak
Josh Fitzgerald, owner of The Barrio Brothers, Flying Burrito Brothers, and Rye - American Kitchen and Spirits, said it was the right decision to end the wage subsidy.
"It was something that can't go on forever."
Fitzgerald said the wage subsidy had been helpful and meant he was able to retain his staff.
"It has given us some breathing room to really make a plan on how we would operate without one," he said.
Chris Baskett, co-owner of Books A Plenty, said she applied for the initial subsidy but did not need to apply for the extension due to a rush of customers when the store reopened.
"It was fantastic, it really got us through that gap. I do feel for other businesses though."
Wage subsidy extension>
- Applications are open from June 10, 2020 to September 1, 2020. - You can apply to cover the wages of your employees over an eight-week period. - You can apply for the wage subsidy extension for your employee, even if you haven't applied for the wage subsidy for them before. - You can't apply for the same employee twice. - If you have applied for the wage subsidy or leave support scheme for your employee, you need to wait until those payments are finished before you can apply for the wage subsidy extension. - You can't receive more than one Covid-19 payment for the same employee at the same time.
