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Covid 19 coronavirus: Unemployment could jump to 26 per cent, Bay businesses hope for best-case scenario
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The best-case scenario was the unemployment rate could climb to 13.5 per cent if the lockdown remained at four weeks.
Bay business leaders all agreed moving into alert level 3 for a month after lockdown was the best possible scenario.
Tauranga Chamber of Commerce chief executive Matt Cowley said the country was on track to meet Treasury's best-case scenario due to New Zealanders' overall compliance with the lockdown.
"Everyone hopes we can achieve scenario one," he said.
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"The scenarios that include oscillating in and out of level 4 lockdowns would demoralise the wider community, people's compliance with physical distancing would decrease, and the economic impacts would be elongated."
Cowley said the Treasury's best-cast scenario would limit main impacts to the construction, tourism, hospitality and retail sectors.
"Other industries are hurting, but they appear to be holding on until the lockdown is over. Rolling lockdowns for the remainder of 2020 would exponentially impact on both business' cashflow and people's psyche."
Priority One chief executive Nigel Tutt said the economic future was "dramatically affected" by time in level 3 and 4 and by the amount of Government support.
"The effects on our region are more pronounced by Tauranga City Council's financial position, so the Government is doubly important here."
While the report painted a reasonable picture of a bounce back, Tutt said: "We should also be very wary of the possibility of more time in lockdown, either now or later in the year".
"Construction, in particular, is an industry that needs to get moving again as soon as possible, it's an important industry that employs lots of people in this area."
Tauranga mayor Tenby Powell said the council was determined to keep the city's unemployment on the lower end of projections and had submitted a range of "shovel-ready" projects in a bid to soften the impact.
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• Covid19.govt.nz: The Government's official Covid-19 advisory website
Powell said 12 per cent of employment in the Western Bay of Plenty came from the construction industry and it was a crucial move to begin work on projects, such as roads, to create movement in the economy.
"We're going to need a lot of Government help to do this."
Retail NZ chief executive Greg Harford said strong and continued Government support through an extended wage subsidy and support for lease payments was required to help retail businesses survive the Covid-19 crisis.
"The consequences of the current four-week lockdown will likely be felt for years to come and lifting the lockdown simply won't be enough for business to return to normal."
Harford said Bay retailers will be hoping scenario one played out and that "we can get back to a more usual environment after a couple of months".
"However, businesses need to be planning for the worst case, and thinking about what will happen if they are forced to remain closed for a prolonged period of time."
Hospitality New Zealand regional manager for the Bay of Plenty Alan Sciascia said hospitality "will be critical to our recovery socially, culturally and economically".
"Our hospitality businesses are facing severe financial uncertainty and further potential job losses."
Sciascia expected 10 per cent of hospitality businesses nationally would not reopen after level 4 with scenario one and a potential 30 per cent at risk if level 3 was extended for longer than a month.
"I recommend that businesses prepare for option 1 being a drop to level 3 next week.
"Scenario 1 is the best possible option with hopefully some relaxation in the restrictions applied and also hopefully with a reduced time frame for level 3."
Tourism Bay of Plenty chief executive Kristin Dunne said a "strategy under uncertainty" approach was needed and it was too soon to know the "breadth, length or depth of the impacts for the industry".
"At this time, we need to be planning for a number of potential futures and these guidelines are useful as a framework for us all to start re-imagining the future."
Today,Finance Minister Grant Robertson will deliver an online speech to Business New Zealand setting out the next steps in the plan to cushion the impact of lockdown.
This will include further measures to help businesses.
'The whole thing is bigger than just us'
Tauranga's Collab Digital owner Brent Ireland said if the lockdown was extended past the initial four weeks, a lot of businesses would be in "the danger zone".
However, he also understood ensuring New Zealand was completely rid of Covid-19 was paramount.
"It has changed the whole way we work, we're a digital company as a whole but some of the face-to-face stuff we do rely on. In saying that, we've still been able to do the bulk of what we do online from home.
"From a client standpoint, it's totally different. One of the big ones is hospitality which has obviously fallen over completely, that accounted for probably 20 per cent of our business and we lost that almost instantaneously.
"When you factor in retail stores and other businesses that just can't open, we were capped at the knees, we've probably taken a hit of over 50 per cent of our business. In saying that, we're confident things will recover, we just have to ride the wave – we're obviously heading into a recession and we just have to see how deep it goes."
Ireland said he had reduced hours throughout his staff and was lucky they had all volunteered to do so. However, if the lockdown was extended he predicted things would get a lot harder.
"I'd say it would hurt more than the first round, to be honest. If it extends it puts a lot of people and a lot of businesses in the danger zone. Our business as a whole would have to reduce our overall staffing capacity for sure.
"In saying that, the whole thing is bigger than just us. It's bigger than me and you, it's bigger than a couple of businesses, it's huge."
Scenarios explained
Scenario 1
Level 4 – 1 month
Level 3 – 1 month
Level 1/2 – 10 months
Scenario 2
Level 4 – 3 months
Level 1/2 – 9 Month
Scenario 3
Level 4 – 6 months
Level 3 – 6 months
Scenario 4
Level 4 – 3 months
Level 3 – 3 months
Level 1/2 – 6 months
Scenario 5
As in Scenario One
Source: Treasury Report T2020/973: Economic scenarios - 13 April 2020
