Stephen Smith warns that while wage subsidy helps, it will be a long road to recovery for Northland businesses post Covid-19.
Photo / Michael Cunningham
Stephen Smith warns that while wage subsidy helps, it will be a long road to recovery for Northland businesses post Covid-19.
Photo / Michael Cunningham
At least $23 million has been paid out in Covid-19 wage subsidies in Northland, but a business leader warns more pain is on the way as some larger employers start laying off workers.
The Ministry of Social Development does not have a full regional breakdown of wage subsidy payments asyet but an online search revealed what some of the major employers in Northland have been paid as at the end of last week.
Among those were Refining New Zealand at Marsden Pt which applied for and received $2.5m for 364 employees, the Carter Holt Harvey LVL plant in the same area was paid nearly $2.2m for 312 staff, and Northland Waste got $1.7m to cover 254 workers.
The Northland Regional Council received $1.5m for 200 workers. Juken New Zealand, which owns a triboard mill in Kaitāia, received $3.7m for 531 employees but the payment also covered its staff employed elsewhere in the country.
Northland Chamber of Commerce chief executive Stephen Smith said a little bit of a commercial resurgence post lockdown was no indication the worst was over yet.
He said people were unable to get out and do things while some sectors such as construction that were usually quite busy have lost jobs during the global pandemic.
"The concern is if it's a pent-up demand, how steep it may get to before it starts falling. A depression usually takes either a V or a U shape. In 2008, it was a U ... quite deep and the recovery curve at the bottom was quite wide.
"I think this is a U. The hospitality sector is looking at five years to repair the financial damage but for most businesses, that is expected to happen in less than 24 months."
Smith said another worrying impact of Covid-19 was some major companies laying off most of their staff post-lockdown.
Refining New Zealand at Marsden Pt were among major employers in Northland that applied for and received the wage subsidy during the lockdown.
Photo / Michael Cunningham
Other big Northland companies that applied for and received the wage subsidy included United Civil Construction ($717,019 for 102 employees), Fullers Bay of Islands ($536,812 for 82 staff), the largest law firm in Northland, Webb Ross McNab Kilpatrick ($521,560 for 75 staff).
Others were Sport Northland ($479,116 for 75 staff), Mangonui Haulage ($496,272 for 71 employees), Stan Semenoff logging, transport, and livestock ($407,716 for 58 employees) and Far North Holdings ($359,880 for 52 staff).
Refining NZ spokeswoman Ellie Martel said it has cut no jobs during the lockdown, although a significant reduction in transport fuel has led to the company operating at reduced capacity.
"We are currently working through plans for putting the plant on standby for several weeks in July and August, after which we will resume operations when new crude orders arrive.
"Contractors are brought in and out of projects as needed. Because we are operating in reduced production mode and have reduced our capital programme, we have not needed many contractors," she said.
As of May 15, almost a quarter of all money paid out in wage subsidies throughout New Zealand had gone to the construction ($1.5 billion) and manufacturing ($1.13b) sectors, while accommodation and food services ($976m), retail trade ($966m) and professional, scientific and technical services ($913m) took up more than a quarter of the total spend.
Businesses with a 40 per cent reduction in revenue because of Covid-19 were eligible for the wage-subsidy extension. The Government last week announced it was dropping the bar from a 50 per cent reduction, which means 40,000 more businesses could apply.
It's estimated up to 230,000 businesses, employing up to 910,000 workers, are now eligible for the eight-week scheme, which starts on June 10 when the previous wage scheme runs out.
Small businesses will also be given more time to apply for the Small Business Cashflow Loan Scheme, with the application date being extended from June 12 to July 24.
