Covid 19 Delta outbreak: Government reviewing 'heartless' gap in resurgence support payment scheme

The change of ownership of the Mission Bay Cafe from Mark Goldstine (right) to Alahi Eco has caused all kinds of headaches as hospitality suffers in Auckland. Photo / Michael Craig

The Government is reviewing a gap in the resurgence support payment scheme that is leaving some businesses without financial support, even though they've been operating for decades.

The NZ Herald has spoken to two Auckland business owners who say they don't qualify for the RSP because their business changed ownership during lockdown.

To be eligible for the RSP - which provides ongoing financial support determined by number of employees - a business or organisation must have been in business for at least one month prior to August 17, as well as having experienced a revenue decline of at least 30 per cent over a continuous seven-day period.

It appears businesses which have changed ownership following July 17 are not eligible as they are effectively considered new businesses - something afflicted owners believe is "heartless" and "stressful".

However, that could soon change following a review by relevant ministers.

A spokesperson for Minister of Finance Deputy Prime Minister Grant Robertson said the minister had been made aware of the issue late last week and a review had been initiated.

This would at least involve Robertson, Revenue minister David Parker and potentially others with relevant portfolios.

Changes would require Cabinet approval and it is understood a decision is not expected this week.

Current cafe owner Alahi Eco (left) had worked at the cafe for 10 years. Photo / Michael Craig

News of the review was of some relief for Mission Bay Cafe owner Alahi Eco but he said urgent help was needed if the business was to survive.

"Definitely we are down quite a lot," he said.

Eco, who had worked at the cafe for a decade, became owner on October 11 - taking over from previous owner Mark Goldstine.

At the time, Eco - like many in hospitality - expected to return to some form of in-house dining before the month was out.

Approaching December and still confined to serving takeaways, the cafe has been trading at between 30-40 per cent compared to pre-Covid times and its future is in doubt without the RSP.

"It's very stressful, I can't explain it to be honest."

Even with a shift to the new Covid-19 Protection Framework expected next week, Eco said the cost of reopening would put enormous pressure on the cafe's sustainability without financial aid.

In a letter from Parker to the cafe's ownership, the minister clarified it was necessary for the applicant, not the business itself, to be in operation for at least one month prior to August 17.

Later in the letter dated November 4, Parker said the scheme was meeting "the Government's aim of helping established and viable businesses through the pandemic".

Goldstine, one of the cafe's founders 23 years ago, argued the business's longevity meant it was both established and viable.

"It's still the same staff and it's still the same customers ... how do you say that's a new business, that's the crux of it to me."

Goldstine speculated there would be dozens, if not hundreds, of businesses in the same position which needed and deserved financial aid.

National MP for Tāmaki Simon O'Connor. Photo / Supplied

National MP for Tāmaki Simon O'Connor said it was a clear failure of policy which needed immediate redress.

"I personally think it's poor policy and a lack of business insight and experience, businesses change hands all the time."

Connie Aldao started her journey of taking over the Waiheke bistro and bar, Vino Vino, in February - making a down payment in April.

Travel to Waiheke has been severely impeded by lockdown. Photo / Supplied

However, because she didn't become its official owner until September, Aldao was in the same predicament as Eco.

Her situation was exacerbated by the dramatic drop in travel to Waiheke throughout lockdown, which had contributed to a 75 per cent decline in normal revenue.

"I just think it's a very heartless decision to say, 'No, you can not apply for it'.

"It's wrong and it's not so caring."

Vino Vino was one of the oldest hospitality businesses on the island which had kept its name, operating since 1993.

Aldao urged the relevant ministers to plug the gap in the scheme before things became dire.

"I think it's really unfair because they are saying, 'We are helping existing businesses', well it is an existing business."

Finance minister and Deputy Prime Minister Grant Robertson. Photo / Getty Images

The statement from Robertson's office recognised the difficulties faced by recently acquired businesses around the RSP, but noted any change maintains the scheme's integrity.

Restaurant Association NZ chief executive Marisa Bidois said she had raised the issue with Inland Revenue after hearing similar stories from a number of members.

"We are hopeful that [IRD] is able to do something to rectify this for these businesses as it's clearly a very stressful situation for them."

Spokespeople for IRD and the Ministry of Business, Innovation and Employment said the number of businesses which had changed ownership following July 17 could not be calculated.

"The Companies Office holds information on company shareholders, however any changes to shareholders of a company does not necessarily reflect a change in ownership and therefore any numbers provided would not accurately represent actual changes in ownership," Business Registries national manager Bolen Ng said.