Ian Mexted-Dykes from Activities and Events Unlimited in Rotorua. Photo / Stephen Parker
Ian Mexted-Dykes from Activities and Events Unlimited in Rotorua. Photo / Stephen Parker
The end to an already-extended Covid-19 wage subsidy scheme has left one Rotorua business owner unsure how the his industry will survive.
Meanwhile, a local bar owner understood the wage subsidy was not going to last forever but said ending it could create a "tsunami of costs" going forward.
PrimeMinister Jacinda Ardern said the $11.9 billion scheme, introduced in March and extended in June, will 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 Rotorua Daily Post 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.
Ian Mexted-Dykes from Activities and Events Unlimited in Rotorua said it will be "dire straits" for a lot more companies than people think when the wage subsidy ends.
"If the wage subsidy ends in September I don't know how the event industry will be able to survive," he said.
"People have been able to keep their heads above water until now and this will be the last straw."
Mexted-Dykes said come September businesses in the event industry will be left on their own.
"Deep down I thought it was going to be extended, even if it was for businesses who have suffered 70, maybe 80, per cent at least."
Reg Hennessy, Hospitality New Zealand Rotorua branch president and owner of Hennessy's Irish Bar in Rotorua. Photo / Andrew Warner
Reg Hennessy, Hospitality New Zealand Rotorua branch president and owner of Hennessy's Irish Bar in Rotorua said he understood the wage subsidy had to end at some stage.
"Going forward businesses can't forever rely on that."
Hennessy said the subsidy had been helpful but when it and bank business loans ran out, the impact would be "huge".
The biggest concern hospitality businesses had, he said, was commercial rents, which needed to be reduced in order for them to survive.
Owner of Zen Arcade Massage Grant Nicol. Photo / Andrew Warner
Owner of Zen Arcade Massage Grant Nicol said the initial wage subsidy was a lifesaver.
"It was literally the difference between being able to pay the rent and not being able to pay rent."
But he believed putting an end date on the wage subsidy would not affect him with the way business had been going.
"There was a lot of uncertainty early on not just about how business would go when we reopened but if we were able to actually open. The initial subsidy took away that nervousness.
"But since then everything has improved slowly but steadily, it's better than I expected to be honest."
Rotorua Chamber of Commerce chief executive Bryce Heard. Photo / Andrew Warner
Rotorua Chamber of Commerce chief executive Bryce Heard said the Government had been generous in its cash injection to businesses, which seemed to have had a positive effect.
"Certainly the people I have been talking to, I have been pleasantly surprised about how the businesses have been doing compared to where they could have been."
Heard said the impact of the wage subsidy ending remains to be seen but Rotorua businesses as a whole have stood up strong.
"It's too early to celebrate success but the signs are promising."
Retail NZ chief executive Greg Harford said most retailers had been unable to access the wage subsidy extension so ending it would not 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."
Harford also expected customers will be increasingly value-conscious and looking to "trade down" away from luxury products to more basic versions.
The 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.
