Budget 2020: Yesterday $50b worth of financial measures were committed to protect jobs in the industries most affected by Covid-19. So what did small business owners make of it?
For many business, perhaps the most anticipated and welcome measure in the Covid-19 response budget was the $4bn support package, which included an eight-week wage subsidy extension for those who remained significantly impacted by the downturn. However, one small business owner was surprised by the new eligibility criteria, which limits the scheme to only those who can show a 50% reduction in revenue in the 30 days prior to June 10 when the applications open.
Brian Campbell, owner of Auckland dessert business Miann, told The Spinoff he was banking on an extension to the scheme, but the new criteria would exclude many hospitality businesses that will be operating at above 50% revenue but still below what was commercial viable. This meant that once the 12-week scheme ran out in June they would be forced to struggle without assistance in a potentially fragile market.
“It’s disappointing,” he said. “I don’t think they read the room very well, in hospo especially. If you’ve been doing 50% between now and June 10 you’re screwed already… restaurants are geared at 8-10% profit if they’re lucky, so if they’re doing 50%, 60%, 70% [revenue] it makes no difference. I think there will be a lot of hospo businesses closing their doors.”
While Campbell was grateful for the original 12-week wage subsidy paid to his 36 employees across three stores, high overheads meant the business had suffered an immense loss during the past two months. He was expecting the next period to be challenging.
“The first day [of level two] was nowhere near a normal day,” he said. “I think it’s going to get tricky in about a month. We hope that there is confidence in the customers to get out and spend but it’s really wait and see. People’s habits may have changed or they may just be dying to get out and get the treats for all that effort of being locked down. And they do say chocolate is recession proof.”
While Campbell had been pinning his hopes on an extension to the wage subsidy, he had also applied for the small business loan scheme for each of his stores to help cover costs.
“We have taken a huge financial hit and it would have been great to see some new initiatives. The banks don’t seem forthcoming even with the government-backed 80% guarantee loan. We are appreciative of the new loan from the government but we definitely feel this is just one fire put out while others start to rage.”
However, he said he had been making investments – including installing seating in miniature outdoor glass houses – in an effort to ensure customers’ safety and boost sales. “I’m always hopeful. I’d like to think there are always ways to survive but this is uncharted territory for us all.”
Another small business owner in the Fiordland town of Te Anau said he was glad for the wage subsidy announcement, although a longer extension would have seen his business through the quiet months and right through to a potential tourist season.
“In an ideal world I was hoping it would get rolled out for another 14 weeks,” said Steve Norris of tourism operations Trips and Tramps. “That would have seen us through to the September school holidays, and we were hoping that the Australians would be turning up by then. But then again, don’t get me wrong, I’m really grateful.”
With international borders closed and tourism virtually non-existent in Fiordland, Norris said he would have no problem showing a 50% decline in revenue over the next month to qualify for the wage subsidy extension. This would mean he could keep his six staff employed for a while longer.
“I’ll easily show a 95% drop in revenue so that won’t be a problem.”
Rob Jewell, the owner of Fox Glacier Guiding on the West Coast of the South Island, said he likewise could show a 50% decline, as 97% of his usual business came from foreign tourists. The wage subsidy extension would help keep his 58 staff working for longer, he said.
“For us [the extension] basically takes us through to August. It does help and it will hopefully help us keep our skilled workers here longer. I would have liked to have seen more but they’ve signalled that there is potentially more to come. So it’s a win and we gratefully accept it.”
The budget also allocated $1.1bn to creating 11,000 jobs in the environmental and conservation sectors. Jewell said this could potentially benefit his business and staff, many of whom possess transferable outdoor skills.
“A huge percentage of the West Coast is conservation land. We’ve got Tai Poutini National Park, so in terms of the environment and all those initiatives that the $1bn looks to cover, I see some real benefit. Certainly with the workforce we have we see some really good potential around that, but obviously we need to see more of the details about what that looks like and what shape it takes.”
Jewell was also happy with the $400m budget allocation to stimulate domestic tourism, which would hopefully bring more New Zealanders down to Fox Glacier.
“It’s a beautiful environment, it’s got great services, hospitality and activities, and so I’m really hopeful that with the package and the right messages, people will say ‘right let’s go out and see our back yard’. Because really, they can’t go to much further afield at the moment and now’s a great time to do it.”