Covid 19 Delta outbreak: Economic package a welcome relief but uncertainty remains over traffic light system

Business organisations in Auckland have breathed a sigh of relief after the Government’s announcement on a new economic package, the vaccination passports, and the support for mental health.

But, they remain concerned about the lack of an exact date for the transition into the new “traffic light system” and targeted support for the struggling hospitality industry.

This morning the Government announced a support package to provide up to $940 million to affected businesses including a boost to the Resurgence Support Payment and $60m for business advice and mental health support.

Restaurant Association chief executive Marisa Bidois said today’s announcement was “exactly” what was needed but the predicament they faced was around the clarity on the reopening date and a lack of targeted financial assistance.

“The easing of restrictions in line with vaccination rates alongside an enhanced business support package for Auckland businesses is a welcome relief for anxious hospitality business owners.

“A reopening framework coupled with clear targets and supported with the appropriate financial assistance is exactly what is needed to move forward and get our largest city moving again,” Bidois said.

“[But] the predicament we have found ourselves in … is a lack of certainty, a lack of targeted financial assistance and a lack of clarity on our framework for reopening.”

Viv Beck, chief executive of the business group Heart of the City, said the group was relieved that the Government was increasing the financial support for businesses.

But there was no confirmation of investment into stimulation initiatives.

“There is still a big challenge ahead for the city centre and we will need to do everything we can to support our businesses when they open in the red zone, ideally no later than December 1 to encourage people to visit,” Beck said.

“With more than 130,000 workers still encouraged to work from home it will be tough.

“What we haven’t heard today is any confirmation of investment into stimulation initiatives – that’s needed to give a shot in the arm to attract people here to support our businesses,” she said.

Today Prime Minister Jacinda Ardern announced that New Zealand will move to a new “traffic light” system to manage Covid-19 when district health boards have 90 per cent of their eligible populations vaccinated.

When each DHB hit this target, the new framework would come into effect.

The traffic light system also makes use of vaccine certificates.

Businesses will be able to continue to operate at each of the risk levels, and each setting can be used in a highly targeted and localised way, Ardern said.

Retail NZ chief executive Greg Harford said he welcomed the news of increased financial support to retailers but more support was needed and the disappointment was that the Government had still not given a firm transition date to the new traffic light system.

“Retail NZ is welcoming news that the Government is increasing financial support for businesses … and that retail will be able to open at all stages of the new Covid protection framework.

“The disappointing news is that there is still no firm date when we will transition to the new system, which makes it difficult for businesses to plan and stay afloat.

“Retail NZ is also really pleased that the resurgence support payment is being doubled. However, there is still a need for additional support and Retail NZ is keen to engage with Government on a sector-specific support package.”

Finance Minister Grant Robertson announced the Resurgence Support Payment (RSP) rate was being doubled and would be paid fortnightly, the wage subsidy would continue through the transition period and a $60m package for the regional business partner programme and mental health support was also included.

“While the ongoing restrictions in Auckland are keeping people safe, we also know they have made life very tough for businesses in the region. In recognition of that ministers have agreed to significantly boost the Resurgence Support Payment,” Robertson said.

“After the next scheduled payment on October 29 we will move to fortnightly payments at double the current rate. The enhanced support will first be paid on November 12 and fortnightly thereafter until Auckland is able to move into the new framework.”

Currently, the RSP is paid at a base rate of $1500 per eligible business and $400 for each full-time employee up to a total of $21,500.

For the payments starting on November 12 this will be $3000 per business and $800 per FTE, up to 50 FTEs. This will make the maximum fortnightly payment $43,000.

The estimated cost of providing both the weekly RSP and the wage subsidy is up to $940m per fortnight through this transitional period.

“In effect this means the RSP will be a weekly rather than three-weekly payment as it is now, but for ease of application and administration, it will be available in fortnightly instalments. We are not changing any settings at this time so payments can be made without disruption.

“The enhanced RSP will be available until Auckland moves into the new framework. The wage subsidy will continue to be available on the current criteria while areas of the country are still in alert level 3.

“Final details of the support to be provided under the new framework will be agreed in November. My expectation is that because businesses will be able to operate at all levels of the framework, the wage subsidy and the RSP will be reworked to a new targeted payment at the Red level of the new framework,” Robertson said.

Ministers have agreed in principle that there will be a transition payment made available to support businesses when they move into the new framework.

Businesses will be able to apply for up to $3000 worth of advice and planning support, and then receive up to $4000 to implement that advice through the established Regional Business Partners programme.

As part of the package, $10m is available for mental health and wellbeing support through a programme to be designed with the EMA and Auckland Business Chamber of Commerce.

Small Business Minister Stuart Nash said the measures are designed to support Auckland businesses to deal with the uncertainties caused by the Delta outbreak.

“This will help build more resilient businesses, improve the ability to operate when Covid-19 restrictions are in place and position businesses better to seize future opportunities.

“The Regional Business Partners programme is a proven network of experienced advisers who can recommend tailored solutions to the issues faced by business owners.

“This will make a real difference in difficult times and ease some of the financial and wellbeing stresses faced by Auckland businesses under lockdown,” Nash said.

Auckland Business Chamber chief executive Michael Barnett said the package announced by the Government shows clearly that they have listened to the business organisations in Auckland and responded.

“The adjustment to the resurgence payment will mean that the businesses most in need of support will receive it, for most it will address the cashflow shortages most small businesses are experiencing now,” he said.

“The recognition by the Government [that] the human cost to business owners, their families and employees is a health and wellbeing issue shows they have listened.

“I would give an 8/10 for this package, I appreciate there will be some finessing to elements of it and there are some issues yet to be addressed for the hospitality sector in Auckland to improve their ability to operate but these should be sorted over the next few weeks,” Barnett said.

Brett O’Riley, chief executive of the Employers and Manufacturers Association, said the EMA welcomed the Government’s announcement of support for Auckland business and the new Covid-19 protection framework.

However, O’Riley questioned how the new “traffic light” system was going to work in practice for businesses and how the Government would reach those communities who are opposed to the vaccine.

“We are pleased to see that the specific support we’ve been asking for … has come to fruition but there will be many challenges before it can be introduced, and in its implementation,” he said.

“We understand the 90 per cent vaccination rate before the new traffic light system comes in, but this is going to take some doing.

“The community-wide requirement for Covid-19 vaccinations certificates will be a strong incentive for those people who are yet to make the decision to get vaccinated.

“Getting to the 90 per cent target in Auckland is going to be a challenge and while the $120m allocated to targeting our Māori community is great news, we’d like to know particularly how the Government plans to reach other communities, such as those who are opposed to this vaccine but would have one of the others.”

He said the Government’s focus on and funding of a programme for mental health and wellbeing for business and was crucial for recovery.

“We hear every day, first-hand through our AdviceLine and the Business Helpline how people are suffering and we look forward to working with the Auckland Business Chamber on this initiative.

“We will also be able to provide business support assistance through the Regional Business Partner (RBP) Network managed by Auckland Unlimited.

“The $50m for the RBP to provide 10,000 businesses with mentoring and advice to help them recover and grow into the future is an excellent practical step to support our businesses and economy.

“The doubling of the Resurgence Payment from November 12 and its two-weekly payment frequency will also be critical for businesses that have been on the brink for months, and will be the difference for many being able to survive until the traffic light system is implemented in Auckland,” O’Riley said.

Hospitality NZ chief executive Julie White said the financial support from the Government was “better late than never” and she sincerely hoped it was enough to stop more businesses going to the wall – but for some it won’t be enough.

“The doubling of the resurgence payment is desperately needed, so will be a relief for many in hospitality. At last, there is more money to offset costs that are driving hospitality businesses toward bankruptcy.

“Many, hospitality and accommodation businesses, most of them family-owned, have failed or been severely damaged over the past 18 months.

“We await further detail on support for businesses when Auckland moves into the new framework and help that will target most affected businesses.”

MYOB head of customer service Jo Tozer said after today’s Government announcement there were some unanswered questions regarding the transition from the phased approach within alert levels to the new protection framework.

“The decisions around vaccination certificates in the new framework will also be providing local SMEs with food for thought, especially with regard to further decisions around how the use of these could impact eligibility for financial support.

“In our latest MYOB Snapshot, 51 per cent said they wouldn’t be asking customers or visitors to their workplace to show proof of/confirm their vaccination status on entry, while just 28 per cent said they would.

“However, with the Government stance on this concept now clearer than before, we could see the approach amongst this group and the 21 per cent of business owners who were unsure, shift over the coming months.”

Another positive piece of news from today’s announcement was the enhanced economic support package and the doubling of the enhanced RSP and mental health support for the businesses.

“It will provide businesses with greater flexibility to respond to the cash flow and revenue declines they’ve faced,” she said.

“Over a third of New Zealand’s SMEs have experienced a mental health condition and more than two-thirds of businesses have told us that they are in favour of the Government providing funding for mental health initiatives for small business, so an initiative providing tailored support for some businesses is a welcome start.”

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