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Covid 19 coronavirus Delta outbreak: Auckland economy losing $100m a day, says council chief economist
August 19, 2021
The level 4 lockdown is costing Auckland $100 million a day, or about a third of the city’s GDP, says Auckland Council’s chief economist Shane Martin.
The figure is in line with ASB chief economistNick Tuffley, who said the level 4 lockdown will be costing the country about $290m a day, although history suggests some of that loss will be offset as the economy rebounds.
Council finance committee chairwoman Desley Simpson said the figures for Auckland follow more work done by Martin on the estimated impact of lockdowns on Auckland’s economy since last year.
“This has been informed by the actual impacts felt through last year’s lockdowns.
“We now estimate that a level 4 lockdown gives a 30 per cent impact to Auckland’s GDP, which equates to a potential cost to the local economy of $100m for each day,” she said.
Auckland Chamber of Commerce chief executive Michael Barnett said the $100m figure is about right, while Heart of the City chief executive Viv Beck said this year’s level 4 lockdown is having a similar effect to last year with shops, restaurants and bars losing about $3m a day.
Simpson said the council knew another level 4 lockdown was a strong possibility and had built a bit of flexibility around that.
“I’m confident we will weather this storm one way or another … if we stay here for a week, we will be fine. If we stay here for eight weeks that will need some more discussion,” she said.
Finance officers are already turning their attention to the impact of the lockdown and will report back to Mayor Phil Goff and councillors.
The impact from Covid last year punched a $1 billion hole in the council’s finances through to 2024, although the better-than-expected rebound in the Auckland economy reduced the figure to $750m.
In June, the council signed off a new 10-year budget with a one-off rate rise of 5 per cent followed by 3.5 per cent thereafter which maintains critical services and increases capital investment by 21 per cent from the previous budget.
However, the big investment package has hit troubled waters after revelations by the Herald this week about a looming $400m funding hole in the transport budget.
This follows word from the NZ Transport Agency, Waka Kotahi, that it plans to only fund $2.3b of the $2.7b the council sought over the next three years from fuel taxes and user charges. A final call on this funding will be made by the Waka Kotahi board later this month.
Beck said most of the 1500 retail shops, bars and restaurants in the central city are closed, leaving 40 supermarkets, convenience stores and pharmacies as the only businesses open under level 4.
There is a mixture of feelings among business, said Beck. Restaurant Month in the central city has left a lot of eateries with a big line-up of bookings pretty gutted, others are philosophical and there is anxiety for others not knowing what lies ahead.
“This is tough on top of tough for some,” Beck said.
She said business in the central city had picked up before the latest lockdown, saying for the June quarter it was down 11 per cent on the same quarter in 2019, calling it “a pretty good result” for winter.
Barnett said the figure of about $100m a day is about right, but part of that cost will be offset by the Government wage subsidy and doing business resurgence.
Last year, he said, Auckland rebounded following the level 4 lockdown and quickly saw skill shortages around infrastructure, construction, home building and technology – and will do so again.
“Day one after lockdown those people will be back in work and into productivity,” said Barnett, adding how quickly people get vaccinated will see the economy move down levels.
To maintain momentum, he said, some of the other parts of the Government are going to have to change the way they behave in areas like immigration, where there is a skill shortage to get growth in the economy and the possibility of a passport for people to do business offshore.
“Those things need to be accelerated because we need to be at the front of the rebound, not at the back of it,” Barnett said.