The government has announced some details of assistance for businesses threatened by the impact of COVID-19 but is being criticised for not moving fast enough on the package:
Forest Industry Contractors Association chief executive Prue Younger said she had been warning about the potentially devastating impact of Covid-19 for weeks.
“You know, we’re another week in, we’re another week of our contractors with no substance to staying in business,” she said. . .
Businesses have costs every day, every week. These ones haven’t had income for weeks and each day’s delay makes their position more precarious.
Skyline Queenstown chief executive Geoff McDonald said he was pleased the government was working on an assistance package, but he would like more detail.
“Skyline is reasonably robust, it’s a fairly large, successful organisation so we’ve got some degree of resilience.
“But some of the smaller tourism operators out there are going to be hurting right now and so the challenge is looking to the future and having at least some sort of milestones to say ‘well, if I can make it there I can get access to X initiative and Y initiative’. That’s what we really need,” he said. . .
Small businesses have little if any fat in their systems. If there’s little or no money coming in they can’t keep paying staff and covering overheads.
This is peak tourist season. Businesses servicing them have lost customers and are losing money. They will already be cutting staff hours, getting rid of casuals and weighing up whether they can afford to keep full time permanent staff.
McDonald said businesses were also being hit with the “double-whammy” of a minimum wage increase from next month.
“We’ve got this challenging environment and we’ve got this sort of ratcheting up of wage and salary bill, so it is difficult. Tourism industry is very labour intensive so your wage bill is such a large part of your overall expenses,” McDonald said. . .
Whether the benefits outweigh the costs of imposing higher and faster increases to the minimum wage is debatable at the best of times. The risk to jobs and businesses when the economic outlook is so uncertain is even greater.
If the government wants more in the pockets of people on low wages it should take less in tax or top up wages instead of forcing businesses to spend more of their own money. It could also pay people who are in self-isolation so they’re not tempted to keep working if they might be incubating the disease but can’t afford leave without pay.
The day the first Canterbury earthquake hit, then Finance Minister BIll English phoned business leaders and asked what was needed. They said money to keep paying staff.
That went straight to cabinet, was approved, and that afternoon the announcement was made that businesses could apply for money to cover wages.
The current situation is different from the earthquake but the need for assistance is just as urgent and the response should be too.
The government is talking about tailoring assistance to individual businesses. That would be complicated and take time.
It would be far better to use the earthquake assistance model. Businesses that needed help to pay wages applied, I think through Inland Revenue, and got it. That kept businesses afloat, workers in funds and money flowing through the economy.
Something similar would be much simpler and easier to implement faster than what the government appears to be planning.
There’s no need to panic but there is need for urgency.