Businesses complain support payment criteria is confusing, thresholds too tight

A snap survey of Hospitality New Zealand members found a majority do not believe they will qualify for the latest round of Covid support. Photo / Alex Burton

After the Government announced another round of business support for businesses hit by the impact of Covid, Hospitality New Zealand saw an overwhelming response: confusion.

Finance Minister Grant Robertson announced a fresh round of support on Monday which he said would support the "most affected" businesses.

The scheme will pay out up to $24,000 a fortnight for qualifying business ($4000 per business and another $400 for each employee up to a maximum of 50), with applications opening on Monday.

Julie White, chief executive of Hospitality New Zealand, met with Treasury officials about the support on Thursday.

"My first comment was, 'you need to get your comms team's act together because we have been fielding an enormous amount of calls from our membership who are equally confused."

The confusion, initially, is about the threshold businesses need to meet to qualify.

Many businesses have been reading and rereading Robertson's statement, deciding whether it means one thing, or the exact opposite.

"Firms must show a 40 per cent drop in seven consecutive days within the six weeks prior to the shift to phase 2 of the Omicron response on February 15," Robertson announced with Prime Minister Jacinda Ardern at the post-Cabinet press conference on Monday.

Last week Finance Minister Grant Robertson indicated the Government was considering support payments for businesses, in particular sectors most affected by Omicron. Photo / Mark Mitchell

Read literally, the statement appears to say that the drop in revenue had to come from the period prior to February 15, compared to that afterwards.

Ruth Cobb, chief executive of PrintNZ, an industry body for the print and packaging industry, was initially unable to answer queries from members.

"I couldn't understand it. I read it at night and thought maybe I'm just tired, so I reread it in the morning, and everything puts you round and round in circles," Cobb said.

Robertson's office clarified the statement without acknowledging questions about the initial statement.

"The affected revenue drop period following the set date compares with a typical seven-day period in a six-week period prior to that date," a spokesman said.

The IRD has since put out a lengthy explanation on its website.

Graeme Hastie, a director of Print Central, a printing business in Queenstown with 18 employees, was unimpressed.

"There's enough confusion and uncertainty in the business market, especially in a place like Queenstown, without having ambiguous statements like that coming out of the minister's office."

Even with the comparison period clarified, a number of businesses and their representatives now worry that many businesses will not be able to meet the test. Trading in January 2022 was already well down on what was considered "normal" prior to Covid, meaning a 40 per cent drop from that period was unlikely.

Hastie said he believed the comparison "almost makes it unclaimable", with many businesses in Queenstown trading well down on a year ago, meaning they may not see a 40 per cent fall in February.

White said Hospitality New Zealand conducted an overnight survey Wednesday, which by Thursday morning had more than 700 responses. Of those, 55 per cent said they did not believe they would qualify for the funding.

Some members, she said, closed down annually in January and so there would be no revenue to drop.

"This is not a handful of closures. This is deep scarring across the industry. There will be survivors, but it is going to be so reduced that it is going to be highly visible," White said.

"When we come out, we'll open the borders and visitors and they'll have an average experience because what you call basic infrastructure, having restaurants and cafes open and available in a vibrant city, aren't going to be there."

White said Treasury officials appeared to take on board the issue. Economic Development Minister Stuart Nash appeared to be eager to help the industry she said, as well as Robertson, but it was unclear whether her lobbying for a change of comparison period or threshold would be successful.

The support payment announcement "hasn't landed well and they know that and they're looking at what the options are, but I don't know if it will change anything," White said.

Kirk Hope, chief executive of BusinessNZ, said the organisation had received a lot of feedback, quickly, that many businesses would not qualify for the support, due to the comparison periods and the sharp drop in revenue required. "If they meet the test, a lot of them probably would have closed their doors a long time ago."

In the days leading up to the announcement, both Prime Minister Jacinda Ardern and Robertson had made repeated reference to the idea that support payments would be targeted at particular sectors most impacted by the latest outbreak.

While Robertson described the payments on Monday as "targeted", the payments are available to businesses of any type that meet the requirements.

Robertson said it became clear that it would be difficult to create a scheme as it "runs into significant definitional and integrity issues".

Hope speculated the broadening of the support may be behind the severe revenue requirements.

"We felt like the settings might have been too tight because they couldn't identify the specific sectors they wanted to target, so they had to provide general support and therefore make the criteria tighter."

Given that the original wage subsidy scheme in early 2020 was made broad, in part because it was difficult to carve off particular sectors for support, it is unclear why the same lesson needed to be relearned by the Cabinet last weekend.