GOLOCAL

Northland has seen a large spike in people applying for social welfare benefits as the economic effects of coronavirus start to bite.

The latest Ministry of Social Development data shows the region has the biggest rise in residents seeking Jobseeker Support and comes as businesses navigate new rules around alert levels.

Many Northland business owners have chosen to remain closed during level 3, despite being allowed to open if they can meet public health and safety requirements and are completely contactless.

This means they will have been shut for nearly seven weeks from when lockdown began on March 25, while still paying overheads such as rent and bills.

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It's now more important than ever to support local businesses, a move strongly backed by Northern Advocate's Go Local! campaign.

Te Arani Lawrence took over the Village Cafe in Kerikeri six months ago and says dealing with the global pandemic has made things extra tricky.

She chose not to open under level 3 rules, whereby businesses accessed by the public - bars, cafes, restaurants and retail stores – can only open for online or phone purchases, along with contactless delivery, drive-through and takeaways.

"Our meals are not made to be eaten at home – maybe the deli cabinet could be taken away but the meals that we cook are not designed for that," she says.

"Our kitchen isn't big enough to safely have staff in there, and I don't want to ask that of them, because they would then go home to their children and partners."

Lawrence says she has received the wage subsidy for her staff, and her landlord has halved the rent so "hopefully we will hang in there".

Te Arani Lawrence said food at the Village Cafe in Kerikeri is not made to be eaten as a takeaway. Photo / Jenny Ling
Te Arani Lawrence said food at the Village Cafe in Kerikeri is not made to be eaten as a takeaway. Photo / Jenny Ling

She says more Government support may be needed in the long term.

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"It's going to be a long battle from here. Over the next year will be the real test."

Charmdog Daycare owner Alex Parker opened on Monday after confusion about whether her service was allowed to operate under level 3.

The Kerikeri doggie daycare owner said she received conflicting information from the Government, which delayed her opening for a week.

She has had to pay the rent and bills, which has been tough, she says, though she feels fortunate for having financial support from her partner's job.

She is confident her business will bounce back, though admits it has been a "huge setback".

"I've spent time and advertising trying to increase my client list, so it won't be the same as what I've built it up to be. This whole thing has been a huge setback."

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Kaitaia Business Association chairwoman Andrea Panther said less than 20 per cent of the town's eateries had opened under level 3. Photo / supplied
Kaitaia Business Association chairwoman Andrea Panther said less than 20 per cent of the town's eateries had opened under level 3. Photo / supplied

Kaitaia Business Association chairwoman Andrea Panther said less than 20 per cent of the town's eateries had opened under level 3.

"The other places have chosen not to because it's too expensive," she says.

"There's a whole lot more that every business has to do with policy, procedures, barriers etc., so there are more costs and time involved, yet productivity is way down because we're all supposed to still be at home. We just don't have the population for them to justify filling their kitchens with fresh food."

Panther says she knows of one eatery that will be "making a call" whether to reopen at all, and another has said it's likely they will lose some staff.

Even as the country moves down the levels, people won't spend as much because of job uncertainty and job losses, she says.

Ministry of Social Development figures show there are 10,856 Northlanders on the Jobseeker's benefit.

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The number of the region's population aged 15 to 64 receiving Jobseeker Support increased from 8.2 per cent at the start of the year, to 9.7 per cent by April 24.

This is a hike of 1.5 percentage points, and the largest increase of any region.

The Ministry couldn't say how many Northland companies had applied for the wage subsidy scheme.

Former Finance Minister Steven Joyce and Retail NZ chief executive Greg Harford have raised concerns about a wave of redundancies when the scheme runs out in June.

On Monday, Prime Minister Jacinda Ardern indicated the wage subsidy scheme would be extended for some sectors after the 12-week period expires.

Northland Chamber of Commerce chief executive Steve Smith said from his own observations around Whāngārei certain businesses were "all go", including the automotive industry, and most service-related businesses were open.

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However, it was "completely different" for those in retail and hospitality, where only around half were open for takeaway-type services.

Northland Chamber of Commerce chief executive Steve Smith said the extra wage subsidy would hopefully help save jobs in Northland. Photo / file
Northland Chamber of Commerce chief executive Steve Smith said the extra wage subsidy would hopefully help save jobs in Northland. Photo / file

"The rest are not able to open their doors at present. For the most part, the CBD is quiet, none of the clothing companies are open, and barbers and hairdressers are not able to. Largely speaking retail is defunct. The exceptions are Mitre 10 and Bunnings and the likes of PlaceMakers."

Smith said the extra wage subsidy would hopefully help save jobs in Northland.

"But I still expect there to be quite a few redundancies, as wages are not the only expenses they're incurring. But for some businesses which are slightly stronger, this will at least allow them to hold on to their staff."

The Chamber yesterday launched a survey to try and gauge how businesses are doing under level 3.

The Covid-19 Business Survey – which has been emailed to 500 businesses and will be shared with central Government – asks what capacity businesses can operate at under level 3 and whether they can operate online, what support they need, and whether landlords have offered a discount for the lockdown period.

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Unemployment in the Far North was forecast to rise from 7.4 per cent from December 2019 to 11.7 per cent over the year to March 2021, as businesses previously supported by the wage subsidy are forced to close.

This is according to a report from economics consultancy Infometrics, which was presented to the Far North District Council on April 29.

It said Kaipara's economy would be more resilient because of its overall focus on food production, "however, council should still anticipate seeing unemployment
levels rise to around 10 per cent by the end of 2020".

More than 3500 jobs are expected to be lost across the Whāngārei district in the coming year. Unemployment is set to rise to 8.8 per cent, up from 5.4 per cent at present.

Cash flow lifeline

Revenue Minister Stuart Nash said the Covid-19 Response (Taxation and other Regulatory Urgent Measures) Bill would help businesses as they dealt with the economic impact of the virus. Photo / file
Revenue Minister Stuart Nash said the Covid-19 Response (Taxation and other Regulatory Urgent Measures) Bill would help businesses as they dealt with the economic impact of the virus. Photo / file

A "significant package" of tax reforms was pushed through all stages in Parliament last Friday to throw a cash flow lifeline to small businesses.

Revenue Minister Stuart Nash said the Covid-19 Response (Taxation and other Regulatory Urgent Measures) Bill would give businesses more than $3 billion in tax refunds as they dealt with the economic impact of the virus.

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Nash said the changes meant cash could start flowing to businesses via the tax system as early as this week.

He advised businesses to talk to their accountant, bookkeeper or tax agent, or log on to the MyIR portal as soon as possible to take advantage of the Government support.

"Many small and medium enterprises are feeling the pain now. The tax refunds will be a cash lifeline for businesses with non-wage fixed costs, like rent, interest and insurance. Some don't want to take on extra debt with a bank loan. Without this support, these otherwise viable SMEs may be forced to close."