Covid 19 coronavirus Delta outbreak: Auckland economy losing $100m a day, council chief economist says

Auckland's economy is losing $100m a day, says council chief economist Shane Martin. Photo / Getty Images

The level 4 lockdown is costing Auckland $100 million a day, or about a third of the city's GDP, Auckland Council's chief economist Shane Martin says.

The figure is in line with ASB chief economist Nick Tuffley, who said the level 4 lockdown would 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.

Finance committee chairwoman Desley Simpson. Photo / Jason Oxenham

"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.

Martin said the $100m figure was a "back of the envelope" calculation based on what happened last time in level 4 and comparing that to business as usual.

"Of course, we would all rather it not be an issue at all, but making the best of a bad situation, I think we are better placed to do that," he said.

Auckland Council chief economist Shane Martin. Photo / Supplied

He said his team would start looking at how different sections of the Auckland economy are coping with a level 4 lockdown a second time to get an insight into how different sectors have been able to prepare and cope, and whether it's hitting the same places this time.

Auckland Chamber of Commerce chief executive Michael Barnett said the $100m figure was about right.

Heart of the City chief executive Viv Beck said this year's level 4 lockdown was 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.

ASB chief economist Nick Tuffley. Photo / NZME

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 was a mixture of feelings among business, Beck said. Restaurant Month in the central city had left a lot of eateries with a big line-up of bookings pretty gutted, others were philosophical and there was anxiety for others not knowing what lies ahead.

"This is tough on top of tough for some," Beck said.

Heart of the City chief executive Viv Beck. Photo / Supplied

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 was about right, but part of that cost would be offset by the Government wage subsidy and doing business resurgence.

Last year, he said, Auckland rebounded after the level 4 lockdown and quickly had skill shortages around infrastructure, construction, home building and technology - and will do so again.

Auckland Chamber of Commerce chief executive Michael Barnett. Photo / NZME

"Day one after lockdown those people will be back in work and into productivity," Barnett said, adding how quickly people got vaccinated would help the economy move down levels.

To maintain momentum, he said, other parts of the Government would have to change the way they behaved 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.