New Zealand's tourism sector is not dead - but it is in a "deep slumber" and 100,000 jobs are on the line, MPs have been told.
Industry leaders from the restaurant, tourism and farming sectors are briefing MPs today on the impact Covid-19 and the lockdown is having on their industries.
They are appearing before Parliament's Epidemic Response Committee, which is chaired by National leader Simon Bridges.
Tourism Industry Aotearoa chief executive Chris Roberts told the committee that the industry was in a "deep slumber" and had been forced to go into "hibernation".
The Government's wage subsidy scheme was welcomed by tourist operators - but up to 100,000 jobs could still disappear, he said.
MPs were today told that thousands of business have been damaged - "many of them mortally" - by the Covid-19 pandemic and nationwide lockdown.
Tourism Industry Aotearoa
Roberts said tourism supported more than 400,000 jobs.
"It's too big to be written off."
For the next six months; $18 billion had been expected to be spent through tourism-related spending, but he was now picking just $6b. That was $2b less a month than had been forecasted.
Roberts estimated as many as 100,000 jobs out of 400,000 could disappear.
However, after a recovery, those jobs would come back as the sector rebuilt itself.
Hotel revenue was down 57 per cent in March, and would be down further this month, he said.
Roberts said there were 3000 workers in Queenstown who were receiving emergency assistance.
Many employers and employees had gone into "winter hibernations".
Almost all tourism businesses have taken up the wage subsidy scheme – the only ones who haven't are the ones that have chosen to close.
Many tourism operators are waiting keenly to hear about a rent rescue package, he said, without which more businesses will close.
"Many businesses don't have a pathway to survival."
Federated Farmers president Katie Milne said farmers were doing better than primary sector workers in other countries.
However "winter is coming", she said, speaking both literally and figuratively.
After the global financial crisis, the price of beef and lamb nearly halved.
Milne is expecting the same thing to happen after Covid-19 has subsided.
The price of milk powder, which is around $7 a kilogram at the moment, is forecast to drop to around $5/kg.
Milne also said New Zealand should be careful not to get into subsidising of the agricultural sector, as that would be more damaging for the long term.
"Subsidies are like sweets; they're not good for you," Bridges said.
Former Business NZ head
Former Business NZ chief executive Phil O'Reilly told the committee today that thousands of businesses were being damaged by the crisis.
The former head of New Zealand's business lobby group is calling on the Government to have a "rethink" about its essential workers policy.
O'Reilly is also calling for the Government to expand the wage subsidy scheme and to provide small businesses with an "urgent" cash flow injection to keep them afloat.
"The engine of our economy is small business," he told MPs.
Overall, businesses are happy with the Government's "go hard, go early" approach.
"It's important to realise how wide and deep this shock is, and will be," he said.
Thousands of businesses have been damaged by the pandemic response – "many of them mortally".
O'Reilly says the wage subsidy has been good for small businesses, but it has been confusing for many too.
He said the Government should further explain the scheme and make it more generous.
"We need to think about how we retain employment," he said.
If a business can show they can demonstrate social distancing while they are operating, they should be allowed to open, he said.
In Australia, he said, the Government is providing many businesses with an up to $20,000 cash flow injection.
"We should urgently do something similar. The biggest killer of SMEs is cash flow."
Meat Industry Association
Meat Industry Association chief executive Tim Riche said the biggest hit for the meat sector was China closing its border early on.
But during that time, meat exporters were able to bolster markets such as the US and Australian.
China has since come back on stream, he said.
"The underlying demand for meat protein there is strong."
But the lockdown has still had a big effect on the meat industry.
Sheep meat production has halved, beef is down 30 per cent and venison meat production has taken at 75 per cent hit.
Overall, the loss in productivity for the sector has been "significant".
However, Riche is confident that demand for New Zealand meat around the world remains strong and the sector is well placed to bounce back.
He said he supported O'Reilly's comments that businesses should be able to open during level four if they can demonstrate appropriate compliance with health and safety practices.
Ports of Tauranga chief executive Mark Cairns who is representing the port companies, said one of the biggest issues was getting empty containers to exporters.
Ports were working with the Government on this issue, he said.
New Zealand exports 65 per cent more containers than it imports.
Cairns said ships have been bringing empty containers into New Zealand to help.
He added one of the larger shipping companies has threatened to stop coming to New Zealand because the export load has been reduced.
He did not say which company this was.
Port of Tauranga was "holding up, if not ahead" of where it was in the past two months, as it was still exporting kiwifruit and dairy.
But Cairns said there would be cost to the businesses because of the lockdown.
The Government, however, was quite rightly doing "everything it can" to eradicate Covid-19.
He also supported O'Reilly's call for businesses to open if they can demonstrate appropriate compliance with health and safety practices.
Today's presenters to committee
Today MPs are hearing from top industry leaders about what is happening in their sectors.
Those presenting to the committee today include:
• Former BusinessNZ chief executive Phil O'Reilly
• Road Transport Forum chief executive Nick Leggett
• Mark Cairns, representing Port company CEOs
• Federated Farmers president Katie Milne
• Meat Industry Association chief executive Tim Riche
• Tourism Industry Aotearoa chief executive Chris Roberts
• Restaurant Association of NZ chief executive Marisa Bidois
Before the travel restrictions and the lockdown tourism was New Zealand's biggest economic earner.
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Yesterday's committee hearing focused on the health side of the Government's response to the pandemic.
Yesterday, Prime Minister Jacinda Ardern said that $6.6 billion has been paid to more than 900,000 people – about 41 per cent of all New Zealand's workforce.