Rotorua businesses hail wage subsidy extension as 'huge relief'

Guido Bachmann, co-owner of Guido's Bakery. Photo / File

Rotorua business and community leaders say the Government's extension to the wage subsidy scheme for another eight weeks and changes to its terms come as a "huge relief".

Finance Minister Grant Robertson announced on Friday that the change in the eligibility criteria would mean an extra 40,000 businesses would be eligible to access the scheme.

Responding to feedback from businesses, the lowering of the revenue loss threshold from 50 per cent to 40 per cent will cost the Government an extra $700m.

It is part of the $50 billion Budget 2020 Covid-19 rescue and recovery package.

Up to 230,000 businesses are now forecast to be eligible for the new eight-week scheme from June 10, covering up to 910,000 workers with between $2.6b and $3.9b support.

The closing date for the Small Business Cashflow Loan Scheme is now July 24.

Businesses and sports clubs are also poised for the possible lifting of social distancing restrictions this week, with the Prime Minister set to make the announcement today. Guidough's Bakery owners Guido and Melanie Bachmann operate two stores in Rotorua.

Melanie Bachmann said she and her husband were "so grateful" to the Government for its continued wage subsidy support.

"This financial relief has made a real difference to our business, particularly as we've been able to retain all our fantastic staff, which is very important to us," Bachmann said.

"We're still not back to normal yet as we are not able to deliver to restaurants or attend night markets but we have had amazing support from the Rotorua community."

She said although Saturday was their third birthday, they hadn't had a chance to celebrate yet "but we're feeling more positive that things can hopefully only improve in the next few weeks".

Bachmann said if the Government did agree for the country to move to alert level 1 it would also have a "huge" positive impact for them, their staff and customers.

Rotorua-based DMC Builders owner Dave Pound said he and his seven staff would be very relieved when the social distancing protocol restrictions were lifted.

"It had a been a tough few weeks and working under the new social distancing rules had taken a bit of adjustment but like everyone else, we had to adapt to the new normal."

Pound accessed the wage subsidy scheme during the lockdown but said he had decided not to reapply, as at some point business owners needed to "tough it out" on their own.

"Like lots of construction businesses we're in catch-up mode and along with other bits and pieces, fortunately we should have enough work to keep us going until Christmas."

Pound said his major concern was how the construction industry would fear early next year, particularly given the projected downturn in the commercial building sector.

Hospitality New Zealand Bay of Plenty manager Alan Sciascia. Photo / File

Hospitality New Zealand Bay of Plenty manager Alan Sciascia said businesses were gradually getting back to normal but it has been a "very slow start" in terms of their turnover.

Sciascia said the extension of the wage subsidy scheme and change of the income loss threshold from 50 per cent to 40 per cent would have a "big impact" on businesses.

"It doesn't sound much when you talk percentages, but it makes a huge difference to employers who can retain their staff and keep their doors open for the next couple of months at least."

He said the Government support also helped to keep the local economy ticking over.

"It is a welcome relief as we head into the winter months which is traditionally a quieter trading period and businesses having to rely on the domestic market for their survival."

Sciascia said the Government's commercial rent support package - including $40m to cover arbitration costs, which was announced last Thursday - would also be a "big help".

Kelly Smith, vice-president Marist St Michael's Rugby and Sports Club in Rotorua, said the lifting of the social distancing restrictions could not come soon enough.

Smith said during the lockdown they had to turn away at least half a dozen bookings for functions, meaning the loss of more than $10,000 of income.

The club relied heavily on functions, as well subscriptions and donations, and its team of wonderful volunteers for its financial survival, he said.

Smith said the clubrooms were usually packed with supporters and the club's 200 or so members could not wait to get back to some degree of normality.

He said they hoped to be able to hold a couple of rugby games this weekend. "Our boys are so keen they even trained on Friday night of Queen's Birthday weekend."

Rotorua Chamber of Commerce chief executive Bryce Heard. Photo / File

Rotorua Chamber of Commerce chief executive Bryce Heard said the lifting of the social distancing restrictions would be an important change for the whole community, "particularly as many restaurants and cafes are operating at 70 or 80 per cent of their normal level".

Heard said it had been a slow restart for many businesses, particularly as this was traditionally a slow time of year, with August and September also being quieter months.

The wage subsidy scheme was a welcome relief for many businesses, but his concern was that it could create a level of dependency for some business owners.

"At some point, the Government can't keep handing out money to help keep businesses afloat as it will weaken their balance sheet and the ability to borrow investment funds will be impeded," he said.

Heard said restaurants, cafes and small retail businesses were subject to "high churn", with businesses coming and going, and he expected that trend to continue for some time.

"But it's not all bad news. Covid-19 has brought us a mixture of bad and good news.

"Some businesses have taken the opportunity to reinvent themselves and adapted to the new normal. I know of several businesses that are looking to hire more people."

Yesterday was the 16th consecutive day without any new Covid-19 cases, with only one active case.