Major Issue With Government’s Support Package

Both The Restaurant Association of NZ and Hospitality NZ have discovered a major problem in the Government financial support packaged announced yesterday.

The Government’s statement looks to have been missing vital words which are now in the online version of the media release: “Firms must show a 40 percent drop in seven consecutive days within the six weeks prior to the shift to Phase 2 of the Omicron response on February 15, compared to seven days after that date.”

The clarification means that means every business that had a very bad January will not be eligible for the grants – because customers and revenue were already extraordinarily low and therefore unlikely to have dropped another 40 percent in February.

A survey taken just days before February 15 found that half of Hospitality NZ members believed their revenue was so low that they could only survive another three months.

The Restaurant Association agrees, adding that the criteria around the new financial support payment will lock out too many businesses from being eligible.

“Unfortunately, the specific criteria set will make too many businesses ineligible,” said Marisa Bidois, CEO of the Restaurant Association.

“What we would like to see is the comparison period extended by a further four weeks, giving those businesses the ability to be able to compare to a period in December or preferably a year-on-year comparison.

“Ever since August of 2021, revenues have been down on previous years so the ability to be able to compare to a period when we were not impacted by alert level operational restrictions, would be a more reliable reflection of the impact to business. Or for new businesses, the ability to compare to the December 2021 period.”

Another problem has been discovered today. Although it was portrayed as a new programme, businesses who had borrowed money made available under the previous loan scheme were today told they could not borrow the $10,000 promised in this scheme until they paid back the first loan.

“Those who suffered the worst of the Red setting after lockdown ended will be ineligible for the support package,” echoed CEO of Hospitality NZ, Julie White.

“It’s highly unlikely that a business down over 50 percent throughout January, will be able to prove a further 40 percent drop since February 15. Some businesses never experienced a significant upturn in revenue after Lockdown last year.”

White noted a discrepancy between the Government’s claim about the total cost of the package, and the very narrow eligibility rule.

“The Government has estimated the package will cost upwards of $460m over six weeks. We’d like to see their calculations, because we think most businesses won’t be eligible.”