Firms unsure as subsidy ends

Canterbury businesses facing the loss of the Government’s Covid-19 wage subsidy in seven weeks say they are looking at an uncertain future.

Prime Minister Jacinda Ardern said yesterday that the subsidy, paid to employers who could prove a 40 per cent drop in revenue, would stop in September.

Nick Inkster, who owns OGB bar in central Christchurch, said the subsidy would be finishing in its quietest month.

OGB initially received the wage subsidy for 30 staff, and then 24, but Inkster thought the business would be fine. Some casual staff on work visas had already left to travel, he said.

Inkster said the subsidy had created ‘‘a bit of a false economy’’, and the Government could not keep supporting businesses that were not viable.

Industry bosses say while they expect more jobs to go, it is too hard to estimate numbers. Almost 18,000 Cantabrians are now taking the jobseekers benefit, up from 13,000 when the country went into lockdown in mid-March.

Amy McLellan-Minty, from Hospitality New Zealand, said with wages as their biggest cost, hospitality businesses would be hit ‘‘the hardest and longest of any sector’’.

The end of the subsidy would result in some businesses accruing more debt they could not afford to try to keep staff employed, she said.

‘‘The road to recovery doesn’t stop in September. It will go well beyond and some operators won’t make it through the other side.’’

Pim Borren, industry body head for both the Rental Vehicle Association and Bus and Coach Association, called for targeted help for businesses completely reliant on inbound tourism. ‘‘For those with high capital costs, it’s very hard to know what to do.

‘‘We’d hoped that the wage subsidy might be extended for the few months until the borders are opened back up. It’s very disappointing.’’

Leeann Watson, chief executive of the Canterbury Employers Chamber of Commerce, said it was getting increasing number of calls from business owners needing to restructure or downsize.