Some rehiring but 92,000 job losses
A newly released Government paper paints a bleak outlook for tourism with job losses predicted to peak at 92,000 this year.
Economic losses from Covid-19 in the tourism sector over the next four years were estimated at $18 billion to $21b of GDP.
The information was in a massive new tranche of Covid-19 Cabinet papers and other documents proactively released by the Government yesterday.
A paper on the Government’s $400 million tourism recovery package from Tourism Minister Kelvin Davis warned the sector’s recovery would be much slower that other areas of the economy because international travel was zero, and a trans-Tasman bubble would take months.
A domino effect was already evident with insolvent tourism operators unable to pay their suppliers and smaller businesses supporting major operators were also compromised.
The forecast of 92,000 job losses is not far off Tourism Industry Aotearoa’s estimate of 100,000, and chief executive Chris Roberts said that despite some positive signs, the future remained uncertain.
Some businesses were reemploying staff because of increased demand from a domestic market buoyed by a post-lockdown desire to travel and the school holidays.
‘‘But at the same time there are other significant layoffs still going ahead, so it’s very much a mixed picture.
‘‘Our worst fears of 200,000 jobs losses have been alleviated, but it doesn’t mean it’s not still a possibility if things take another downward turn.’’
Roberts said more unemployment was looming when the extension to the wage subsidy began ending in mid-August, and that would make it difficult for some businesses to hang onto staff until summer.
The newly-released document outlining the Government’s tourism recovery plan also justified the need for a strategic assets programme set up to prevent key attractions from failing.
The fund, which has received more than 300 applications, has so far given $15.7m in grants and loans to three major tourism operators – Kaiko¯ ura Whale Watch, THL’s Waitomo Caves tours, and AJ Hackett Bungy.
The Hackett decision has been criticised as corporate welfare because of the owners’ substantial business and personal assets.
Davis said it was ‘‘neither feasible nor desirable to keep all firms afloat’’ until borders reopened and travellers’ fears about Covid-19 abated, but important parts of the tourism network needed protection.
‘‘There is an unjustifiable risk that some key attractions, services or facilities may be lost, and that this will slow down either the national or regional recoveries, with a disproportionate and even catastrophic impact on some communities.’’
Funding criteria on the Ministry of Business, Innovation and Employment website ask whether applicants are facing severe financial stress, and if they had exhausted all other sources of cash and working capital.
In a recent interview Davis repeatedly said that ministers choosing recipients for the money would base their decisions on advice from officials.