Worst-suffering Businesses Left Out By Hospitality Package Rules

Hospitality NZ has clarified a mystery and 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% 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.

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

Hospitality NZ Chief Executive Julie White says the eligibility rules probably exclude most of the sector, as hospitality never recovered from the lockdown, and trade had already sunk by December.

“Hospitality went into January in a bad state, and it got worse. There was no major drop under Phase 2 in February because business was already bad.

“So those who suffered the worst of the Red setting after lockdown ended will be ineligible for the support package.

“It’s highly unlikely that a business down over 50% throughout January, will be able to prove a further 40% drop since February 15.

“Some businesses never experienced a significant upturn in revenue after Lockdown last year.

“Northland was in Red for a long time, and never got a chance to recover before the whole nation went into the Red over Omicron.

“And when the whole nation did go into Red, the public reacted very quickly. Fear of the new variant meant the few bookings that remained were cancelled, and foot traffic in the cities vanished.”

“The eligibility criteria must compare the required drop in revenue to a business-as-usual baseline. That is not what January was.”

Julie White notes 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,” says Julie White.

© Scoop Media