Covid-19

Fear and lockdown in Auckland

An announcement on wage subsidies might be needed to avoid job losses - but not everybody agrees the Government should signal its intentions sooner rather than later, writes Dileepa Fonseka 

Crowds of people spilled out onto the street in Mangere East as the midday deadline for Auckland's entry into Level 3 loomed.

Mangere East Family Services CEO Peter Sykes said the queues at his local Kiwibank stretched well out the door on Wednesday morning.

"It was miles long as people went and got money out.

"You've got people knowing that they only technically had until midday to put a plan in place for the next five days.

"But then is it for the next five days or is it for the next six weeks?"

In Wellington, Police Commissioner Andrew Coster and Prime Minister Jacinda Ardern were trying to reassure the public there was no need to pile into supermarkets either.

Their message was: We had enough food last time. And we'll have enough this time. 

"People who work in precarious low-income jobs - women, people of colour - they're the ones who are going to get hit the hardest."

Statistics previously released have shown as much as 70 percent of the nation's economy can continue to operate at Level 3.

So why the panic? And why hoard cash? 

"A lot of them don't have cards. They still do the old thing of going into the bank to get their money out," Sykes said.

"They don't have the technology to bank online for instance," 

Sense Partners economist Shamubeel Eaqub said people would be worse off if they withdrew money during a lockdown, because they had less money in their bank accounts to pay for things by contactless payment or online shopping.

That might not be as much of an issue in some parts of Auckland.

"If you're living in South Auckland where we have the highest levels of deprivation and the lowest levels of internet connectivity, online shopping is not really a thing you do."

He also had another answer for the queues at banks - one likely universally felt by Aucklanders no matter their income level: "Fear"

Auckland's economy is both well-placed and highly vulnerable to another lockdown even if Level 3 is 'lockdown with takeaways'. 

The region was well-placed because Auckland has a lot of people capable of working from home: white collar workers in professional and business services. 

"Auckland in that top end of town is probably not going to be as affected," Eaqub said.

"People who work in precarious low-income jobs - women, people of colour - they're the ones who are going to get hit the hardest."

And the businesses that employ them will be entering this new lockdown with much poorer balance sheets than they had before the crisis. 

'The first thing needs to be a signal'

Auckland Chamber of Commerce chief executive Michael Barnett said there was a huge amount of uncertainty out there and signals around wage subsidy support would need to go out early to the region.

Perhaps even before the Friday deadline for deciding whether an even longer lockdown might be needed.

"I would have suggested to the Minister [of Finance] that he would think of doing this in two stages: the first thing needs to be a signal.

"It needs to be 'in the event this goes beyond Friday we will move quickly to implement a subsidy'.

"The biggest issue last time was cashflow. This signals to them that a part of this problem is going to be relieved by a wage subsidy."

'What do we do to prepare our business for tomorrow?'

Businesses were already making decisions on how they will survive. 

Data on internet usage from Tuesday night shows a dip in internet usage during the Prime Minister's announcement - as people switched off Netflix and turned on the TV news - followed by a large spike in internet activity. 

Eaqub said that last spike represented all the businesses on videoconferences and Zoom calls discussing how they were going to weather a new lockdown.

"Just talking to a lot of businesses around town: everybody was all hands on deck going 'Okay, what's the contingency plan, what do we do to prepare our business for tomorrow?'."

Most were likely already assuming this latest lockdown wouldn't end in a few days after asking themselves the question: "How can you stamp out community transmission in three days?"

"I'm hoping over the next one to two days we are going to see the specifics of what they're going to do in terms of wage subsidies and those kinds of things."

Barnett saw an opportunity to roll out wage subsidies faster this time.

Many businesses that would need those subsidies had already applied for them and provided evidence that their balance sheets would suffer due to Covid-19. 

At a press conference on Wednesday morning, Ardern indicated more information about potential wage subsidy scheme support would be made on Friday once the country had a better idea of whether the lockdown would need to be extended.

Infometrics economist Brad Olsen backed an approach of waiting a few days before outlining the kind of support that might be coming.

The wage subsidy would be needed if a longer lockdown went ahead, but there was no need to rush an announcement before Friday.

"It shouldn't be announced, in my mind, until we know what's happening going forward," Olsen said.

"We've got to remember that the level of job losses is substantially lower than we might have expected.

"Combined with a general rise or bounce-back in New Zealand's economic activity, that does suggest that we need to possibly have a more limited view on the wage subsidy."

'We can't rely on a Covid-free environment as our baseline'

The headline numbers were rosier than expected, but the household labour market survey showed hundreds of thousands of people were in a more precarious position than those numbers might suggest. 

Across the June quarter the survey indicated 357,000 people had jobs, but worked 0 hours in them. While more than half a million people worked fewer hours than usual. 

And over 185,000 people thought there was a high chance they would lose their job in the next year while approximately 466,000 people were in jobs where there was a 'medium' chance that would happen. 

Sykes said better administration of food parcels were something that could be improved upon this time too. 

"Part of it is making sure that the resources come to an area like Mangere or the areas that are going to need them and are not stockpiled in central Auckland.

"That's where the system broke down and failed last time."

Ardern said the Government had already put extra support into food banks and the provision of masks in Auckland. Public health units also had the ability to financially support people who might need to self-isolate.

The Covid-19 leave support scheme could also provide employees with paid leave while they were self-isolating.

Regardless of what announcements are made as Friday approaches, Olsen said businesses would need to adapt to a world where a lockdown might happen with very little notice. 

"We can't rely on a Covid-free environment as our new baseline.

"We almost have to - for the next wee while - consider that Covid and the risk of community transmission remains.

"Businesses will have to figure out how they may well operate during very tough conditions."

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