History repeats: Businesses were already struggling with months of cancelled bookings and the botched criteria for Government support were the final straw.
Twice, a Christchurch caterer has highlighted flaws in criteria for Covid business support schemes that would have rendered many businesses ineligible. And now, for a second time, the Government has admitted it got the eligibility criteria wrong and been forced to fix them.
Last year, Newsroom pointed out problems with the wage subsidy criteria, which had first been identified by White Tie Catering director Katie Duncan. Acknowledging the problem, officials redrafted the criteria so businesses could more easily demonstrate a 40 percent drop in earnings.
This week, Finance Minister Grant Robertson announced a new targeted Covid support payment for businesses struggling during the outbreak. Firms were required to show a 40 percent drop in revenue compared to seven consecutive days in January or early February – but Duncan argued that for food and beverage businesses and many others, that was unfair. They were being asked to demonstrate a 40 percent drop on revenues that were already negligible at the slowest time of the year.
Duncan was concerned she and others would not be eligible for the support, because their business was already suffering as the Omicron outbreak gathered pace and scared customers into staying home.
Today, the Government tweaked this so businesses could choose to compare their revenue to seven days in early 2021 – an idyllic period when the whole country was in alert level one.
“We are aware that there are a number of businesses which had a very quiet January or early February this year and believe that they will not be eligible under the criteria of the Covid support payment, particularly those in the hospitality sector,” Grant Robertson said.
Duncan was “thrilled” to hear the Government had again altered the eligibility criteria. Her operation was among those set to apply for the financial support, after the number of bookings this financial year dropped by more than a third.
Duncan said the industry already ran on slim margins, meaning hospitality was disproportionately affected by loss of business compared to other sectors.
“We’d like to see decision makers have a deeper understanding of the nuances in how each industry is affected,” she said.
The Government’s initial announcement had caused uncertainty and stress in the catering and hospitality sector, she said, as struggling business owners were worried about proving a 40 percent decline in revenue compared to an already quiet start to the year.
A significant proportion of her business revenue was generated during the wedding season in January, February, and March, but this year the three months were marred by cancellations and uncertainty in whether events could go ahead.
Duncan said the Government’s wage subsidy had enabled the business to keep a hold of specialised staff, like high-end chefs, but she wanted to see additional support handed out to the industry.
Robertson did not indicate any further targeted support would be available for the hospitality sector. In a statement he said all businesses were welcome to apply for the new support payment and the Government would monitor the impact of Covid, and adapt support payments if necessary.
Applications for the Covid support payment open on February 28, with payments due to start on March 1.
Eligible businesses would receive $4000 per business, plus $400 per full-time employee capped at 50 full-time-equivalent roles, or $24,000.
The payment would be available on a fortnightly basis for six weeks. Each of the three payments would need to be applied for separately due to overseas evidence suggesting the peak of the outbreak would pass after six weeks, according to the Government.