Coronavirus: 89 per cent of Auckland businesses collecting wage subsidy

Sunday, 23 August 2020

The Government has paid out $11 billion in wage subsidies to businesses that have suffered a loss of income as a result of the coronavirus crisis. (File video, first published in August 2020)

New analysis shows just how hard Auckland has been hit by coronavirus, with 89 per cent of businesses collecting the wage subsidy since it came in in March.

The proportion of Auckland businesses collecting the subsidy is significantly higher than the national average, which Dot Loves Data estimates to be about 75 per cent.

Auckland is losing 250 jobs and up to $75 million a day in economic activity during the current level 3.

Restaurants say they’re struggling to survive, and retail spending at Auckland shops was down two thirds as a result of the new restrictions.

* Applications open for new two-week wage subsidy

Auckland businesses are struggling under a second lockdown.

* Coronavirus: Can the average Kiwi afford to live on the Covid-19 wage subsidy?

Government director of Wellington data analysts Dot Loves Data Justin Lester said the “huge' proportion of Auckland businesses reliant on the wage subsidy “shows the weakness within the Auckland economy right now”.

“The data reinforces local sentiment that Auckland businesses are reeling from the latest lockdown and many will not survive when the wage subsidy payments end.”

Applications are currently open for a two-week extension to the wage subsidy scheme. The third round of subsidies is expected to cost about $510 million and would cover 470,000 jobs.

More than 1.7 million jobs have been supported by the wage subsidy scheme.

To calculate the number of businesses receiving the wage subsidy by region, Dot Loves Data took data from the Ministry of Social Development website of all businesses receiving the wage subsidy and mapped the information against the New Zealand Companies Register.

It showed provincial New Zealand is currently the “economic backbone” of the country. In Waimate local businesses are faring much better than their city counterparts, with only 15 per cent of businesses accessing the wage subsidy.

In Opotiki the figure was 24 per cent, while in Southland it was 25 per cent.

Within Auckland, the analysis showed South Auckland was worst off. Businesses in Manurewa, Papatoetoe and Māngere had the highest risk of receiving the wage subsidy, 20 per cent higher than Ōrakei, Waitākere Ranges and Waiheke areas.

Just 30 per cent of agriculture businesses have received the wage subsidy, but construction has been hit hard, with 92 per cent of businesses accessing the subsidy.

To qualify for the first round of the wage subsidy, businesses needed to show they had suffered a 30 per cent drop in revenue due to Covid-19. For the second and third rounds, that changed to a 40 per cent decline.