Covid 19 Delta outbreak: Businesses in Auckland on the brink of collapse

Small business owners in Auckland say they can’t keep using up their savings and don’t know how much longer they can survive as lockdown restrictions continue to impact across the city.

While many retailers have revamped their online service and some hospitality operators now rely on selling takeaways, service providers such as hairdressers and physiotherapists are one group left at a loss by the Covid-19 restrictions.

The co-owner of ASC Salon, Andrea Cockle has been burning through her savings to meet the payroll of her 11 staff and the other expenses that come with owning a hair salon.

“I don’t even know if we’d survive another lockdown. It’s just, we’ve lost quite a significant amount of personal money ourselves because we’ve had to keep reinvesting into our business. That’s our livelihood. So we’ve chosen that as being our first priority,” Cockle said.

Cockle and her husband Stephen Cockle co-own the Parnell salon. Just before hearing about Covid-19 last year, they sold their house to buy another house, but then the first lockdown kicked in, temporarily closing all non-essential businesses.

That meant they had to reinvest their savings and the money from their house sale into the salon, to remain afloat.

But 18 months later, still without a home of their own, and with zero income, the couple might just be on the brink of collapse if lockdown doesn’t end soon.

“We are pretty much out of the property market, we can’t afford to get back to buy a home because we’ve used that money,” said Andrea Cockle.

“We are confident we can recoup the money [from the salon] at some point down the line. But we don’t know when that’s going to be.

“We’ve been lucky enough to have a great landlord who has given us a bit of leeway. So that’s been really super helpful,” she said.

At this stage, none of her 11 staff has been made redundant.

“Once we open again, it’s business as usual.

“So we need all hands on deck, it’s really important for us to be able to retain every one of our staff because we’re a small business [and] we would struggle to replace them initially, in order to kind of get back to business as usual,” Cockle said.

But opening in a restricted alert level would mean following guidelines such as social distancing, which would reduce the number of people allowed into the salon.

“Logistically, particularly with having to go back and social distance, we can’t have as many staff … and as many clients in the salon. So, trying to generate that same revenue won’t just happen initially.”

At the same time, the salon would be busy and the staff would have to work even harder to meet the demand, which risks them being overworked.

“And it just forces our staff to work a heck of a lot more hours. And it puts a lot of pressure on them, regardless of the fact that they’ve been off for the time that they have still, you know, the anxiety of going back into a really busy workplace is difficult for them.

“We can’t burn them out.”

Heart of the City chief executive Viv Beck said the Government must wake up as Auckland hits crisis point – a clear, simple roadmap is needed.

“The roadmap announced on Monday has left businesses gobsmacked.

“This has reached a crisis point for many businesses and Monday’s announcement has crushed hope and left a lot of people angry. After shouldering around a $850m loss of consumer spending since the start of last year, our businesses deserve better,” said Beck.

“There is a desperate need for certainty and confidence. Businesses need a reason to remain optimistic for the future because right now, with the lack of clarity around when they can trade safely, no clear border policy, no clear vaccination policy, no commitment to additional financial support and no timeframes to work with, that is extraordinarily difficult to find.”

On Monday, Prime Minister Jacinda Ardern released a three-stage roadmap to slowly ease Covid restrictions for Auckland.

Step 1, which began on Wednesday, allowed Aucklanders to meet loved ones outdoors up to a maximum of 10 people, the reopening of early childhood education centres, and activities such as beach trips and hunting are acceptable.

The second step will allow more retail to open, under a hybrid level 2, but Ardern did not give a date for when this would begin.

The final step would be similar to what is now known as “Delta level 2” – with hospitality venues open for up to 50 patrons, who must be seated and separated.

Close contact businesses such as hairdressers would also be allowed to open with mask use and physical distancing, and gathering limits would be extended to 50.

Cabinet will review each step weekly to ensure it’s safe to move. The wage subsidy will continue to be available to qualifying businesses.

Amy Schischka, co-owner of Physio Impact, owns three clinics in the Auckland CBD and said the Government’s wage subsidy and the resurgence payments weren’t enough.

“We haven’t had to let go of anybody yet, we’ve been really lucky that we’ve been able to support our staff with the wage subsidy.

But in terms of other fixed expenses like rent, computer software and other day-to-day costs, it’s just not enough, she said.

“We’ve used the resurgence support payments, but it barely touches the sides. I think it probably covers not even a quarter of our rent a month excluding the other expenses,” Schischka said.

She has been using her savings to fill the gap not covered by the Government’s help.

“Which obviously we can’t keep, keep bleeding,” she said.

After the 18 months since the first lockdown, her business had just started to recover, but this lockdown took everything away.

“We’ll do everything in our power to make sure that [closure] doesn’t happen. But it’s definitely getting to the stage where we’re having to consider whether we downsize in terms of locations … so that we can decrease our expenses.”

And this lockdown had been even harder than before, especially with taxes soon being due.

She said some form of tax exemption from the Government and a rent freeze would be really helpful.

“Some sort of rent freeze from a government level for businesses that are unable to access or unable to utilise the premises at the moment. I think that would be a really good idea.

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“This lockdown, the very first week of lockdown, we had to pay our GST and provisional tax, all of that came out at the very beginning of lockdown. And we’re going to have another GST bill coming out soon,” Schischka said.

“So we’ve had to pay two lots of taxes within this particular lockdown itself, even though we haven’t earned any money.

“Our income tax as a business is calculated based on your earnings for the previous year. So it’s sort of forecasted tax.

“So even though we’re earning zero dollars, it’s not reflective of the current environment, because you’re like, because you’re paying tax [based] on last year,” Schischka said.

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