Good support for business needs to continue, adapt

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New Zealand and South Canterbury are now entering uncharted waters as a result of the Covid-19 crisis. Timaru Courier reporter Chris Tobin  asked South Canterbury Chamber of Commerce chief executive Wendy Smith how she thinks this region will fare.

Q. How many job losses do you foresee for South Canterbury?

South Canterbury is very well positioned (relatively speaking) to come through this crisis in good shape, due to our very diversified and strong economy. The backbone of our economy is built on the agricultural sector, with associated strengths in manufacturing and food processing and the demand for food and high-quality safe food will remain globally.

Hence we are likely to weather this storm better than many other districts.

The Timaru district, Waimate and the Mackenzie district are centrally located in the middle of the South Island, ensuring good secure access to markets and we are serviced by road, rail and sea options (short-term we have lost air!).

The Mackenzie district has a higher exposure to the impacts of Covid-19 due to its strong international tourism offering and certainly in the short term this industry will be decimated. However the district is backed up by agriculture and just as our ancestors built their futures on food production, we will see the Mackenzie’s short-, medium- and longer-term recovery once again being built [by] our farmers.

The Timaru and Waimate districts have a broader economic base underpinned by essential goods and services in the food production areas. This sector is also well diversified across the beef and sheep, dairy, horticulture, arable, seafood and forestry sectors, plus we have a high proportion of the processing and manufacturing retained within our districts.

At this early stage this is difficult to measure and the wage subsidy scheme has worked exceptionally well in enabling employers to retain employees and keep them connected to their businesses ready for when the recovery can get under way. So job losses within the Timaru and Waimate districts have been quite low. Unfortunately for those in the tourism sector, especially in the Mackenzie district, there have been a few businesses placed into hibernation, riding out the storm and potentially looking to reopen in a staggered fashion once the Alert Levels drop and domestic tourism can get under way. Job losses have been experienced here but the data and specifics are not yet available.

Q. Clearly tourism has suffered massively this be quantified for South Canterbury? Also, what are the expected implications for the retail, hospitality and general small business sectors?

The tourism sector has been decimated, unfortunately particular the international tourism market which has strong economic weighting in the Mackenzie district. This sector will rebuild but quite dramatic measures are being taken to get businesses through the short to medium term. For some this means going into hibernation and waiting until the Alert Level changes to 1 and domestic tourism can start to be rekindled. This will be against a backdrop of a recession so it may be slow and behavioural patterns are likely to have changed. However, local and domestic visitors will enable the sector to rebuild. Current forecasts are indicating a rebuild in domestic tourism over the next 12-18 months while international tourism regrowth will take far longer.

Q. How do you think the Government has handled the crisis?

So far the Government has handled a number of areas very well and only history will tell us how well. We are in the early stages from an economic and business survival perspective. At this early stage the wage subsidy scheme has worked exceptionally well in enabling employers to retain employees and keep them connected to their businesses for when the recovery can get under way.

Q. What in your view is needed now?

We would like to see an extension of the wage subsidy for those businesses that really need the support. So fine-tuning the existing scheme and working through how best to target the support. Plus a targeted commercial rental scheme to assist businesses to stay afloat that will play a role in our recovery. Plus further tax relief.

Q. How long do you think it will take to recover?

To the pre-Covid-19 economic position, it is too early to say. At this stage our economists are predicting various scenarios: a “V”-shaped recovery, or a “U” or perhaps a “W”.