Auckland's once-thriving central business district could lose more than 12,400 jobs and $3.1 billion of GDP by March 2021, according to an economic impact report by business association Heart of the City.
Sectors such as tourism, hospitality, entertainment, retail and arts and culture - the businesses that give Auckland its "vitality and distinct character", Heart of the City CEO Viv Beck says, are among the worst affected by the COVID-19 response.
"The impact of losing international tourists, students and events took an early toll on these businesses and this was compounded by people working from home," Beck said in a statement.
"The large-scale loss of customers will continue to have a severe impact, even once we get to alert level 2. The drivers of a dense, busy city centre have now become major risks that need well-considered actions to address."
Auckland, the country's largest city with a population of almost 1.7 million, has been hugely impacted by the mass closures under alert level 4 lockdown, which required all non-essential businesses to shut up shop for almost five weeks. The city is also home to several of New Zealand's largest universities, heavily dependent on the international students who remain unable to enter due to stringent border controls. Like much of New Zealand, Auckland is also reliant on tourism - an industry in sharp decline due to ongoing travel restrictions.
According to a report by independent economist and consulting service Strateg. Ease, even a quick exit from level 3, which was implemented on April 27, could cause central city job numbers to drop by more than 12,400. Economic activity (GDP) could also decline by more than $3.1 billion by March 2021. The company's report predicts it will take at least two years for the city to scale back up to where it was prior to the pandemic.
The grim picture is significantly worse than the Global Financial Crisis of 2007 and 2008, when employment opportunities dropped by 4400.
"A lot of city-based businesses, such as those in the financial and insurance sector, are able to operate remotely at almost full capacity under the current restrictions," Beck said.
"However, that's not the case if you have a bar, a tourism offer, a retail store or a café, or anyone else whose sales are dependent on customers walking past your shop window."
She acknowledged that for those businesses, there is little "appreciable" difference between level 3 and level 4. Although Prime Minister Jacinda Ardern has consistently compared level 3 to a "waiting room" of sorts between the lockdown of level 4 and the freer movement of level 2, the restrictions still require Kiwis to practice physical distancing. The measure, although imperative to the continued success of the COVID-19 response, also limits businesses' activity and engagement with their customers.
Many companies are still unable to open under level 3 as they cannot ensure their service will operate in a safe, contactless way. The majority of small businesses in particular don't have the reserves to ride out a two-year recovery process, or to automatically pivot to a new operating model or service style.
"For many, level 2 will have ongoing restrictions that impact their viability due to physical distancing and a lot less customers," Beck said.
"Moving quickly and safely down the alert levels is assuming a greater degree of urgency as we look to the Government's announcement on May 11, but more is required to pave the way for a successful future city centre."
She also noted that multiple small businesses were bearing the brunt of major construction work, such as Auckland's City Rail Link. Many shop owners spoke of their anger and resentment prior to the pandemic, the rail project lessening foot traffic and making their businesses less accessible, directly impacting their revenue.
"Our small businesses are bearing a disproportionate share of the cost of these initiatives with insufficient support offered to date to address cash flow issues.
"If the Government is serious about creating vibrant and sustainable communities, they need to understand the needs of different communities.
"We ask the Government to show they are serious about economic recovery and the wellbeing of thousands of people who create our vibrant offering.
"We need a collaborative and sustainable approach to support our small businesses to ensure we have a vibrant city centre to showcase with America's Cup and APEC still scheduled for next year. The same principle should apply to other areas raising specific needs. One solution does not fit all."
