Auckland will lose 4000 to 8000 jobs because of current alert Level-3 restrictions, along with a further $100 million drop in council revenue, an economist has predicted.
Restrictions are costing Auckland 250 jobs and $65-to-$75 million in lost GDP each day, even with a wage subsidy in place, according to the latest forecasts from Auckland Council's chief economist David Norman.
He says many businesses pushed to breaking point in the first lockdown will not survive the second,even if it is relatively brief.
Photo: RNZ / Cole Eastham-Farrelly
Auckland has lost around 24,000 jobs since the first lockdown and even if the current one ends on Friday, thousands more jobs will go, he says.
He has modelled the impact on Auckland’s GDP under two lockdown scenarios. One model is based on the current Level 3 restrictions continuing for another two weeks, followed by a further two weeks at level 2 before returning to level 1. Another is based on four more weeks at Level 3 and two weeks of Level 2 restrictions after that.
“We’ve estimated we’ll probably lose between another $11 billion and $19 billion over the next two years from the Auckland economy. Depending on how long this lasts if it’s one of those two scenario,.” he says.
Notwithstanding that these are predictions, and there are many variables, he says thousands of jobs are at risk.
“In terms of jobs lost across those two scenarios we’re looking at 4000 to maybe 8000 jobs directly hit through the two-to-four week period.”
When the job subsidy scheme ends, that situation will inevitable worsen, he told Nine to Noon.
Auckland’s budget has already taken a big hit from the first lockdown, he says.
“Last time round things turned out a little less bad than we thought, but bad none the less. Last time round there was a $450 million loss in revenue.”
The current restrictions will shave another $100 million form council revenue, he estimates.
Central government can help Auckland by funding infrastructure that is ready to go, he says.
“We know that Auckland is about 34 percent of our population, and it’s 40 percent of the tax take but we only got about 20 percent of funding through the shovel-ready projects [funding].
“Auckland has now been exposed to higher levels of lockdown really through no fault of its own, no one’s fault really at all perhaps, but this is the reality of it.
“And it would be good to see some of those gaps in our revenue filled with provision for more infrastructure projects so that when we do get down to lower levels we can get up and do projects that are genuinely shovel-ready.”
There are a number of such projects outlined in the council’s 2020/2021 plan, he says.
“It really doesn’t matter what the specific project is, the key message here is let’s look at projects that are genuinely shovel ready.”
Loans will not help the situation, he says.
“For us to keep our credit rating at a reasonable level we have to keep our debt under control.”
A credit-rating agency downgrade would damage the city’s ability to borrow at current rates, he says.
“With Covid wave 1 we have had to temporarily breach those limits and work out a plan to bring our debt under that limit within a year.”
Even a central government interest-free loan, which under normal circumstances would be welcomed, would not help in the current situation, he says.
“Anything that adds more debt to our balance sheet is not going to help.”
