The Cook Islands Chamber of Commerce says government economic figures for the coming year may be optimistic. Pictured here is the cargo vessel Liloa II. 21030909
The Chamber of Commerce reacted to yesterday’s unveiling of the budget with a warning that businesses could be forced to lay off workers in the absence of government financial support for vulnerable companies.
In announcing government’s spending plans for the 2021-22
fiscal year, Prime Minister Mark Brown confirmed Government will be ending the
wage subsidy and the bulk of measures that were included in the Covid-19
Economic Response Plan.
In its place, it has set aside $22.5 million to assist
businesses in the event of a border closure or renewed economic hardship.
Eve Hayden, the Chamber’s chief executive officer, said many
local businesses continue to suffer, despite the opening of the travel bubble
with New Zealand last month.
“… we remain concerned about the wage subsidy concluding at
the end of this month, at a time where many businesses remain 50 per cent or
more behind in revenue when compared with the corresponding pre-Covid period,”
“Even in July with seven (initial) flights compared with 23
pre-Covid, there simply won’t be the trading revenue needed to keep existing
“Shedding staff now when some recovery is underway will be a
difficult call, but many businesses will need to do this if the wage subsidy
Hayden said the Chamber is seeking a continuation of the
wage subsidy for businesses that can demonstrate a 50 per cent or more reduction
in revenue when compared to similar pre-Covid months.
Additionally, she said the Chamber had more conservative
revenue estimates for the 2021-22 fiscal year, compared to the figures
presented by PM Brown on Tuesday.
During his address to Parliament, Brown, who is also the
Minister of Finance, said Government is estimating gross domestic product to
grow by 8.8 per cent in the coming 12 months. Taxation revenues are also
expected to grow to $107 million – a 32 per cent increase from the previous year.
Hayden said: “If flights from NZ increase towards pre-Covid
numbers, and if we open a bubble with Australia, that will clearly change the
landscape and increase revenue.”
“Yield per visitor may also take a while to realign with
pre-Covid numbers as deposits on accommodation have already been paid in many
cases and therefore ‘new’ revenue may only be 70-80 per cent of the spend.”
Parliament was adjourned yesterday, and the Appropriation
Bill referred to the Public Accounts Committee, which is a change of process
from previous years.
Local businessman Temu Okotai said he hoped the new process
would result in wider public consultation.
“It should also mean that the general public will be able to
ask questions,” he said. “They want it to be a robust process.”