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Hansard transcriptInquiry into Government response to COVID-19Epidemic Response Committee12 May 2020MembersHon Michael Woodhouse (Deputy Chairperson)Tamati CoffeyMarama DavidsonHon Todd McClayDavid SeymourStuart SmithFletcher TabuteauHon Louise UpstonHamish WalkerWitnessesPania Tyson-Nathan, Chief Executive, NZ Māori TourismEve Lawrence, General Manager, Haka Tourism GroupJeff Alexander, Director, Event ImpressionsAndrew Crawford, Managing Director, Sounds AirMatt Brady, Managing Director, Pan Pacific TravelLes Morgan, Chief Operating Officer, Sudima HotelsChris Roberts, Chief Executive, Tourism Industry AotearoaKelvin Davis, Tourism MinisterWoodhouseWell, good morning, everybody, and welcome to today’s meeting of the Epidemic Response Committee. My name is Michael Woodhouse, and I’m the deputy chair of the committee and will be chairing the meeting for today, which has a tourism theme. We’ll be hearing from a number of tourism operators who are responding to and affected by the COVID-19 outbreak. We welcome, first, the chief executive of New Zealand Māori Tourism, Pania Tyson-Nathan. Thanks for joining us, Pania. We’ll hear some opening remarks, and I’m sure colleagues will have questions for you.Tyson-NathanKia ora tātou e huihui mai nei i tēnei wā. Thank you, everyone. I’m delighted to be with you all this morning. There we go. Well, in New Zealand, our tourism operators have, pretty much like everyone else across the country, I think—very quickly, we found that business continuity insurance was a waste of time, with the pandemic clause that no one had expected. We’ve had businesses with three to six months’ contingency in the bank gone in one fell swoop. Banks are not lending against iwi assets. Cash is king, as we all know.Unfortunately, I think we see a lot of commentators talking about SMEs as one normally would, and the cyclical nature of SMEs—for example, you know, 20 percent fail after 12 months, etc., etc. This is not the case with COVID. We’ve had very little understanding, I think, of the cumulative effects of previous shocks on our tourism business. If we gather up Te Wai Pounamu as a region, they had Christchurch and Kaikōura earthquakes; they’ve had flooding on the West Coast. They’ve never actually fully recovered from subsequent shocks. We’ve got the central North Island, Tauranga, Whakatāne, up to Waikato, down to Rotorua, and Taupō—you know, post Whakaari / White Island, they’ve barely had the opportunity to lift their heads. So I guess my point there is we need to consider them in quite a different way from the rest of the country. I could also say the same about Northland with droughts, and you might ask yourselves, “What the hell has that got to do with tourism?” Well, it’s got a lot to do with tourism.We need to think of these as quite unique situations. We are realistically optimistic about the future. We’ve got tourism businesses now repurposing their businesses. We’ve got fierce competitors now becoming bed pals. This is all very encouraging. We have builds going ahead. Down in Tekapō, the Godley group, they’re looking at phase two of their extension. We’ve got a small hotel build going on at Mount Cook that’s subject to resource consent, I think, at the moment. You know, in a small place like that, that’s 60 jobs. We’ve got, up in Rotorua, the spa build with one of our Māori trusts. That’s 100 jobs tomorrow at least. So these are not shovel-ready; these are hammer-ready, which I think is great for the sector because it demonstrates that people still see a future in tourism.Of course, Māori tourism, again, we have the IP opportunities with the Pacific and our Aboriginal cousins across the Ditch once the Australasian borders open. These are initiatives we’d been speaking about pre-COVID, so we look forward to those. Māori are looking at distressed assets. We just want to make sure they too don’t become distressed assets.I think what we’re going to see is the impact on B and B may have a positive impact on the housing market. I think we’ll also see cheaper rents, with what I anticipate will be a surge. The big elephant in the room for all of us is unemployment. We cannot let this happen. We’ve got to do everything to provide a buffer.In short, what are our needs? Of course, everyone’s waiting for Thursday. We need the wage subsidy. Now, some of my tourism colleagues will have a different view about this as to whether it’s a grant or a loan. I don’t think anyone really cares at the moment, but we need support there. Of course, we all know there are significant liquidity issues. Now, what was great when the wage subsidy first came out, we had a cap—major impact on Māori trust and incorporations and iwi, who, as you know, have multiple portfolios, and with the cap as it was originally set would have a major impact on their ability to participate in the wage subsidy programme. So I’m hoping there’s similar flexibility in the new package that, I think, kicks in today, the $10,000 per business and $1.8k per employee, because I think of one in particular with 50 bars and cafes under extreme pressure at the moment. He’s currently only eligible for $10k, so I’m hoping there’s that sort of flexibility there.No one’s looking for handouts. The banks are not lending, despite the Government guarantee scheme. We need good data so we can make informed decisions and manage future risks, and if I can ask all of you around the table to consider the regulatory environment. I’m horrified at the types of compliance costs that our businesses have to contend with.So that’s pretty much it from me. Question time.Woodhouse Kia ora, Pania. Can I just remind colleagues to use the raised hand option on the participants bar so that I know who wants to ask questions.CoffeyKia ora, Pania. Thanks for kicking us off. What kind of numbers are you seeing? What kind of data is coming through? You were talking about good data before. What are you seeing in terms of numbers of job losses in the sector?Tyson-NathanOh, well, look, there’s lots of modelling going on at the moment, Tamati. I was on a call with the hospitality sector the other night: best-case scenario is 51,000 unemployed; worst-case scenario 68,000. It’s something like that. When you look at Māori tourism, we employ about 14,000 people, so, yeah, we’ve started to see the impact straight away with some of our businesses closing or going into hibernation. I think it could be as high as 30,000. Now, that’s a bit of scaremongering going on, but I do think that that’s realistic. Hospo is a huge employer of Māori and Pacific Island, and the same with tourism. So I’m not just talking Māori tourism businesses employing Māori; I’m talking about right across the sector. We had SkyCity yesterday announce 700 job losses, and I know that they are doing everything to keep their staff, but they are big employers of Māori and Pacific Islanders in Auckland. I mean, any job loss is not good—anyone losing a job is not good, but we know from previous experience the impact on Māori, and the Pacific, actually.CoffeyAnd what have you heard about the redeployment options?Tyson-NathanYeah, well, I’ve had a couple of conversations with Brett O’Riley from EMA. Now, they are doing some really good work around redeployments, because, of course, they’re working directly with employers. But, you know, it’s difficult in places like where you’re from, for example, Rotorua. You don’t have a lot of big employers there. This is why I think we need to look at these hammer-ready projects, not shovel-ready—I mean, if we have a combination of both, fine, but you’ve had multiple hits there across your whole region, actually, with forestry, tourism—yeah.WoodhouseThanks, Pania. I see all the hands shot up on my prompting, so we’re going to need to be short and sharp.McClayThanks very much, Pania. Hey, good morning, and thank you for the work that you’re doing, particularly the way you’ve very clearly explained the challenges around all tourism, hospitality, and Māori tourism. I want to put hospitality and tourism together, because actually, largely, they’re the same. If you look at Rotorua, you know, it’s been the international and domestic tourism sector that’s kept much of our hospitality going. You mentioned regulatory cost, and that’s something that we and I’ve spoken a lot about, but can you give me a few examples or ideas of what you’re talking about, the actual costs that there would be upon businesses and how that affects jobs? I suppose the new regulations that are coming under level 2 are an example.Tyson-NathanLike, I think everyone agrees the rules need to apply. What we need is a year off, not a year to pay them off, and that’s pretty much the response we’re getting from departments. I’ll give you an example from the Wanganui area, actually: a small business, eight staff, $47,500 in compliance costs. Now, when I talk compliance, let’s just park tax and all that sort of thing for a minute. This is concession, $25,000; $10,000 for health and safety. He’s got a boat, so pull the boat out of the water—that’s $5,000, and $5,000 to get it surveyed. So we’re at $47,500, OK? Oh, there were some other bits there, but anyway. The point is if you could give that guy a year off, he could employ his eight staff at $781 a week, and they will do stuff. He is largely domestic; he’ll get through this, but when you’re paying those types of costs on top of trying to keep doors open and everything else, it’s an issue.Look, I’ve got businesses all over the country, and I have to say I should have been across this before COVID. I was mortified at the sort of costs that our businesses are having to pay. So let’s, like I said, accept that the rules need to apply. They must be safe; the boat’s got to be safe. Everything else has got to be in place. But I do think it’s time for you all to sit around the table and have a look at—it’s actually like compounding interest, you know? It just grows and grows and grows, and I don’t know that anyone’s actually sat down and looked at previous pieces of legislation, and it just gets piled on top, on top, on top. And, actually, it goes against the productivity goals, in my view. You’re spending so much time on compliance, not enough time in the business.McClayYeah, so just one quick follow-up on that. So you gave the example was in Wanganui of the $47,000 in costs. Can we assume that over the seven or eight weeks of the lockdown, that that business has incurred significant costs across the business anyway? I would guess they’ve got the wage subsidy, but that’s going to run out in four weeks’ time. So what happens to that business if the wage subsidy runs out, there’s no more support, and they’ve got that $47,000 of additional debt? Are they still going to be there?Tyson-NathanI think you’ll—one of two things will happen. One, they’ll go into hibernation, and for some businesses that’s not a bad thing. Or—McClayHow do you pay your debt when you’re hibernating?Tyson-Nathan—exactly—or you’ll collapse. And what, I think—with some of our businesses that actually are closing or have closed, we’re trying to minimise the liability. So we’re working with them. But, actually, there’s a whole lot we can do before then.McClaySo, final one, actually, because a follow-up to that: the tourism Minister, Kelvin Davis, said yesterday, “I think, you know, you shouldn’t be starting a business in tourism today.” Shouldn’t he really be saying, “We’re doing everything possible to save every business in tourism today.”, if it’s harder to start one than it used to be?Tyson-NathanYeah, look, this is probably not the right thing to say online, but I suffer from the same thing that Minister Davis does: we’re not great at public speaking. What we say and what we mean are often two very different things. Look, hindsight’s a wonderful thing. I said things four weeks ago I wish I hadn’t said or I could’ve said better. So, look, give the brother—look, I can tell you now, I’ve been meeting with Minister Davis, Mahuta, Henare, and Jackson three times a week for the last six weeks. Unfortunately, people don’t see—they don’t hear the conversations, they don’t see the hard work that’s going on behind the scenes.McClayPania, sorry, I don’t—Tyson-NathanI know your point—I know your point.McClaySorry to interrupt. My point is not about that; it’s actually about doing things so those businesses survive. That’s actually what I’m meaning—Tyson-NathanYeah, no, I totally agree.McClay—so those businesses survive.Tyson-NathanAnd that means a lot to him. I’ll tell you what, I know from the meetings that we have that number one is survival. I know that. Now, you don’t quite come out like that.WoodhouseThank you.SeymourAh, well, thank you very much, Mr Chair, and kia ora, Pania. Thank you for coming along. And, look, I just want to very quickly say that since 2006 ACT has been trying to get the Regulatory Responsibility Bill up, and I’m sorry it’s taken a crisis for more people to recognise that regulation and compliance is like tax, except the Government doesn’t get any revenue; the businesses just pay costs. And it’s something that I hope will be addressed. But—so very aware of that. I just wanted to go back to something you said very early on: banks aren’t loaning against iwi land. And I’m really interested in this topic of how we unlock Māori capital. I wondered if you could just talk a bit about that. I know it’s not directly COVID, but I think it’s always been critical and it’s urgent now.Tyson-NathanYeah, trust you to ask that question.SeymourWhy me?Tyson-NathanHa, ha! Why here? Look, I’m not sure that I’m the best person to answer that question, but one thing that is blatantly obvious to me is that pre-COVID, banks, big law firms, big accounting firms were knocking at every iwi door, and it’s interesting now, when this is where the rubber hits the road, and they bail. But we are seeing iwi now are dumping stocks to get cash. I’m concerned about some of the stocks they’re dumping, because in the, sort of, medium term, we’re going to need those. I know I’m not answering your question, and I can’t even fudge this one. Yeah, I just think, look, we’ve got long memories—very long memories. So what everyone needs to do is come to the party. So, yeah, it hasn’t been great, but, look, I’m just bumbling my way through this answer, to be perfectly honest with you, David. I’ll find someone who can give you a good response.WoodhouseI’ll let you off the hook, Pania.Tyson-NathanHa, ha!SeymourI think I know what you’re saying, but it just seems to me there’s a lot of prosperity missed out on because we don’t have the system of property rights that allows, you know, huge amounts of capital to be brought into use for the next generation, and I think that’s a problem that—I mean, it’s very difficult and needs to be solved.Tyson-NathanYeah, that is a problem—that is a problem. But, David, let’s not have a political discussion today.SeymourOh, no, no, just curious.WoodhouseSo we’ll need these to be quick-fire—Fletcher Tabuteau.TabuteauThanks, Mr Chair. Kia ora, e hoa. Thank you for coming on this morning. A lot of the thinking around especially our Māori operators is they have kind of an international tourism focus, and with the rest of the world struggling to move forward, arguably, as rapidly as we are, what’s the kōrero around refocusing on domestic tourism and even, hopefully, the Australian market, kind of, āpōpō, kind of thing?Tyson-NathanOK, so what we’ve got is a whole lot of businesses repurposing at the moment—remembering that 60 percent of our Māori tourism businesses have a domestic focus anyway. So what we’ve got—interesting—look, what we’ve got is we’ve got fierce competitors becoming bed pals. That’s great. We’ve got a huge opportunity around an exchange of IP, which we were working on pre-COVID with the Pacific and our Aboriginal relations in Australia, so that we had been working on when COVID happened. So once the—yes, Australia’s important to us, but so is the Pacific, and I think that’s quite exciting.Look, we all know that international’s going to be a bit of a slow burn. We all also know that domestic tourism’s going to look quite different. This is why the whole unemployment thing is so important to me—is if people haven’t got money to spend, guess what? They’re not going to have an experience. They’re not going to go to a cafe. But not only here in New Zealand—you know, I looked at the States. You know, 21 million unemployed in one month—how many of those are our potential customers long term? I saw the other day another million from the public service gone. That really concerned me. Now, like it or not, in terms of international, the places that are looking good are those that Māori relate really well to, and that’s Asia, for obvious reasons. You know, they’ve managed COVID reasonably well—well, very well, actually, some of them. We’re both cultured. You know, we just need to get on with it, but we are realistic. It’s a slow burn, and we just need to get on with it, actually.WoodhousePania, I can do many things, but I can’t stop time, and I’m afraid we’re out of that. So—Tyson-NathanOh, no, very happy.Woodhouse—with apologies to my colleagues—I hope Marama and Harete have questions that will be relevant to subsequent submitters. But thank you for what you’re doing, and all the best to your members for the future.Tyson-NathanKia ora.WoodhouseWe welcome Eve Lawrence, general manager of Haka Tourism Group. Welcome, Eve—over to you.LawrenceTēnā tātou katoa. [Inaudible] Kia ora mai tātou. I just want to start by saying that I don’t believe for a moment that the Government have done a bad job with the health crisis. I think the health crisis has been covered and we’ve made some bold decisions, and as a result we’ve probably saved thousands of lives, but I believe now is the time to start focusing on the economic fallout and saving livelihoods.There’s loads of points I can raise today, and I’m sure a couple of them will be the same as many of the rest of you, but firstly I want to address the wage subsidy. We need an extension on that wage subsidy—there’s no doubt. We need to be able to support our kaimahi and avoid further job losses. From a personal HTG perspective, we are a self-funded New Zealand start-up. We’ve invested 100 percent of our profits every year into growing our business, and we’ve been profitable since year one, in 2007. We’ve supported communities we operate in and we’ve grown incredibly quickly, and our balance sheet could easily make it through a recession, but we can’t make it through zero revenue. No business models for zero revenue, and the narrative that bigger businesses should rely on their balance sheet is really disheartening to hear from a finance Minister. Whilst this comment was made before the wage subsidy was extended to businesses with more than 21 staff, the subsequent financial support packages feel very much targeted towards those smaller businesses.So we believe that not only does the 12-week cap need to be lifted for specific industry and extended to potentially 26 weeks, if not further—and tourism should definitely be one of those specific industries—we also believe that the revenue threshold needs to be raised. If we were still trading at a revenue loss of only 30 percent right now, Haka Tourism Group would be over the moon, to be quite honest. And even with some pivoting, today we’re trading at around an 80 percent revenue loss, and in early March it was more like 95. I mean, if you look over the Tasman, you see Australia offering Kiwis A$765 a week for six months to help them survive and keep their jobs, and we need the same here. I feel like we needed it yesterday, but this is obviously a good platform for us to be requesting these solutions now. We need this time to adapt, and we need to be supported until the borders can reopen again without isolation.Secondly—and I know this point will come up again from another industry colleague today—is commercial rents. In 2016, Government launched Project Palace initiative, which was an attempt to avoid an accommodation shortage and encourage investors in New Zealand accommodation and commercial infrastructure for tourism. So HTG wanted to support New Zealand’s tourism economy, and we came up against global hotel chains, but with aggressive negotiation we managed to partner with seven landlords and long-term lease eight properties nationwide. But now our overheads are $350,000 a month for our lodge and hotel rents. We’ve been attempting to renegotiate our leases over the last few weeks, and we have had some small wins, I’m not going to lie. Reducing our rent exposure for May and June is great, but we’re incredibly worried about the remaining six months of the year, and potentially further.Our landlords are not corporations or larger landlords; they’re just Kiwis. They’ve invested in commercial property, and they’ve got mortgages to pay. And we have been able to pivot with some of our accommodation properties—we’ve been supporting Auckland City Mission—but commercial rent reductions need to be on the agenda, otherwise we as a business, and I’m sure many other businesses, face indefinite constraints on our ability to generate revenue and cover our fixed costs, and, to be honest, a really real chance, along with many other businesses, that we just won’t survive COVID-19.Thirdly, I think there are some targeted financial options that can be offered to tourism industries—not just tourism but those also underpinned by tourism. Just some small examples: a marketing grant to assist with targeting domestic and Australian customers as individual businesses, not as a country; lowering or zero-rating GST for specific industry, our tourism businesses; using the international visitor levy to distribute funds to tourism businesses; and extending the break in the APTR, or the “bed tax”, until December 2020, and I know that’s not a direct Government initiative; it is directed by councils, but some pressure could be put on those to extend the break in APTR.Lastly, I just want to address this domestic campaign. I personally don’t believe for a moment that domestic tourism can even come close to filling the massive void that having no international visitors is going to create for New Zealand. I think the general consensus across a lot of my industry colleagues is that if we’re lucky, we might see 20 percent of our revenue year on year. And efforts to reimagine tourism in the middle of a crisis—it’s like calling in an architect instead of the fire service while your house is still burning down, and I think we need to first put our efforts in place to save the house and then think about reimagining and rebuilding our mercial accommodation providers: we’ve also been damaged by platforms like Airbnb, and if we’re going to target domestic visitors—and we’re going to be asked to target domestic visitors, which of course we will be doing—not only must we get our Haka whānau back; we must also have a level playing field. So things like health and safety and fire ratings, resource consent and rates—we’re fighting for a market share with a platform that can lower its rates far further than any commercial accommodation provider can ever dream of, and we’re fighting—and this is a conversation I’ve had with many industry colleagues—against a market that feels our pricing is too high. I mean, in a country where salaries are lower than others with similar costs of living anyway, this probably does feel true to people, but the reality is, in comparison to global markets, New Zealand is far from expensive. And if you going to compare a like-for-like product, doing a scenic flight over Milford Sound is around NZ$500, and if you want to go and do the same thing at the Grand Canyon, it’s going to cost you US$500. So we’re fighting a mindset which is incredibly difficult to change in regards to pricing.And now you can combine that with job losses, less income, and a complete, complete lack of confidence to travel, not only internationally but also domestically. There’s a massive reason why large operators like Ngāi Tahu Tourism are closing. NTT: over 80 percent of their business comes from international visitors, much like companies like Haka Tourism Group, and even if 20 percent of those are domestic, the likelihood of generating enough revenue to keep these businesses afloat simply isn’t—it’s just not there, especially if we have to lower our pricing exponentially to keep the market interested. It’s just not viable for these businesses to remain open.And I just want to close off by saying, as I’ve mentioned, we need further support to keep our businesses afloat and our kaimahi in jobs. We can’t rebuild without staff. The wage subsidy extension and commercial rent relief for hoteliers and accommodation providers is just absolutely imperative for us to keep our industry alive. And the South Pacific bubble needs to be prioritised, without quarantine periods, in order for people to have the ability to travel, and it needs to be a matter of urgency in order for this tourism industry to even have a chance at survival.I think this lockdown and COVID-19 is going to cast an incredibly long shadow on tourism. The vast number of people in this country that are both directly and indirectly employed in the tourism industry just need your immediate help. First and foremost, we need to save our people and our businesses and our industry from just complete decimation, and only then should we be starting to refocus on reimagining our future.No reira, tēnā koutou, tēnā koutou, tēnā tatou katoa.WoodhouseKia ora, Eve, for your very powerfully made comments. We’ve time for a couple of quick questions.WalkerHi, Eve. Thanks very much for coming down. In my electorate, Clutha-Southland, we’ve got Queenstown and Te ?nau both heavily focused on international tourists. In Queenstown, it’s around about 75 percent international, 30 percent domestic. A lot of companies have close to 100 percent international clientele. Just in the last three weeks, we’ve lost around 1,100 jobs in Queenstown. Last week, the week before, was 600 to 700. This week, I know of at least 600. All the tourism operators are telling me they just want clarity and certainty. That’s all they want. For example, the extension of the wage subsidy scheme—if they knew if that was going to continue just for tourism or for your key staff a number of weeks ago, it could’ve saved a number of jobs.And also, a couple of tourism operators have told me even the Australian border—if you had some idea, the best-case scenario that border’s going to open in, say, August this year, and then the worst case August next year, that would’ve saved a number of jobs, because I know many down here can hang on until about August-September. Post that period, they just simply can’t hang on.How much would it help you, especially with all your forward bookings, if the Government did say, look, it’s not going to open until at least August—best-case scenario August, worst case is maybe early next year?LawrenceOh, look, from an HTG perspective, I mean, we obviously rely on the lead time for people to book and come here. So, realistically, we obviously get a good amount of revenue from snow, but you’re right, the uncertainty doesn’t provide us with any hope whatsoever. So whilst the 12-week wage subsidy has helped, we’re potentially looking at going from 184 FTE down to 13.5, which is just insane, and that’s one business. So if the wage subsidy was to be extended and, potentially, hopefully, this South Pacific pulls off, we could get some semblance of a business back by keeping our people on board. And if we get some semblance of a snow season, we could certainly survive—we’ve got a balance sheet to survive until around March, but there’s no way, without any revenue coming in, that we’re going to be able to survive much longer, especially if we’re not given time frames and certainty around those borders reopening.WoodhouseThanks, Eve.CoffeyKia ora, Chair. Thank you—thanks, Eve. We heard—I wrote down “Save the house first.”, so I like the way that you frame that, and it’s a call that’s come from tourism, it’s a call that’s come from the hospitality industry as well. So I know that we are working on it. Obviously, you’ll be looking forward to the Budget this week, as well as many others in our sector.Can I just ask a question: if you were advising the Government on how to deal with the opening up of our borders, because, obviously, what we’re talking about here is line of sight, right—clarity. Everyone wants clarity. But how do you deal with that when you’ve got states in Australia that don’t even agree with each other in terms of being able to move around freely? So how do you do that? How would you be advising our Government to tackle that one?LawrenceOh, hey, look, I’m not a politician and neither do I want to be, but I think, first and foremost, we need to look at potentially testing airports on both sides of the Tasman, because if there are self-isolation time frames put in place, it will deter people from travelling and it will further damage our tourism industry in New Zealand. So I think, first and foremost, we need to look at the health of the travellers, because people will want to be safe. New Zealand is a safe haven now. We’ve done a great job with the health crisis. Jacinda Ardern has been a fantastic ambassador for New Zealand, in the sense that she has covered this all off in the press. She’s receiving worldwide accolades from various media outlets. I think—yeah, we need to look at testing. I mean, Emirates are doing it in the Middle East. Why can’t we do that across airports throughout Australia and New Zealand as well?But also we’re reliant on so many other factors. So it’s not a case of “What would you do?” We have to be reliant on the number of flights, airlines not going out of business. So there’s so many knock-on effects that we need to first think about before—I mean, look, we need this trans-Tasman bubble. So we need our national airline. We need Air New Zealand. We need Virgin Australia. We need Qantas. The volume isn’t going to be as it was before, but we need to implement testing and keep the health and safety top of mind, because people’s confidence in travelling will be low.CoffeyAnd just second, the idea that you got to save the house and then reimagine tourism, are you saying that it has to be either/or, or do you think we could do and/and?LawrenceOh, look, I think we can do and/and, but, first and foremost, we need that help in order to save the businesses, otherwise you don’t have an industry. You don’t have an industry to reimagine if you don’t save us first.WoodhouseThank you very much for your submission—as I said, very powerfully made, and all the best in the recovery.Jeff Alexander, director of Event Impressions—looking forward to hearing from you. Following that, there’ll be questions.AlexanderThank you, Michael. I’m just going to probably echo a lot of Eve’s sentiments there. I just want to go through a quick statement just so that I can try and get my thoughts in order and get the points across. The business events industry is responsible for roughly half a billion dollars to the economy in a year. Services include event styling, event flowers, event photography, entertainment, audio-visual, lighting, sound, production, exhibition, catering companies, professional conference organisers, event managers, hotels, and venues. We are working, knowledgable professionals who bring life to the business community to connect, educate, and celebrate. Business events play a major role in the wider economic community, where it acts as an important catalyst for overall economic development. We are a major economic importance and a big tax generator.Event Impressions is an established and viable event company of 18 years, with bases in Rotorua and in Auckland. We’re a husband and wife team with a valued and experienced team specialising in creating events through event design; styling, which includes event décor, flowers, linen, furniture; and event management expertise. We produce upwards of around 200 events a year with a team of five plus around 15 to 20 temp staff. Our market is the corporate in association from New Zealand, Australia, and Asia-Pacific region, including India and China.We’re no stranger to managing through a crisis. We’ve managed through the GFC; the Christchurch earthquakes, where we had a Christchurch operation which we no longer have down there; and now COVID-19. In 2018, we won the Supreme Business of the Year Award here in Rotorua. On 13 March, we had an immediate halt of business due to COVID-19. We sit here today with over eight weeks of zero revenue for our Rotorua and Auckland operations. We clearly understood that this was going to be a long-term issue. In week one, we basically started the hibernation process. We cut all non-essential services and any costs and consolidated down as much as possible. We have used the wage subsidy, the tax relief via the temporary loss carry-back scheme, and we are working on a survival plan to allow us to recover.Business events has a lengthy road to return. It’s impacted by Government policy, sector confidence, and traditional lead lag. For us and similar business event SMEs, we’re struggling with the business fixed expenses—the rent, rates, insurance, vehicle costs, vehicle compliance costs, software subscriptions, and basic business expenses, along with employee costs, which includes topping up the wage subsidy. That’s to keep our experienced staff, as the wage subsidy does not pay their full wage.We have had issues around getting our landlords to understand that we need support in the short term, let alone getting support in the longer term that we’re going to need from them. If we were faced with 50 percent of our revenue, we could make this work, but for most like us in our sector, we are experiencing little to zero revenue, and it’s a long way before we are going to see that change. Many of us are trying to pivot, yet many places that we can potentially pivot to are industries that are struggling as well. A wage subsidy along with a scalable financial assistance package, so that each business can get equal support no matter what the business size, is desperately needed.Business events work with really long lead times, anything from eight weeks to three to four years. Shorter lead times is usually corporate business, but that market is now unsure, unstable, and unlikely to take the risk. Business events are directly affected by the COVID alert system, as we saw yesterday. Even at an alert level that allows small gatherings, there is little evidence of confidence from the market, and we believe many clients will not entertain event inquiries where there are any restrictions around gatherings. There is work currently being done in the industry defining how events will operate once we’re allowed. Involvement in consultation with Ministry of Health would ensure confidence when we can come back to booking events.Right now, we are seeing Government conferences cancelling for dates late this year and event sponsorship money being either withdrawn or being used for other purposes. Professional event managers have reported services being dropped by existing Government bookings, with many now being run internally. Now is the time that you need a professional event manager to manage your event, with all the additions that we’re going to need to manage around the COVID-19 environment. The business events industry needs Government entities to lead the restart, keep their sponsorship, run their events, and work closely with the business events industry. The Government must carry the event industry through.Established event companies with reputation already carry substantial overheads. Without any help, many of these viable, experienced event companies may or will fail, and this will devastate the events sector. We absolutely believe that the business events in New Zealand will return. That’s why we’re here today, fighting hard to be recognised and to preserve what we have, so that we can start again safely. We will be denied this future for the sake of six months to a year if we cannot secure assistance.Thank you for your time, and happy for any questions.WoodhouseJeff, thank you. We do have a few minutes for questions, and before I go to Todd McClay, can I just ask you: when you heard the Prime Minister describe what level 2 would look like at the weekend, you would’ve, I guess, anticipated that a lot of—well, not a lot, but some of your business with internal functions up to 100 people would’ve come back. Tell me what you thought about yesterday’s announcement and how you feel about the restrictions as they were articulated yesterday.AlexanderYeah, obviously, with the guidelines for level 2, they were published last—you know, were put out last week. We’re working on gatherings up to 100 people, so at least we can start. At least there’s something that we can actually work with. Then it’s kind of hard when we’re working towards that and then, basically, yesterday’s announcement has, basically, pulled the carpet out from under us. Can clearly see that the Ministry of Health are struggling with—you know, they’re very, very cautious around events and gatherings, and that’s understandable. So what I would like to see further forward is that they’re working and communicating with us more so that we understand what’s happening, rather than saying, “Yeah, next week you can do this, but tomorrow, now, you can’t.” If that keeps happening, it’s going to destroy the confidence in the market and people just aren’t going to do any events because it’s just—yeah.WoodhouseWhat’s that going to mean for your business, Jeff? Are you going to be able to survive that with a maximum of 10?AlexanderNo, not at all. Even 100 still—you know, basically, how our business is set up, we are keyed for the larger events. So we’re more things—up to the 400, 500, 600, 700, 800 and stuff is more where we’re geared for. When this all happened, that’s why we made the decision, basically, and we retrenched very quickly. Like, we had two warehouses in Rotorua, side by side. In three days, we moved out of one into the other just to shed costs, insurance rates, and the whole thing. So, you know, we’ve tried to do our bit, but we can only go so far. We’re asking: we need immediate help in order to get us through, and then once we get help, then they can manage the virus situation and the health side of that with a lot more comfort, and our team and that can as well.McClayYeah, thanks very much, Jeff. Thank you for coming on. You’ve been very clear in the challenges your sector faced. I mean, just to summarise what I’ve heard you say is before COVID-19, you were a growing business in two parts of the country and had a lot of, you know, award-winning business. Now, with the shutdown, it’s placed considerable cost upon you. I really just want to cut to the chase: if you don’t get the support that you’re calling for and you’re not able to have a clear time line of when you can get back to 100-plus people, what’s going to happen to your business?AlexanderYeah, basically, we’re hanging our hat on what’s going to happen, what we’re going to hear on Thursday. What we did when the wage subsidy first came out, which was great—it was a good initial start—you know, we committed to our staff and we put processes in straight away to really manage ourselves through this. Basically, if nothing comes through on Thursday, on Friday we have to reassess what we’re doing and how we’re doing it. I think there’s a lot of us in the event industry that are pretty much doing the same, and potentially the event industry will—if there’s nothing coming out on Thursday, I would say the event industry is in its dying moments [Inaudible] could start working through.McClayIf you don’t get direct financial support on top of the wage subsidy—and whether or not that continues or not—you and many others in the event industry, you’ll be closing, you believe? Because you’ve got not income at the moment, right?AlexanderYeah, there’s no income there at all. A lot of us are trying to pivot, trying to move into different areas or expand into different things to try and make this last as long as we can. The hard thing that we’ve got is we don’t know where the start line is, and it keeps moving. You know, yesterday, the start line moved on us. So until we get an actual start line, we can’t actually work out where a finish line might be.So we don’t know how long it’s going to take, and the lead time around events—so, you know, most businesses out there that can actually open their doors and customers come, they’ve got customers straight away and revenue starts straight away. With the event industry, as soon as we’re allowed it, people can ring us and we can start planning on it, and then, you know, at a short term, you’re looking eight weeks or something like that before we’re actually even starting to do these events again, and then there’s revenue. So we’re already eight weeks in with no revenue, and until—we don’t know when the stipulations are going to come off, that we can actually start doing any events, and then we’ve probably got an eight- or nine-week buffer on the back of that. So we’ve probably got quite a few months where this is—we’re not even halfway there yet.McClayThank you. And so you said on Friday you thought that you could start managing your business and planning towards perhaps 100 people safely, within the rules. Tell me, what’s the difference, in your view—and, you know, you’ve done this for a long time—of you managing 100 people in a space with social distancing for an event, compared to 100 people who are allowed to go to a cinema starting Thursday?AlexanderYeah, the difference is the event industry are experts in people flow. You know, putting on an event is not just about putting people in a room on seats. How the seats are laid out, how they’re designed—and they have ways of being able to manage traffic flow and manage how people interact within a room. So that’s fully controllable in our environment, whereas in a cinema, it’s OK if you’re sitting on the seat, but what’s going to happen when the movie finishes and everybody on every second seat gets up and walks through the aisle out to the foyer? So it’s, kind of, you know, our team—the industry is professionals at this. This is what we do. We manage people and manage how they sit and how they flow. So we’re actually geared up probably a lot better than what has been opened, and there’s a lot of work being done on different configurations and things to make it safe, but we’re calling on consultation with the Ministry of Health to kind of work with us and go, “Are you happy with this?” We have full control. You know, most of the events and that can be registered, so we’ve got contact tracing information straight away. All that information is managed from business events teams.WoodhouseSo, Jeff—McClayFinal one, if I may? It’s a very, very quick one.WoodhouseVery brief.McClayYou mentioned the wage subsidy, and I think you said that your company took it. There’s probably about four weeks left. That’s helped keep staff on your books, but it hasn’t helped mitigate any other costs. What happens if that wage subsidy is not continued—what happens to your business and your staff?Alexander Yeah, that’s the big decision, I think. That’s all decisions for Friday, pretty much. We have to manage and work out how we make it work and if we can make it work, which is really hard when we don’t have a finish line. We don’t know when we can start. We don’t know when revenue can actually start coming back. So our team have been great, coming forward with lots of ideas and stuff for us to try and pivot and create something for them, and, you know, we want to stand by them as long as we can, but it’s going to run out at some point.WoodhouseThank you to you, Jeff, and, look, with apologies to Hamish and Tamati, we do need to move on, but hopefully the questions can pop up from other submitters. Andrew Crawford, managing director of Sounds Air, welcome in, and we look forward to hearing from you before questions.CrawfordThanks. Like Jeff, I’ve got a presentation to give to you—just a few words and an outline. Kia ora, Mr Chairman, and members of the committee. Thank you for allowing me to present to the Epidemic Response Committee. We know that the demands on Government as a consequence of the COVID-19 epidemic are considerable at the moment. Sounds Air is an airline that has been servicing regional New Zealand for 32 years. We started with one aircraft flying Wellington to Picton, and we have since grown our fleet to 10 aircraft and established a specialist aviation maintenance facility in Blenheim, Sounds Aero Maintenance Ltd. We employ 85 staff across our engineering base, flight ops, and ground crews. These are talented and qualified people who go the extra mile for our customers every single day.Sounds Air has experienced significant expansion over the last five years, with our passenger numbers doubling in that time from 57,000 passengers in financial year 2015 to over 115,000 last year. We don’t just fly tourists and holidaymakers but a lot of business travel, essential workers, and many people receiving health treatment in the major centres. We are a significant regional business, generating revenue in excess of $20 million this financial year. Prior to the epidemic, we were on track for a further regional expansion, securing two extra aircraft to broaden our network across the length and breadth of New Zealand, continuing our strategy of connecting regional passengers to the main airport hubs in New Zealand and to our national airline.During alert levels 4 and 3, we were extremely grateful that the Government announced financial support by the way of the wage subsidy. Our people are our business, and without them Sounds Air would not be the much-loved airline it is today. We are a family, and we have committed to keeping everyone employed for as long as we can to continue to operate. Being able to support our workforce was huge, but we cannot sustain the business without additional bridging support, as all cash reserves have gone just to keep the business at a minimum viable product to get us to level 2. The Government announced a support package for aviation, but in particular this was for essential freight services. Contact was established with the Ministry of Transport, and we continue to engage with officials there. Lack of action was an extreme frustration for us, but this, of course, needs to be tempered with the understanding that the ministry was and still is dealing with multiple issues on multiple levels. We have been overwhelmed at the level of support from regional authorities and regional businesses, who have all written letters of support to the ministry and the Minister. The petition started by MP Stuart Smith garnered over 27,000 signatures to date and highlights the importance of regional connectivity to many across New Zealand.What does the future look like for us? These are very difficult times, and we feel the enormous responsibility to do everything we can for our passengers, for all the businesses that rely on Sounds Air, and for all the 85 staff and families of our group. We see the future of returning in the service we offer with our aircraft size well-suited to meet regional New Zealand needs, especially post-COVID, as we can operate a higher frequency of flights with much lower operational costs than larger aircraft. We have smaller aircraft, we’re a nimble operator, and we can take our service anywhere demand lies. We remain optimistic that our strategy for growth applies now more so than ever, and we will provide essential regional connectivity to build strong regional economies as New Zealand works hard on the road to recovery.I would also like to note Pania’s point around the $500k loan scheme from banks. That was a complete non-starter. I haven’t found one bank that would entertain us, and I haven’t found one business that was able to obtain that. Eve’s point that businesses should be able to survive with their balance sheet with zero income I totally agree is just farcical. It is not possible.WoodhouseAll right. Thank you, Andrew.SmithThank you, and thank you Andrew. I had a very good flight across Cook Strait this morning. It was a great service. My question, really, is around when the wage subsidy ends, without further support, will Sounds Air survive?CrawfordNo.SmithSo going to level 2, there’s, I think, a belief out there that because you’re carrying passengers—and, of course, this morning the flight was just about half full because of the requirements for social distancing. So that simply won’t allow you to make enough money, and you won’t have enough aircraft flying, to keep the business viable—is that correct?CrawfordYeah, correct. We’ve opened flights up today at level 2, with a minimum viable service. We need to get back to Westport, Taupō, Blenheim. Air New Zealand’s going to be doing some flights there in a few weeks, but very limited. You know, Blenheim and Nelson are one of our key markets—Blenheim-Christchurch. So we’re opening up morning and evening services to all these centres. We need to get business back going again. But the damage has been done, and I mentioned before Eve’s point: the money’s been chewed up. Our minimum viable product is well over a quarter of a million dollars a month in costs. With zero income, you know, it’s completely unsustainable.SmithAnd you mentioned the nimbleness of your smaller aircraft. Can you really give a better example of that? So taking your smaller aircraft into regions as they recover is going to be far more economical than Air New Zealand with their larger aircraft. Is there a number or something you can put around that? CrawfordWell, we believe so. I mean, we’re flying 12- and 9-seat aircraft but high-quality, modern, state-of-the-art machines, and in the smaller destinations like the Westports and Taupōs, we just don’t think it’s—I mean, and Air New Zealand will have a different opinion, but flying 50- or 80-seat aircraft in there when they’re social distanced, so an 80-seat aircraft is only going to carry 40 people—how many people actually going to be on these flights? Are we not better to have a smaller network like us and Air Chathams and other players who can support that regional network group and then give support to Air New Zealand to fly the bigger routes at a much more profitable or break-even point of view?SmithThank you.UpstonThanks very much, and I just want to note on record, Andrew, Taupō’s thanks for stepping into the Wellington route when Air New Zealand pulled out several years ago. First question: when are you returning to Taupō? We want you back. And the second question is in terms of—you know, we heard from Pania that there’s been collaboration between arch rivals in the past. Are you engaging in any discussions with Air New Zealand about how you can service routes that they can’t or won’t?CrawfordHello, Louise, how are you? I think we were on the first flight together, weren’t we? I remember.UpstonIndeed—indeed.CrawfordYeah, good to see you.UpstonProud moment.CrawfordYeah, exactly. We’re back to Taupō on Monday—UpstonYes.Crawford—Monday morning, morning and night, three days a week—Monday, Wednesday, Friday, or maybe four, and a Sunday night flight. So it’s not all about business. We want to get people there for the weekend as well, so we’ll be offering those Sunday services. We have offered to fly Taupō to Auckland in the meantime, but I think Air New Zealand’s coming back there in a few weeks, so it’s been decided at the moment that we won’t do that. But, I mean, that’s an example of what we could be doing, and if we could engage with Air New Zealand and they said, “Listen, why don’t you do that flight until the numbers pick up?”, we would be more than happy to do that, but we find it’s very difficult to talk with Air New Zealand.UpstonThanks, and thanks for what you’re doing.CrawfordNo problem.WoodhouseTamati, I see your hand is up. Is that because you’ve got a question or you forget to put it down? No, it’s up. Thank you—over to you.CoffeyHey, thanks, Andrew. Just off the back of Louise’s question, whilst you’re talking with Air New Zealand and having that collaboration, what about the other small players, i.e., the Air Chathams? Have you been talking about innovation and collaboration opportunities there?CrawfordNot as yet. I think we needed to get to level 2. I mean, at the moment it was very much sitting on your hands. We didn’t know when level 2 was coming, but I assume that Air Chathams will be going back to Wanganui and Whakatāne and, of course, the Chatham Islands, and maybe Kāpiti. But, no, we haven’t been discussing collaboration just as yet. And it’s important to say we haven’t been discussing collaboration with Air New Zealand, even though we would like to have some discussions with them. It’s just not that easy to talk to them.CoffeyOK. So just to be really clear, knowing that, obviously, we’ve got a Budget this week and the tourism sector—aviation as well—have been calling for some support, what are your top three again?CrawfordWhat’s my—I couldn’t hear, Tamati.CoffeyWhat’s your top three wants from the Budget? You were talking about what you want out of the Budget this week.Crawford.Well, like everyone else, the wage subsidy continuing would be fantastic, I think, and probably imperative. Support from the Ministry of Transport, which I think I mentioned in my statement there we’ve been talking to for coming up to eight weeks now, but I think, potentially, we’re starting to get traction there. As I said, they’ve been very busy with the critical international air freight market. More passengers would be the third one, but they’re coming. We’ve opened bookings today, and we’re already starting to see bookings coming. And I think there’s a lot of doom and gloom and it’s tough in the tourism industry, but in the local domestic, I think we’re going to see movement and quite a lot of it.CoffeyCool, thank you.SeymourThank you, Mr Chair, and thank you, Andrew. Can I just say, huge admiration for what you do—starting your own business with airplanes, basically living every kid’s dream. And I’m sorry about the tough times. I just have a question about load factors, the percentage of your seats that are filled. I mean, it seems to me that with the social distancing regulations, that the Government is effectively putting a ceiling on your load factor that makes it very difficult for a flight to be profitable. Have I got that right, or can you make money with the load factors that are required under social distancing?CrawfordIt’s a twofold answer. The PC-12, which is the aircraft behind me and the one we fly to Taupō and Westport, is a modern, state-of-the-art machine and pressurised, and has seats down either side, so a metre gap in between. So we can fly that at full capacity, which is very fortunate. The Cessna Caravan, which we fly across Cook Strait, has 12 seats, but with the current social distancing we’re reducing it to seven. Of our own volition, we’re asking all passengers to wear face masks for the duration of the flight. All our flights, fortunately—I think the longest one is maybe 45 minutes.WoodhouseDo you provide them, Andrew?CrawfordYes, we are. We’re asking passengers to bring them, but we’ll certainly provide them, and we’re going to monitor that for a couple of weeks just to see how that goes. IATA, the International Air Transport Association, does not recommend the use of face masks on aircraft. So we just want to just be a little belts and braces, and ask passengers to wear them, see how it plays out over the next few weeks, make sure the numbers keep reducing or plateauing—I mean, it’s hard to reduce from two and one a day, but as long as we don’t see a great uptake. As the Prime Minister said the other day, they’re not too worried about air travel; they’re worried about what people do when they get there, hence going to events, which Jeff was talking about earlier, or Hereford conferences.SeymourI just wondered because I’ve been getting on a plane mostly filled with politicians—which hasn’t crashed, people might want to know—and it’s half empty. That’s Air New Zealand. You guys have got the problem with your Cessnas, maybe not with your other planes. Every airline in the world must be thinking about load factors under these regulations.CrawfordCorrect.SeymourI just wonder if, you know, either IATA or the CAA or whoever the correct—or even the New Zealand Government are engaging in how airplanes can fly with high or low factors under COVID conditions. It just seems to me that for New Zealand, being able to have fuller planes flying in and out is going to be critical to our competitiveness as a tourist destination, for one thing, but also for a bunch of other things.CrawfordYep, totally agree. It’s going to be an issue. Hopefully, we can get over it in the next few weeks.SeymourI guess the question really is who’s responsible for that? Is it one of these international bodies that should be doing the work, or is it the New Zealand Government? I mean—Crawford[Inaudible] the Government will be looking at what IATA is doing. IATA is really the international body and what all airlines in the world look to, and their recommendation is already out: they do not see the need for social distancing on aircraft. Now, the Government and the health department want to see what happens, and we agree. Let’s just see what happens over the next few weeks. If the numbers stay low, then I think there’s a very good case that social distancing can be relaxed on aircraft.SeymourVery interesting. Thank you very much, Andrew.CrawfordThank you.WoodhouseThank you for your submission. It was very helpful, and I want to wish you all the best for staying in the air.CrawfordThanks very much, Mr Chairman.WoodhouseCheers. Pan Pacific Travel is our next submitter. Matt Brady is the managing director, so over to you, Matt.BradyKia ora, Mr Chairman, and ladies and gentlemen. Thanks so much for the opportunity to appear before you today. Pan Pacific Travel is what is known as an inbound tour operator. Now, this is a very niche part of the tourism industry that, dare I say it, outside of the industry is largely invisible. We get asked if we’re a travel agent, but no, in actual fact, we’re not.Pan Pacific was founded 36 years ago, and since its second year in operation it’s been very profitable. So in that time, we’ve contributed hundreds of millions of dollars to New Zealand’s foreign exchange earnings and, dare I say it, millions and millions and millions to our very good friends at the IRD. So we feel we’ve done our bit to contribute.We’ve managed to successfully navigate our way through the ’87 crash, SARS, bird flu, 9/11, and the GFC, and continued to grow through all of those. I hate to say it, but I think we might have met our match with this one. In February, we had 28 staff, we had two overseas representative officers and were handling just on 20,000 long-haul international holidaymakers, from virtually every market in the world. We worked with 2,000 New Zealand suppliers, and last year we paid $30 million to those New Zealand suppliers. They ranged in size from a two-bedroom bed and breakfast all the way through to luxury lodges. Motor coaches, rental cars, private chauffeur-driven vehicles—we ranged the full gambit.Three months later, we’re facing zero revenue—zero, not one dollar, not one. And we’re looking at a period which the PM says is for a very, very, very long time. Realistically, we’re crunching numbers on, potentially, 12 months. So we’re fighting for our very existence and for the security and jobs and welfare of a team that are incredibly loyal, passionate about what they do. They’re experienced, multi-talented, multi-lingual. So that’s what we’re facing at the moment. As business owners, we’re committed to trying to continue as long as we possibly can. However, I sincerely doubt that—like 99.9 percent of small to medium businesses, we cannot survive 12 months without significant help.Now, we’re full members of the Tourism Export Council of New Zealand—TECNZ—and if I may just divert very slightly away from Pan Pacific, because I think I’ve got a larger story to tell here, and this is about the inbound sector of New Zealand. We’re absolutely vital and crucial to the New Zealand tourism industry and, more importantly, to the recovery of it. So TECNZ, Tourism Export Council of New Zealand: we’ve got 71 full members, roughly 650 staff between us all, and we handle one out of three long-haul international visitors to New Zealand. One out of three long-haul international visitors from all around the extended world are actually passed through the 71 members of TECNZ. Now, there are other inbound tour operators out there as well, so that will grow that market even more.We’re business to business. We don’t deal with the consumer directly overseas; we’re dealing with tour operators or travel agents. Collectively, we would spend amongst ourselves a budget not dissimilar to what Tourism New Zealand would spend with our international travel—so the trade shows we attend offshore, our overseas representative offices, the personnel that we have based over there, the fact that we’re actually in a lot of our—the majority of our tour operator partners, we’re actually in their offices around the world, talking to them about new product, we’re talking to them about new ideas and concepts, we’re training their staff.Now, at the moment, there’s quite a number—and growing number—of New Zealand tourism companies that are actually going into hibernation or closing. So we’re seeing hotels, sightseeing attractions, including some of the very, very major ones. Now, to be honest, that’s not an option for us as inbound operators. We tend to operate 18 months in advance, so right now, we’re actually working on programmes for 2021-22, and we’re keeping New Zealand top of mind for all of those overseas tour operators who are looking at sending people to New Zealand not right now but for next year. That’s what we’re doing now. We’re investing now in business we will not see a return on for anywhere up to 18 months.Now, the overseas tour operators—basically, they will look after the sharp end, the sales and the marketing side of things. So they’re producing and distributing the brochures. They’re doing their websites. They’re responsible for the SEO of all their websites. They may have sales managers knocking on the doors of travel agents, encouraging them to sell their product when they have people come to New Zealand. Depending on their size, they may outsource some or all of their product development work. Now, this is where we as the experts on the ground are telling these people on a monthly basis, “Here’s a great new product you should consider.” We’re the sharp end of taking some of Tourism New Zealand’s objective of regional diversification, spreading people out into the outlying regions, seasonality. We’re actually taking that objective and putting it into a commercial package that those people can then sell to people.Other than that side of things, by and large, those tour operators offshore outsource everything else to the inbound tour operators. So they may have a reservations team that will take the actual request from their travellers, but then they’ll pass it to us. On a 21-, 28-day itinerary, we may be interweaving as much as 50 individual suppliers. We’re the ones who are actually making the reservations for the specific dates, going back with alternatives if somebody can’t do it. The other thing that we’re doing there is we’re doing all the contracting. So we’re the ones who are getting all the rates from those New Zealand suppliers up to 18 months in advance. We’re pushing that all through. We’re costing up itineraries.The other thing that we do to add value is post-arrival. Once these travellers get to New Zealand, we’re providing them with a 24/7 helpline. Now, when we look back over the last couple of years, we’ve had some tragedies. We’ve had the Christchurch and Kaikōura earthquakes. We’ve had the Christchurch mosques. We’ve had weather disrupts where the entire West Coast is cut in half for 10 to 12 days. Our teams are working in behind there, helping these travellers rejig their itineraries, to change itineraries, to make sure they’re actually helped. To give you one example, when the Christchurch earthquake hit, we had 425 passengers leaving or arriving into Christchurch that day. Within 24 hours, we’d ascertained the safety of every single one of those, bar two passengers, and that’s because they got out on to a flight over at Emirates and we didn’t find out until they got home that they’d actually made the flight.So that is something that IBOs do. With the greatest of respect to somebody who’s booked something online, good luck when you’re stuck on the West Coast trying to get through to somebody to help you out to get to your next destination. So that’s where we add incredible value. Obviously, after then, we make all the payments to suppliers. Now, the big challenge is for a lot of these tour operators overseas, New Zealand is a relatively small part of their global portfolio, so it’s simply not economically viable for them to say—if the inbound sector did not exist, they are not going to suddenly go, “Well, that’s great. We’ll increase our reservations team by 20 percent to look after that. We’ll quadruple the size of our accounting team.”, because rather than sending off one cheque to an inbound operator in New Zealand, they’re having to write out payments to, you know, 200 individual suppliers. Simply, if we did not exist as a sector, the vast majority of those overseas tour operators would simply cease to sell New Zealand and other destinations. It’s a reality of life. It’s just not commercially viable to do that.One of the things I would share, because obviously there’s a lot of doom, gloom, and despair out there, is all of us are continuing to get inquiries, quotes, and bookings for the future—every one of us. Every full TEC member is still getting those inquiries and bookings and quotes, obviously, into next year. So there is a positive. We’re actually generating, for want of a better word, a huge pipeline. So, you know, the one thing is a lot of our suppliers are getting those bookings from us. It’s actually giving a few of them. Somebody said, “We come in in the morning, Matt, and we just don’t know where to look at, and then suddenly we’re getting one email from Pan Pacific Travel. We’re getting another one from General Travel. We’re getting something else from [Inaudible].” So it is giving that little bit of hope that in the future, there is still a strong interest in New Zealand.Now, as an inbound sector, we were probably one of the very, very first sectors to be hit and impacted by, firstly, the closing of the borders to China. Then we had the requirement to self-isolate, which pretty well shut things off, and then once the international border was closed, that’s it—gone. There’s every chance we will be the very last to be able to operate as the borders open, and I think it might have been Eve who said that, you know, if we’ve suffered seven-week loss at 30 percent loss of revenue, we would actually be cheering—100 percent, potentially for a year. So one of our key points really is that Pan Pacific and all inbound in the sector of New Zealand—we are vitally important to New Zealand’s recovery for tourism. If we are not there, one in three long-haul international visitors may very well simply disappear—simply disappear. So we’re a pipeline to future bookings.So, like everybody else, what—and I’m very conscience of my time; apologies—support? For us, it’s very simple. It’s sector-specific. It’s targeted. It’s long term, for the duration of the closure of the borders. Like everybody else, the employment subsidy is absolutely crucial to us, because our people are the most important thing. Secondly, and it’s been alluded to as well, realistic targets need to be articulated. Our PM enjoys a global followship, which is amazing, how much she is followed around the world. Unfortunately, the day after her quote was “The borders will remain closed for a very, very, very long time.”, every single inbound operator had an immediate wave of cancellations of people early in 2021. Every one of us have had people approaching us saying, “Should we stop selling New Zealand next year. We’re in a brochure production stage—should we stop if we can’t come back in 2021?” So for us, I think we would sort of say that far better to say it is unlikely we will reopen for six months or it’s unlikely we will open to long term before Christmas, whatever it is—it’s just that, I think, would be a far more positive message.WoodhouseMatt, I’m sorry to interrupt, but if we want to ask the two or three questions that are asked, I just need to curtail that. What’s your preference, to complete your submission or to answer a couple of questions?BradyAll I would say is—30 seconds more—we do support a phased introduction to markets if at all possible. It’s vital to keep international marketing going. The role of Tourism New Zealand in maintenance marketing modes—absolutely essential. Sorry, Mr Chairman, I’ll stop there.WoodhouseNo, that’s fine. Thank you, Matt. One question each, please.SeymourThank you, Mr Chair, and thank you, Matt. I looked at your presentation, or your written submission. The thing that jumps out as crystal clear is that if we don’t get certainty around opening the border, ITOs are shot. I just wonder, is there an example of anyone around the world who is doing this best, who is leading at having intelligent borders that allow people and money through but not viruses?BradyAt present, not to my knowledge, personally. We are in a unique situation. We’ve got that great, huge multithousand-kilometre moat. It’s not an easy solution, I know, and that’s where I come back to the phasing. That must, obviously, be under strict conditions where we do have the hope of testing or confidence that certain markets may have controlled the virus better than others. That’s why we’re suggesting a phased approach. But personally, no I can’t offer up a best case.SeymourIf nobody’s done it, who has the best plan?BradyAgain, from my own personal looking and reading, we’re hearing that certain markets like in Greece and that are considering opening. The difference there is they’ve got very porous borders. It’s land, so we are in quite a unique situation, but, again, I’m afraid, I couldn’t give a leading example.SeymourThat’s the answer we all need. Thanks, Mr Chair.WoodhouseMatt, I’m afraid we’re out of time, but thank you very much for your comprehensive submission and all the best for the next period ahead. Les Morgan is the chief operating officer of Sudima Hotels. We’re in your hands, and, of course, we welcome your initial submission, and it’s over to you how the time is used, but, hopefully, we’ll have some time at the end for questions.MorganThanks Mr Chairman, and kia ora to you all. Thank you very much for the opportunity to address you. I’ve got a brief statement, and I’ll just read that, if that’s OK. Our group owns or manages approximately $350 million in commercial properties. In the main, these assets are made up of five international-class hotels in Rotorua, Auckland Airport, Christchurch Airport and Christchurch CBD. We have a further three properties under construction in Auckland CBD, Kaikōura, and Queenstown.We are a company that has built its reputation on sustainability, accessibility, and cultural diversity. It’s fair to say we’ve led the hotel sector with our corporate socially responsible approach and have been formally recognised for this. We are the current bearers of the Air New Zealand Supreme Tourism Award.We had, prior to the COVID crisis, 550 employees. As of today, this number has been reduced by 85 percent. Our trading revenues are down to 20 percent of normal levels, and this revenue is solely derived from the Ministry of Health isolation facility contracts. We have two hotels mothballed and one pending. Our situation is similar to most major hotel groups, but what we all have in common is we are hanging on by a tenuous thread. We accept that our sector is facing a long road to recovery. Our businesses require volume and estimate it could take up to four to five years before a return to previous levels. We require cash flow, not only to meet our operational requirements but to sustain ongoing maintenance and compliance costs, and under all circumstances we must continue to service principal and interest payments.Even with the loosening of alert levels and the subsequent stirring of the domestic tourism market, the level of demand will not be sufficient to meet our obligations. The corporate traveller is facing huge budget pressure, the conferencing client wary of things due to health and safety, and the leisure traveller subject to seasonality. The international visitor recovery is likely to be even more challenging, and certainly more susceptible to further disruption.What we are seeking is immediate financial assistance tailored to our sector. Major hotels and the wider accommodation industry will not be able to effectively participate in any recovery if we have neglected assets and emaciated workforces. The current need for hotels to be converted into hospital-like facilities is a stark reminder of how vital our sector is to the country’s infrastructure. New Zealand cannot hope to host major events, for example APEC, without our inventories. The Government’s priority should be ensuring the survival of New Zealand’s key tourism assets before embarking on a fresh marketing strategy. Hotels cannot put out the welcome mat if it’s behind a closed door. Thank you.WoodhouseThank you, Les.WalkerHey, thanks, Les. Just a question—it may be commercially sensitive, but you’re building a hotel down in Queenstown. That’s my first question—what are your plans there?—and, secondly, I know of two hotels in Queenstown making lay-offs this week totalling about 300 staff. The reason for that is they’re not too sure what’s happening, that post - 12-week wage subsidy. How much confidence would it give you if the Government came out and, sort of, indicated what’s happening post - 12 weeks?MorganThere’s two questions there, really, I guess, Hamish. The first thing would be that these are large capital investments, and so those decisions are always made on five- or 10-year cycles. So the decision to continue with those investments is already made. In terms of clarity, that’s been a real issue for us. In our own case, the wage subsidy has been welcomed, but any news about further subsidy has come too late. We’ve made those decisions now because once we go through the consultation period and the notice period, the subsidy’s gone. So those jobs haven’t been saved. All the subsidy did was prolong it. If there’d been some clarity earlier, that might’ve changed that situation.CoffeyYeah, gidday, Les. Can I just ask, as we’ve had this major disruption—of course it’s affected our accommodation sector greatly, and you’ve talked about, potentially, the help that an extension of the wage subsidy scheme could provide. What else was on your list, because I didn’t quite hear it in your submission?MorganKia ora, Tamati. Specifically, we would like to get some rates relief. We believe that that could be potentially underwritten by the Government. Please bear in mind that we have big properties—they’re big commercial assets, so we pay a lot of rates. That’s a really key factor for us. And also because we see the recovery for our sector taking so long, we’re really after financial assistance for the next four or five years. I think looking at it for one or two years is not sufficient for our sector. What we’re looking for is potentially loans, maybe zero-interest loans over a period of five years, for larger amounts. We’re bigger businesses, and we need that. It won’t be until we get to that three to four level, potentially, that we start to break even, so I think that needs to be kept in mind.WoodhouseVery good. Thanks, Tamati, and thank you, Les. Those are sobering figures—an 85 percent reduction in your employee numbers, and that’s, I think, a really good metaphor for what you’re experiencing, so all the best. Chris Roberts has been listening to a lot of that—there you are, Chris. I doubt that much of that would’ve been a surprise to you, but give us your thoughts, and we’ll open it up for questions.RobertsAh, kia ora tātou katoa. Yes, Mr Chair, I think we’ve heard some very impassioned pleas for help there from our sector—a clear message that it’s about survival first. This is—you know, three parts of this: there’s the survival, there’s the recovery, and then there’s a reimagining. We do need to look at both the recovery and reimagining, but as you’ve heard from those on the front line, right now it’s about survival, in the main. Some of the issues raised in this session around compliance costs, a very clear need for a targeted continuation of the wage subsidy, put in a very elegant way—the “save the house first before you can rebuild it”. I picked up on the concern of Government cancelling events and business meetings for later in the year. Please, can we get instructions out to Government departments not to do that? We need Government to take the lead, to still be holding those meetings. This is the bread and butter for many operators, that they can still have those small meetings, conferences, happening, and the Government should not be giving the wrong lead by cancelling those.We obviously need support for regional connectivity with our smaller airlines, and there are some sectors like the inbound tour operators who clearly will not survive without Government assistance over the next year. And Les has just mentioned, in their case, 85 percent redundancies across their award-winning hotels. And this week, we got results from a survey of the hotel sector, and 40 percent of hotels around New Zealand are closed completely. There’s a higher number in regional areas. Essentially, there are 14 hotels in Auckland who are housing returning New Zealanders, and that’s about the only business going on. Job losses are certainly greater than 50 percent and up to that 80-85 percent across the hotel sector.It’s a similar story across the wider tourism sector. We’ve started to see the higher-profile announcements—Air New Zealand, Ngāi Tahu Tourism, Skyline, SkyCity—but jobs are going every single day, and I still believe at least 100,000 jobs will disappear. We have feared that it could be as many as 200,000 jobs. The decision to allow domestic travel under level 2 will save thousands of jobs in the immediate term. It also gives businesses hope that they can survive this. They will certainly be smaller, often operating with a bare minimum of staff for now, but they will look to rebuild and to re-employ. But they need further ongoing assistance. Their revenues are going to be a fraction of what they were normally, even with the resumption of some domestic tourism.I think the sort of need that we have, in terms of the priorities, is certainly a targeted wage subsidy, and it doesn’t need to be at 30 percent of revenue as being the qualifier. I think every tourism business can show about a 70 or 80 percent decline in revenue, so the threshold could be changed. There’s also a need for direct grants or those long-term interest-free loans. We need to reduce Government compliance costs or give a holiday to the various Government fees and charges that are imposed on tourism businesses, and some guidance on the outlook—some greater guidance on what lies ahead of us.As we move down the alert levels—and we’ll all be hoping that we do move down the alert levels—the Government focus should shift to supporting those businesses that are affected by the closed border. So this won’t only be tourism businesses, but it will include many tourism businesses, who are cut off from their customers. Now, these are solid businesses. They were and are viable and valuable contributors to our economy and were doing so just a few short months ago, and they can be again when their customers return, but in the meantime they need help to survive.There’s a lot of talk about how best to get our economy moving again and what sectors we should focus on as a country. Our economic saviour is, quite frankly, not going to come from releasing a new variety of apple or developing a new computer game, nice as those things are. Prior to COVID, tourism was putting $3.5 billion a month into the economy—$112 million a day. If we want to stop the economic damage and protect the incomes of New Zealanders, the single most important thing we can do is getting that visitor spend going again as safely as possible. I might call an end to it there, and happy to take questions.WoodhouseThanks, Chris. Before I go to Louise Upston, you made a comment that said the Government should take the lead to hold those meetings and conferences, but, actually, the Government took the lead yesterday in doing quite the opposite, by restricting the number of people at a gathering to 10. Now, people have talked a lot about things like weddings and funerals, and obliquely the tourism industry is even involved in that, but can you just, sort of, comment on where we’re at at level 2 and the degree to which that’s going to help or hinder tourism operators?RobertsWe’re still trying to get clarification today on what is the impact on business meetings, and there’s different views across the industry on what the situation is, so we’re trying to get some more clarification out of officials. The Government’s announcement said that social gatherings should be no more than 10 but didn’t specifically reference business events or just general meetings. So can the National caucus or the Labour caucus meet in person next week? Is that allowed, because it’s more than 10 people? Can a hotel host a meeting of 25 people? We don’t have clarification on that at the moment. Those aren’t social gatherings, and we would hope that the previous restriction of up to 100 still applies, and that would give us more scope to still have that bread-and-butter business that’s really, really important for a lot of business. A lot of people host those sort of meetings, and it’s important that they can safely go ahead, but right this moment, I don’t have clarification on whether that’s possible.WoodhouseAnd without putting words in your mouth, that confusion is going to lead to people not being able to plan, surely, for things that would positively benefit your members and the country.RobertsWell, I know personally a meeting that I was to attend in a couple of weeks’ time was immediately cancelled, and that venue then won’t get that hire fee. So we do need clarification. And my earlier comment was also about those bookings down the track. If Government departments are cancelling bookings for October, November, December, that’s sending a very, very bad signal. Leave those bookings in as long as possible. Don’t cancel them early. Show confidence that we’re going to be continuing to tackle this virus and get back to more normality, and that those events will be able to happen.WoodhouseThank you.UpstonThanks, and thanks, Chris. I know you’re doing incredible work for your members. A third of the workforce in Taupō, obviously, tourism and hospitality related, and it makes a big difference to have an advocate like you. I want to come back—because we’ve obviously heard some pretty challenging figures from Sudima, for example, around job losses, and you talk about, you know, there could be 100,000 jobs that are lost. Roughly how many are already gone? So just provide a bit of context: how many do you think are gone already?RobertsIn the hotel sector survey that we just put out this week, they’re looking at about 50 to 60 percent redundancies, and about 8 percent have happened already. So the wage subsidy has certainly delayed a lot of those lay-offs. So, certainly, thousands of jobs already gone, but as Les said, many businesses are now looking at what’s left of the wage subsidy and giving redundancy notices right now to use up the remainder of that subsidy, and then people will be finishing up in June. So we’re going to see a wave of people laid off in June, depending on what’s announced in the Budget. But, for some, it’s already too late. We have been suggesting for some weeks now that we need the earliest possible indication of what’s going to replace the wage subsidy. It’s worked out that we’re not going to hear until the Budget, and for some that’s going to come too late.UpstonSo there’ll be a lot of people who are watching and we talk about survival, and people will think survival, kind of, then isn’t so much of an issue once we move to level 2, but, obviously, for many of your members the restrictions are still significantly in place, and I want to get your perspective, particularly on events. It’s a bit similar to Michael’s comment. The Prime Minister’s said, you know, it’s not about getting on the plane; it’s about what you do when you get there, but with lack of certainty in terms of the numbers of people that can gather—you know, someone going for a trail run, for example, where clearly they’re not going to be, you know, close to one another—what’s the impact of the events side alone and that continued lack of clarity around numbers and rules?RobertsI would hope the approach is taken that it’s safety first, and so that anyone organising an event can put a proposal through to the Ministry of Health or other officials and say, “This is how the event’s going to run. This is what we’re intending to do. Does it meet your requirements? Are we keeping people safe?” And if we’re keeping people safe, then events and other activity should be able to proceed and not be restricted by some hard-line rule around particular numbers, because as you can say, with something like those sort of outdoor events, people aren’t in close proximity. And I think the Government’s concern is very jam-packed groups and inability to trace them. Well, event organisers know everyone who’s in that event, and depending on the nature of the event, there’s not actually a lot of close contact always necessary.The other thing with events is we know with—getting domestic tourism again is fantastic, and that’s a huge ray of hope for our industry, but a lot of domestic travel is driven by events. You go to another part of the country because of something that’s on that’s attracted you to go there, and we’re not going to have those major events in the foreseeable future, so our reasons for travelling are going to be different. The good news is we know there’s a pent-up demand and New Zealanders want to help, and we’ve had a lot of talk about New Zealanders saying, “Yeah, I’m going to take a holiday. I realise businesses are doing this tough, that people’s jobs are at stake. I can afford it. I’m going to have a week away or a weekend away and spend a little bit of money in the community and actually help save those jobs.”UpstonYep, great. Thank you.CoffeyHi, Chris.RobertsHi, Tamati.CoffeyJust a question: Matt from Pan Pacific talked about having some kind of moving target, or some kind of target, to aim towards. He used the example that later on in the year, he had bookings that were starting to formulate, but then, obviously, with the uncertainty they all cancelled. Do you subscribe to that? Do you think there should be some kind of target, albeit a moving target, or is that too uncertain for the industry?RobertsLook, we need it—even if they’re scenarios. And we asked a couple of weeks ago for some scenario planning from Government and that was taken up, and I believe both MBIE and Tourism New Zealand are working on that and we hope to see the results of that work quite soon. I don’t know what the final details will be, but I imagine several scenarios on what the recovery—how it may pan out. And we need that sort of certainty, be it to have discussions with your bank or with your offshore wholesalers or with your own staff, about this is what the Government’s suggesting may be the way out of this. Of course, there’s a lot of unknowns at the moment, but right now we don’t have any guidance, apart from a few very general comments about it’s going to be a long, long time. Well, a little more definition around that would be hugely appreciated. And, as I say, some forecasting on visitor numbers and when it all might happen has been done in the last week or two, and we hope to see that work come out soon.CoffeyJust finally, there seemed to be a bit of concern, obviously, around that cap of 10. I understand that, but I also wonder what you would advocate as being the next step, because when I look at Australia’s guidelines and the way that they’re looking to relax their rules, it doesn’t seem to be too much of a jump after their very limited numbers. They seem to be going up very incrementally—10 up to, I think, 20 or 50, I saw, and then further afield than that. What would you advocate for?RobertsI think businesses would like to be able to submit a plan to WorkSafe or someone and say, “This is how I want to operate. Does this meet the Government’s needs?” So it’s not so much about how many people. “I believe I can safely operate and keep all my customers safe and trace all of them with this number of people involved, and is this acceptable?” I know it’s very simple and it’s good for an announcement to say it’s 10 and then the next announcement it might be 20, but that doesn’t allow for the huge differences in the way businesses operate. So businesses are really keen to do this right. They’re committed to behaving responsibly and safely, but if they think they can operate with 120 people and do it in a safe manner, they’d like to be able to submit that plan to someone and get it approved.CoffeyPania earlier—just as well, quickly—Pania talked about hospitality being a little bit left out in the conversations when tourism conversations happen and advocacy happen. She was saying that sometimes hospitality sweeps in under tourism when it’s convenient, and then sometimes, when they need some advocacy, they’re kind of outside of the tent. Where do you sit on that?RobertsWell, visitors, be they New Zealanders or international, actually spend more on hospitality than they do with tourism operators, so they are incredibly important. The food and beverage offerings are an incredibly important part of our tourism make-up, and that’s one of the things we have to keep in mind. What sort of tourism system are we going to have as we come out of this? If we lose too many businesses—if all the bars and clubs and cafes are boarded up, if some of our key tourism providers have gone under, if the hotels have remained closed, what do we have to offer visitors when we emerge from this? So we have to be very careful. The Government’s thinking about what tourism looks like after this. It’s not about what just Government does; it’s about what is left of our tourism industry.McClayThanks very much, Chris. Thanks for all you’re doing in advocating on behalf of the wider sector. You’ve mentioned, and others have, domestic tourism and the role it can play in supporting business, and I agree with you. Every time somebody feels comfortably they can go and travel, they have a chance to save a job. But, realistically, the domestic tourism season, with the exception of a couple of weekends, is through the summer, and if that’s right, doesn’t that mean that a lot of the tourism businesses that actually are just struggling now—they don’t know how they’re going to survive. You know, that domestic tourism dollar, to whatever degree it’s going to come back, may not be six or seven months away?RobertsLook, Thursday doesn’t mean that suddenly it’s all back to normal for any tourism business. They’re just grateful they have some customers. But, yes, this is not the peak time, of course, for domestic travel, and you’re having to look forward right through to school holidays and when travel is a bit more possible.In the meantime, it’s really going to be weekend travel, on the whole. So what do you do with your business when you’ve got no customers Monday to Friday and then a few customers coming in on the weekend? That’s tough for a hotel. That’s tough for an activity operator. It’s tough for every business to manage that. So I think a lot of people are saying it’s 10 or 20 percent of normal, so it’s at least some cash when you’ve had no cash for seven or eight weeks, but it’s not enough by itself, which is why there’s so much excitement about the opportunity to open up to Australia—in an ideal world, in time to have some of them coming over for the ski season, but certainly in time to have the Australians come here for the October school holidays. I think we’re not really going to see any substantial tourism activity until about October.McClayRight, thank you. And then just coming to the trans-Tasman border and wider conversation to visitors from elsewhere, a time line of when the Government might like to achieve something, if it’s safe, and some of the conditions they may consider. What sort of certainty would the sector have if they saw some sort of plan around that, and how might that impact decisions that are going on this week and in coming weeks around keeping people on, saving jobs?RobertsWell, I would hope that through MFAT, those discussions have already begun. I don’t know that they have, but in some of those other countries who were doing well to contain COVID—and there’s a number of them around the Asian area who are one flight away from New Zealand, so we should be starting those conversations very early about the prospects of opening up borders to other countries, even recognising we’re not talking about it happening in the next few months but about when it might happen. And then to share that with the industry and say, look, yes we’ve started talking to Taiwan or Hong Kong or Malaysia or whoever it is about what the prospects are of our two countries opening up our borders to each other, and here’s the sort of time lines we’re thinking about, because it’s just those signals that the industry is desperate to have.McClayRight, so time lines and a plan imperative to keep jobs and businesses open?RobertsAbsolutely.McClayThank you.WoodhouseChris, thanks for what you do to advocate for the tourism industry and for your submission today.We’re now finally going to hear from the Minister of Tourism, the Hon Kelvin Davis. Welcome in, Minister. Chris’s comments have, I think, reflected the theme of the morning submissions, so, as is customary, a very brief opening remarks from you before we open for questions.DavisKia ora, can you hear me now?WoodhouseYes, coming through loud and clear.DavisYou can hear me. All right, kia ora, Mr Chair, thank you very much. Tēnā koutou ngā mema o te komiti. I’d first of all like to start by introducing on the call Stephen England-Hall, the CE of Tourism New Zealand, and Iain Cossar from MBIE, who are here as well.It goes without saying that these are unprecedented times in New Zealand’s history. We’ve had to work swiftly and assertively to save lives. Tough decisions have had to be made and operationalised within hours and days, not weeks or months. Our first priority has always been to protect the health and wellbeing of New Zealanders. We knew that getting COVID under control as fast as possible was going to ensure the best outcomes for everyone.That wasn’t just our priority; many in the tourism sector have told me protecting the lives of New Zealanders was their priority as well. We acknowledge that the tourism industry has been hit very hard and will continue to be hit hard. The Government and industry recognise we will not be able to save every business and every job. The combination of reduced demand and willingness to travel and less ability to travel globally is devastating for tourism worldwide. The loss of tourism and international visitors is felt throughout the economy, and I’ve personally met with and heard from accommodation, hospitality, tourism attractions, transport, retail, events and arts, and others in the sector, and they’re all saying that they are really hurting.So my approach to supporting our tourism sector has been driven by three ideas: first and foremost, we needed to look after our people; secondly, we need to be strategic and inclusive, and that meant engaging with the sector in what the tourism industry would look like in a post-COVID world, and, of course, how we’ll all get there; and lastly, developing a response package, which must be balanced, timely, and considered. So at the beginning of the outbreak, when borders started to close around the world, we immediately stood up the Visitor Sector Emergency Advisory Group to assist international visitors who were in the country at the start of the crisis. Industry players such as airlines and regional players such as RTOs were invaluable in making sure our manuhiri were well looked after, and this is what I mean by being responsive, and we’ll need to continue to be nimble.So the Government also provided immediate support to the tourism industry through the wage subsidy scheme, tax relief, and the business finance guarantee scheme. The recently enacted small business cash-flow loan scheme will provide further short-term liquidity to businesses. This is about looking after our employers and employees who are really hurting. So Tourism New Zealand has engaged with more than 3,000 tourism businesses: 87 percent have accessed wage support, 93 percent of TIA survey respondents accessed the wage subsidy scheme, and 30 percent the tax relief measures. I’ve no doubt that our economic package has helped to cushion the impact on the industry, which would be in a far worse shape without our help.Every step of the way, I’ve focused my intention on engaging with all of the tourism industry sector. I’ve hosted online discussions, moving through the country region by region to capture the voices of as many affected operators as possible. I didn’t want to reimagine the sector for the future or develop a recovery and response package without hearing from as many people as I could.We also need to act strategically and fast to make sure that New Zealand is positioned to recover. Connectivity with the rest of the world is critical to our tourism industry, and Government has moved fast and at scale. To save one of the critical tourism and transport assets, the Government extended support of up to $900 million in loans to Air New Zealand and announced a $600 million aviation package to ensure air connectivity is available on key routes for at least the next six months and to deal with immediate risks and opportunities as they arise in the aviation sector. But make no mistake: tourism will not be the same globally—COVID-19 has seen to that—but because of our actions, New Zealand is better placed than most, and every step of the way we’ve sought to make sure that our response has been balanced and timely.We won’t be making announcements today—WoodhouseMinister, look, I don’t want to cut you off, but it was to be a brief opening remark, and I think that’s sort of covered out where we’re at.DavisI’ve got just a couple of very important points to make.WoodhouseWell, I’m sure they’re important to you, but what’s important to this committee is that we get to ask you questions. So let’s see if we have time for you to conclude at the end.DavisNo, I’m just going to finish off what I’ve just got to say, because I won’t be making announcements today, but I can confirm that on Budget day, we’ll be announcing further assistance for the tourism sector, and this will include a tourism response and recovery package. So I’ve listened to the sector, we’ve worked together, and as the Minister and as a Government, I believe our response and recovery plan is balanced, timely, and considered.WoodhouseI’m hoping it’s as timely as I want to be today. Minister, you talked about the wage subsidy and that you had no doubt that it had prevented job losses, which is probably true for the moment, but what we’ve heard this morning is that just about all of the submitters have said the wage subsidy has delayed the inevitable and that redundancy notices are being issued as we speak. What’s your response to that?DavisWell, we just have to be real, in the first instance. We know that in level 4 and level 3, there was no tourism, and that has been really, really hard for businesses, and we acknowledge that. Under level 2, the recovery can begin. Domestic tourism will start. But we’ve been open and honest from the outset that we will not be able to save every business and every job and that the wage subsidy scheme and the other business support package measures were just there to soften the blow, and it’s given people time to think about what it actually means for their particular business.WoodhouseYou’ve said your top priority and the Government’s top priority was the health and wellbeing of New Zealanders. Wouldn’t you agree that having a job is a massive factor in that health and wellbeing, and that’s not happening right now? It’s going absolutely the other way. So to what degree did you balance the inevitable job losses from a severe lockdown with the health and wellbeing of New Zealanders and their job losses?DavisWell, we believe that a strong health response was also our best economic response. Now, what we’ve done has worked. We went fast and we went hard, and our recovery is starting sooner than other comparable countries. So what we’ve done has actually been very effective. It’s got us to the position now where we can lift domestic travel restrictions. Businesses can start opening up, albeit at a lower level. But that strong health response has also been our best economic response.WoodhouseSo let’s talk about the lifting, because last week the Prime Minister gave New Zealanders an idea of what level 2 would look like, and that included gatherings of up to 100 people. Now, yesterday, there was a different announcement made, which has caused considerable confusion amongst tourism operators. So can you clarify for the committee, because I think it was Chris Roberts that suggested that perhaps the hundred limit didn’t apply to business gatherings but only applied to social gatherings, like weddings and funerals. Can you just clarify for the committee where the 10-person limit applies?DavisSo there are no mass gatherings. In your social bubble, you can have up to 10 people. A business such as a restaurant can have 100 people in their premises, but groups can only go to a maximum of 10. Now, the reason being is that we need to maintain that separation. We need to have the seating, we need to have the single serving, and then those things.WoodhouseI get why; I’m just trying to work out the definition. So what’s the definition of a social bubble? Is a political party caucus a social bubble?DavisWell, as we’ve said, while it doesn’t apply to an individual workplace, but in terms of social gatherings, we’ve said 10 people. So, look, the big thing is—and I heard Chris say it—it’s about operating safely. If a business can actually show that they can work safely, that’s the most important thing—as long as they can work safely within the guidelines that have been given.WoodhouseUnless you’re a wedding host, I would presume.DavisWell, this is what we’re saying. Businesses have to make those decisions for themselves. If they can work safely within the guidelines, then—WoodhouseYeah, I want to stop you there, Minister. The Government’s made that decision for them, because they’ve said that a wedding host can’t host a wedding because it meets the definition of a social gathering and therefore you can’t have more than 10 people. So can you understand that there is a huge amount of confusion out there about what is actually allowed and what’s not, and that’s causing an impact in the industry that you oversee?DavisAnd our officials are working with the various sectors in the industry to make sure that they understand how the guidelines apply to them. In fact, they’ve worked with them to develop guidelines. So there is a lot of work going on—it has gone on, it is going on—but we’re doing our very best to make it clear to people what sort of environment they can continue to work in. WoodhouseMy last question before I open it up: Chris Roberts called for the Government to take the lead and to hold the sorts of meetings that his members are saying are being cancelled right around the country. What is the Government’s position on supporting the tourism industry by not discouraging, if not encouraging, Government departments and entities continuing to hold conferences and training and so on?DavisWell, again, it comes down—it’s the same for Government departments as it is for any operation. As long as things can be done safely within the guidelines, well, then they can continue. But let’s understand that the most important issue here is the health of New Zealanders, and we don’t want to get into the situation where we drop down levels and then because guidelines haven’t been followed, we end up bouncing back up the levels.Woodhouse All right. So you’re not prepared to encourage Government departments to meet safely and normally, as they had planned to do prior to COVID?DavisWe will encourage Government departments to meet safely within the guidelines relevant to that particular level.Woodhouse Thank you.SeymourYes, thank you, Mr Chair. Thank you. Kia ora, Minister. Can I just ask—when the Government announced first that there would be mandatory quarantine for all entries to New Zealand and then to shut the border completely, can you just summarise: what was your input to Government about the impact of that on tourism and the support for tourism that would be necessary?DavisWell, regardless of the decision that the Government has made, I’ve put my case and my point on behalf of the industry to Cabinet. We make these decisions as a Cabinet, and—SeymourYeah, I know, but the question was: what was your feedback?DavisWell, I’m not going to go into what discussions were had or not had at any Cabinet meeting, but what I will say is that I have fed in the views of the industry throughout the whole process since the very beginning of the concerns around COVID, and we have made collective decisions throughout that time in what we think are the best interests of New Zealand. And as I said, our first inclination was around health, and the health decisions have driven the economic decisions.SeymourYeah, OK, look, we’re not going to get anything specific there. Can I just ask—we’ve just heard from IATA that they don’t recommend social distancing on aeroplanes. We had the Sounds Air representative on this committee. He said that the Government is recommending social distancing. I just wonder if you’ve had any involvement in that decision, and why the Government is driving down [Inaudible] factors on aeroplanes when IATA is not recommending it.DavisWe are making decisions based on what we believe is the best health response in any given industry. So if that’s the decision that’s been made, we’ve made it because we think that that is going to keep New Zealanders safe.WoodhouseOne of the things I don’t understand—if I might just ask a supplementary on that—is that you keep referring to the health response, but we’ve achieved that, and now we’ve got to look at things like the economic and tourism response. The people who have been coming to our committee have said, “Look, we can do this safely.”, and it seems to me that the Government is stopping it from doing what it knows it can do. So why don’t you trust business more?DavisWe are working with business. We are working with industry. We’re co-developing the guidelines. So, you know, the Government agencies—WoodhouseBut you set the guidelines, Minister—you set those guidelines. And it seems to me that there’s a distinct lack of trust in the ability of business, particularly tourism operators, to open safely and encourage custom, and that’s what they’re crying out for.DavisSo we’re giving the guidelines, and they are to operate safely within those guidelines that have been developed with the industry.WoodhouseWell, yes, but a decree that you can’t have a wedding with more than 10 people isn’t a guideline; it’s executive fiat—it’s a rule.DavisWe’ve been making decisions in what we believe are the best interests of health, because the last thing we need is for more people to get COVID, to have a spike, and then we regress back up the levels.SeymourMy Chair, sorry, can I just finish the line of questioning I started? Look, finally, Minister, I’ve heard some interesting comments from the Prime Minister and the Minister of Finance about financial support for specific industries. The Prime Minister has suggested in the House that there should be specific, targeted support for industries that continue to be affected by Government restrictions as we move down the alert levels, and we don’t need to tell anyone here that tourism’s going to be affected the longest and hardest. On the other hand, Grant Robertson has said in comments at a press conference that that’s very difficult to do. He raised the question of how do we define whether the guy who runs the gas station—assuming it’s a guy—at Kaikōura is part of the tourist industry or just another gas station operator? I wonder—I understand you want to say, “Oh, wait till the Budget.”, but I wonder if you can explain how you’re going to define the tourism industry for the support that I know you can’t tell us about yet.DavisWell, you’ve made the very point that I want to make that tourism is such a dispersed industry, from the person who’s pumping gas at the Kaikōura service station right through to the aviation industry, through to hospitality, through to accommodation. So it is a very dispersed industry, but we have a tourism recovery package to be announced later in the week, and people will have to wait just a couple more days to see what’s in it and how it will help them.SeymourYeah, I get all that, but with respect, Minister, the whole point of this exercise is you come to the committee and we ask questions and you try to answer them. So the question was: we know it’s a dispersed industry; we know it’s difficult, but how will you define it, is the question.DavisWell, the tourism industry is an industry that works with or caters for visitors, be they domestic or international. But there isn’t a definition of what tourism is. But so many people’s lives—SeymourThat’s really necessary—if you have a Budget package to support tourism, you kind of need to be able to define it. That’s why I asked the question.DavisWell, there will be criteria developed for people to access the package. So if they meet the criteria, they’ll be able to access the package.SeymourAll righty. Always a pleasure, Kelvin. Go well.DavidsonThank you, Mr Chair. Kia ora, Minister. Can I pick up on Māori tourism, please? We had Pania Tyson-Nathan this morning from New Zealand Māori Tourism, and she did mention that there had been really good engagement across Māori Ministers. But, Minister, could you talk to us quite a bit more about the work that you’re doing specifically—the support and the engagement that you’re having—with the New Zealand Māori tourism sector?DavisLook, New Zealand Māori Tourism have been working really closely with us in the response to COVID in general. They’ve helped businesses to pivot away. They’ve helped in the redeployment of workers. They’ve been highly involved in the re-imagining of the tourism industry. And as we know, Māori tourism is actually one of the most unique features of our whole tourism landscape. So they’ve been highly involved in influencing what we’ve been doing, and I just want to say thank you to New Zealand Māori Tourism for the work and support that they’ve put in.DavidsonMinister, I just want to pick up on one of the, sort of, re-imagine ideas, and particularly concerning cultural IP opportunities she mentioned with our Pacific and Aboriginal cousins. What sort of discussions are you having with those sorts of—and particularly the cultural IP opportunities which are unique to Māori tourism?DavisWell, Māori tourism is instrumental in organising the indigenous tourism conferences that have been had. You know, there’s been discussions for a number of years around how we can best support each other’s cultures in terms of tourism, and those discussions will continue as part of a COVID response. You know, there’s more discussions to be had, and in particular, I guess, as we open up the trans-Tasman bubble, in time there’ll be opportunities there to engage more with our indigenous brothers from Australia.DavidsonThank you, Minister. Thank you, Mr Chair.WoodhouseThank you.McClayMinister, thank you very much. A couple of quick questions just based on what you said: you mentioned you think that New Zealand is, sort of, getting back to normal and coming out of this quicker than many other comparable countries. Compared to Australia, how many more or how many less jobs and businesses in tourism do you think will be lost? Who’s going to end up better off, us or Australia?DavisWell, it’s, as I’ve said, because of the dispersed nature of tourism, it’s hard to gauge just how many jobs will be lost in tourism as a direct result of COVID. We will have more information in August when Stats New Zealand put out their latest stats to give us a clearer picture of employment across New Zealand. But it’s very difficult to tell at this stage, if you’re wanting to compare between us and Australia, who will be better or worse off. I’ve heard that they’ve had significant unemployment since COVID across Australia, not just in tourism. It’s just too difficult to make those broad comparisons.McClayWith the exception, though, that you’ve just said to the entire sector that we’re better off because you went earlier and went harder than anybody else and we’re coming out sooner. So I’m just wondering about—you’re saying that to them yet at the same time you’re saying it’s very hard to know exactly what’s happened in New Zealand. For the package that you will be announcing tomorrow, which I hope and pray for the tourism sector is significant, what analysis have you had of the number of businesses that will be saved and the number of jobs that will be saved as a result of this package?DavisAnd, again, because it’s difficult to say whether the service station in Kaikōura is—McClayI’m just going to talk about specific tourism as opposed to the wider definition, because if you look at a Queenstown and Taupō and Rotorua—I’m sorry to interrupt you, but we’re just short of time. If you look at the Queenstown, Rotorua, Taupō, specifically tourism, as opposed to whether or not somebody is buying petrol on the way through, I guess I’m talking about.DavisSorry. So can you ask your question again?McClayYeah, so my question is, for the package that you are announcing tomorrow, that you’ve said you won’t tell us about today—I hope and pray it is significant for the tourism sector, but what advice have you received in putting that package together and deciding where the funds will be targeted of the number of businesses that are likely to be saved and jobs saved directly in the tourism sector? I’m not talking about the guy pumping the gas necessarily; I’m talking directly tourism.DavisWell, we know that it’s going to help many, many businesses. In terms of the exact numbers of businesses that will be helped, we don’t have that direct advice. But the fact of the matter is that we have got a response package, a recovery package, for tourism that will help many, many businesses.McClayAll right. Just a final one, if I may, Chair: why did you wait until Budget, rather than probably two weeks ago where you could’ve been telling the sector exactly what the support was? Because, I mean, we’ve had hotels on here today who—you know, hotels that are announcing today job losses because of the uncertainty. So I guess I’m asking the question why it was there wasn’t announcements about an extension of the wage subsidy two weeks ago or last week when businesses were actually making those decisions. Why did you wait for Budget?DavisBecause any response had to be timely and considered because of all the business support package that we had previously in alert levels 4 and 3, but also because decisions get made at Cabinet, and we can’t go pre-empting those decisions. There’s a lot of Ministers involved in the response, helping the whole of the country as well as tourism.McClaySo there was a Minister made an announcement yesterday that will come up in the Budget. And so my point is your decisions around Budget were not made this week, because Budget was locked in, and we heard around family violence money, which is very important, was already announced. I’m asking why you as Minister didn’t seek permission to make early announcements so that jobs were safe in tourism, because I would guess over the last two weeks there’s probably 10,000 jobs lost in the tourism sector that may not have been if they’d known what the support was.DavisAnd as I’ve said, I won’t go into any discussions that we may have or may not have had at Cabinet, but we have made—we have made—decisions and people are going to hear on Thursday what that decision is for the tourism industry.WoodhouseSo just supplementary to that, Minister, your colleague the Minister of racing has just announced a $50 million relief package for that industry, and yours is probably 13 or 14 times larger, so can we take it from that, if it’s a scalable relief package, that you’re going to be announcing something between $600 and $800 million for the tourism industry?DavisOh, look, you’re just going to have to wait and see what the announcement is going to be.WoodhouseI’m sure you will want to agree with me, though, that tourism jobs are more important than horses.DavisLike I said, you are going to have to wait and see what the response package will be.WoodhouseYou talked about the package being timely, but the Minister of Health and the Minister of racing felt it necessary to give certainty to their industries. Why couldn’t you do that for tourism?DavisLike I said, it needs to be timely. We’ve had all those other business support initiatives that are helping businesses, of which tourism businesses—as I’ve said, 93 percent, I think, in one survey said that they had accessed them; 87 percent in another survey have said that they have accessed those business support packages. So we have done what we have done to support businesses, and now, as we move into the recovery stage, we have another package to announce.WoodhouseAll right, well, if racing is a $1.6 billion industry and tourism is a $42 billion industry, then let’s hope there’s a scalable response from Government. Can I go to Tamati Coffey very briefly—I know we’re running short.CoffeyKia ora, thank you, Minister. All submitters today have praised the Government’s health response—no complaints on that, so they’re really supportive, that’s good. They have asked for business support as well, and we’ve heard that time and time again, and you’ve already indicated that that’s coming this week, so that’s great. In terms of the reimagining or the tweaking of tourism, you’ve said that you’ve been on online discussions this week, or for the last couple of weeks, few weeks. What are you hearing? What are some of those stories that people are talking about as we start to look into the future about what tourism looks like or could be?DavisWell, if you want me to answer briefly, one of the major things that people have been saying is that we need to reimagine a more sustainable tourism future, that now we can’t just go back to what it was before, that we have to look to a more sustainable future. But they’ve also said that we need to do this together, and that’s why I have been talking with people in the sector, region by region—as I’ve said, over 3,000 people so far, and in the next couple of weeks, probably close to another 2,000 people. And what I have been doing is taking their feedback and feeding it in to the highest levels around the Cabinet table. And everybody in the tourism industry, in the tourism sector, can be reassured that there isn’t a Cabinet Minister around the table that doesn’t know what the impact of COVID-19 has been on the sector. And it has helped to influence the decisions that we make as a Cabinet.CoffeyAnd just finally—WoodhouseVery quickly, Tamati.Coffey—do you think—one of the comments from Pania from New Zealand Māori Tourism was about hospitality and where that sits within the tourism framework—sometimes it’s included, sometimes it’s left out. Do you think that it should be included under that tourism banner a bit more?DavisWell, this, again, goes back to the question about the diverse nature of the tourism industry, and hospitality is one of those sectors that is part tourism and is part, you know, locals going to their local cafe to have something to eat. And it just highlights the complications around addressing issues across the board.WoodhouseQuick-fire questions from Stuart Smith and then Hamish Walker to finish.SmithThank you, Mr Chair. My question is—and welcome, Kelvin, Minister. My question’s around the response in terms of the aviation package. That has been in consultation with the industry for weeks now and yet the money’s not gone out, other than for international freight and some minor freight here in New Zealand. You know, announcements are fine, but delivery is what we’re after. Can you give an assurance that there’ll be much faster action in handing out this money and support?DavisYeah, so the purpose of the aviation package was to help maintain some key routes internationally, as well as helping to re-establish flying around New Zealand. And, look, I can commit to talking to Phil Twyford, the Minister of Transport, who worked with the industry on the package, to make sure that concerns are being addressed.SmithWell, it’s actually the officials that seem to be slowing it down, so I think a bit of leadership from the Ministers would be helpful.WoodhouseThank you.WalkerAfternoon, Minister. Just quickly, the biggest issue for the ski fields at the moment is they’re getting held up by MBIE and Health officials regarding the sign-off for the procedures. They can’t go out and make a statement saying they’re open for business without this sign-off. This has been ongoing for about two weeks now. They need certainty so they can hire staff. They’re supposed to open middle of June. Is there any sort of commitment there from you as the Minister—you can maybe get the MBIE and Health officials to move that on a bit quicker?DavisYeah, certainly, because we do have Iain Cossar here on the call from MBIE, and if it’s OK with the committee, I might invite Iain to respond to that.WalkerAnd just one more question, Minister, around—some operators down here are quite confused. The Earnslaw—how many people are they allowed on their boat to operate?DavisOh, look, again, we’d have to work with officials to work out exactly what it means for individual tourism operators like that. I mean, Earnslaw is a slightly different case. It would need a bespoke arrangement. But, again, the officials can work with that business to see what it means for them.WalkerBut, Minister, if you can’t answer that simple question, how is the industry supposed to move forward, go ahead, when a number of them will be opening this Thursday, when that’s less than 48 hours away?DavisAnd like I said, you know, we’ll have officials working with them to work out what it means exactly for the Earnslaw.WalkerThank you.CossarIf the committee pleases, I can speak to that.WoodhouseVery quickly, Iain. Thank you, yep.CossarVery quickly. Look, I can give you assurance that there are some details around gatherings that are still being worked through. They are being worked through with Health, MBIE itself, and the all-of-Government policy team and industry. We’ve undertaken to have them resolved prior to moving into level 2, so that will be done in the next 24-36 hours. We are trying to resolve those final few issues, and the member has raised one of them.WoodhouseVery good. Well, thank you for that update, Iain, and, Minister, thank you. We all look forward to the package as it’s going to be announced as part of Budget 2020 on Thursday. So appreciate you all on your appearance today.DavisCan I just make one very short final comment. As we move into level 2 and we start to recover and we start to repair the sector, I just want to say to people in the tourism industry: thank you very much for holding in there with us. We know how hard it has been on you as employees and employers and as business owners and industry leaders. But what COVID has taught me is that when we work together, when we withstand the worst, I know we’ll come out the other end at our absolute best. So thank you very much.WoodhouseWell, I’m sure they’ll appreciate your thankyou to them. I’m not sure they’ll be thanking you yet, but we’ll see what happens on Thursday. Thanks very much for your time. So that ends the public part of our meeting—just if colleagues can just stand by for a little bit of administration. For those viewing at home, we’ll be reconvening tomorrow morning at 10 a.m., when we have an economic theme, and we’ll be inviting the Minister of Finance to brief us on the day before the Budget. So thank you very much, everyone.conclusion of evidence ................
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