Small businesses say JobKeeper works, but will its end be a sucker punch?
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COVID-19 caused a once-in-a-century disruption to business but MYOB found that the federal government’s JobKeeper handout made a big difference.
JobKeeper is a wage subsidy aimed at keeping workers in jobs. According to the federal government, the scheme supports nearly 1 million businesses, and 3.5 million workers are receiving payments.
Eighty-four per cent of small business owners reported the scheme allowed them to stay afloat. This is despite four in 10 reporting their businesses had to hibernate for six months and 93 per cent seeing a reduction in work.
“The impact of COVID on the small business sector is hard to overstate, as evidenced by the data,” MYOB Economist Jon Manning said.
There are varying expectations as to when the impacts of COVID-19 will abate. But there is a clear consensus they will persist for some time.
However, the survey found that business owners were generally satisfied with the job the Morrison government had done.
While the JobKeeper scheme will continue for another three months there is concern about what the impact will be from the scheme coming to an end.
Some businesses may be able to trade in ordinary conditions but the shape of recovery will vary among differing industries.
For example, consumer staples such as food may arguably be back to normal already. Others such as tourism could remain down until next year with Australia’s borders expected to remain closed.
Yet there are concerns a wide-scale ending of support may have the impact the scheme was seeking to avoid. JobKeeper is one of several stimulus measures expected to end in September such as the deferral of mortgage payments.
Roger Montgomery, chairman at Montgomery Investment Management, warned last week this was a ticking time bomb.
“What will happen to households and businesses’ ability to start paying their debt again once the cash inflows from the other stimulus packages go away?
“The government has been clear that there will not be an extension to JobKeeper so we are at risk of seeing welfare payments decline substantially at the same time as debt repayments resume.”
This morning, Treasurer Josh Frydenberg hinted that the government was looking for industry specific solutions. He pointed to the arts sector as one the government was looking at helping.
He also said support for business extended beyond JobKeeper, noting other initiatives such as the instant asset write-off.