Report calls for decisive action to get business back on track
One in three businesses receiving JobKeeper have not planned for when payments stop and about half have indicated they will be unable to maintain current hours and head count after the Federal Government’s wage subsidy scheme ends, a Business NSW survey of more than 1,000 businesses reveals.
The Back on Track report, based on responses to a survey undertaken in June, identifies 10 priorities for business recovery, including the implementation of a ‘JobKeeper 2.0’ program, a commitment by the Commonwealth and states to return unemployment to less than six per cent and the establishment of a Youth Jobs Guarantee.
Hunter Business Chamber CEO Bob Hawes said COVID-19 was a once-in-a-generation challenge for the business community that demanded decisive, ongoing action from government.
“Half of the respondents from our region receiving JobKeeper indicated that their business would be closed without the subsidy, which was higher than the state average of two in three,” Mr Hawes said.
“Across the region, revenue is estimated to be down by between 40 and 47 per cent, due largely to the impact of government restrictions and reduced customer demand.
“While the survey shows that JobKeeper has been overwhelmingly the most helpful policy measure for business, it also reveals that few businesses have a Plan B, with many unprepared for what happens after September.
“That is why this week’s Economic and Fiscal Update from the federal Treasurer must give the business sector confidence about the road ahead, particularly given the new risks that have emerged in Victoria and NSW and the impact these developments are having on business and consumer confidence.”
Eight in 10 businesses expected to be back to normal or near-normal operations by October, although many indicated their capital spending, staffing and capacity to hire would be reduced. More than half of the respondents had downsized, deferred payments, reduced staff expenses or drawn on personal funds in response to revenue loss.
Tourism, construction, transport, hospitality and education businesses were the least likely to be back to normal by October. Among the positive indicators, two in three businesses believed Australia would recover faster than comparable countries, given our relative success in managing the health crisis.
The survey showed a marked drop in business confidence following the recent outbreak and subsequent lockdowns in Victoria. An additional survey undertaken in the first two weeks of July showed the number of businesses anticipating an economic rebound over the next three months dropping from 24 per cent before the resurgence of the virus to 19 per cent afterwards.
“Uncertainty about the health crisis and the future of business support programs, such a sJobKeeper, is having a massive chilling effect on the appetite of business owners to hire staff and invest for the future,” Business NSW CEO Steve Cartwright said.
“The Recovery Drivers discussed in our report are aimed at ensuring that businesses stay open, staff are rehired and that the foundations for future economic growth are set in place."
These Drivers include a Federal and State Government Compact committing to returning unemployment to below 6 per cent by June 2022, providing greater certainty on the pathway ahead for businesses currently affected by restrictions, supporting young people through a Youth Jobs Guarantee and replacing JobKeeper with a new rebate to protect vulnerable jobs.
“Our future living standards depend on our resolve to reduce the cost of doing business and improving competition in markets. That is why we urgently need regulatory reform to drive business growth, concrete steps to improve NSW’s energy outlook and investment in new nfrastructure to unlock economic capacity in regional NSW.
“We would also like to see greater co-operation, including through National Cabinet, to implement overdue reforms to federal financial relations, payroll tax and workplace relations.”
The Business NSW Back on Track Report and Recovery Drivers are available at businessnsw.com.