Navigating The Post JobKeeper Stimulus Package
With the JobKeeper scheme due to wrap up on March 28, what does the new package have to offer brands who are nervous about trading without financial support?
Administered by the Australian Tax Office, the JobKeeper Payment was a scheme released in 2020 by the federal government. Designed to be a means to financially support businesses and not-for-profit organisations during the peak of the Covid-19 pandemic in Australia, there’s no denying that the payment helped to keep thousands - if not, millions - of Aussies in a job, and out of the Centrelink line.
The JobKeeper Payment is currently supporting around 3.5 million individuals, in over 900,000 businesses around the nation. To date, payments have totalled around $60 billion - and as repeatedly stated by Prime Minister Scott Morrison and Treasurer Josh Frydenberg, the scheme was never intended to be a long term one. As a result, JobKeeper is set to finish up on March 28, 2021.
However, leading economists from the Commonwealth Bank of Australia have issued a warning that over 100, 000 jobs could go off a cliff when the subsidy dries up - particularly for those in the travel and tourism industries. This has long been echoed by business owners trying to stay afloat within these sectors, who fear that as long as international borders remain closed, little can be done to salvage their businesses in the current economic climate.
Although pleas for an extension on the JobKeeper wages scheme from both State Premiers and key industry figures are looking increasingly unlikely to be answered, a new post-JobKeeper stimulus package was released last week by the federal government. While some have welcomed the new subsidies with open arms, not everyone is happy - so what are the new updates, and how do they affect you?
What’s Changed With The New Stimulus Package
Tourism is a major growth driver for the Australian economy, generating $60.8 billion in gross domestic product (GDP) in 2018/19, and employing around 5% of the country’s workforce.
Along with the accommodation and hospitality industries, it was arguably the hardest hit sector when Covid-19 arrived on Australian shores. Faced with the double assault of both international and domestic border closures, not every business owner trying to make a living in this sector has been able to adapt the way that they operate in order to cater to the much smaller domestic and state markets - in their own words, there’s simply not enough to go around.
As an attempt to placate a decimated industry, Prime Minister Scott Morrison has unveiled a new $1.2 billion dollar post Jobkeeper stimulus package that is set to take effect from April 1, 2021 - but is it enough?
One of the key support packages outlined is the 50% subsidy on 800, 000 domestic flights to selected tourism destinations across Australia. Designed to support key regions that are most reliant on tourism and travel around the nation, destinations included in the scheme cover Cairns, The Whitsundays, The Gold Coast, Alice Springs, Broome, Kangaroo Island and Merimbula.
“This is our ticket to recovery - 800, 000 half price airfares to get Australians travelling and supporting tourism operators, businesses, travel agents and airlines who continue to do it tough through COVID-19 while our international borders remain closed,” Prime Minister Scott Morrison said.
“Our tourism businesses don’t want to rely on government support forever. They want their tourists back. This package, combined with our vaccine rollout which is gathering pace, is part of our National Economic Recovery Plan and the bridge that will help get them back to normal trading.”
However, the new financial support package was almost instantly met with an array of criticisms from a wide variety of tourism industry figures. Just a handful of the key concerns aired so far have included the following -
Airlines Come First - Many have decreed that the biggest winners of the scheme would be Qantas and Virgin, as the package will also include specific support aimed at sustaining more than 8,000 jobs, as well as support for airport screening costs and a services assistance support program to relieve the cost burden related to training on-the-ground staff at Australian airports.
No State Travel - Although the heavily discounted airfares have been designed to get Aussies moving, there were no subsidies for travel within each state. With many Australians reluctant to even cross domestic borders fearing snap closures in the event of a Covid-19 outbreak, travellers have been left to ponder whether it’s worth the risk or not.
Network Favouritism - While the new post JobKeeper scheme was released to specifically support regions that are heavily reliant on international tourism, some states came out significantly better than others. Tourists from Melbourne and Sydney are being encouraged to travel interstate, but there are no discounts on people looking to visit the cities in return.
No Wage Subsidies - One of the biggest gripes echoed by tourism bodies around the nation is the complete withdrawal of wage subsidy schemes. While many are grateful at the prospect of more visitors to their regions, many argue that it’s simply not enough. Alarmingly, 8/10 tourism operators stating they will have to let staff go without the JobKeeper wage subsidy.
The second change announced with the new stimulus package for the tourism industry is the extension of the SME Loan Guarantee Scheme. The expansion will see the limit of eligible loans rise from $1 million to $5 million under the scheme, as well as a cost split shift which will see the government guarantee a higher portion of the loan. The shift would see the government’s 50-50 split with banks shift to an 80-20 split.
Businesses with a higher turnover are expected to benefit, too, as the cap on eligible turnover increases from $50 million to $250 million. Borrowers will be offered a repayment holiday on both principal and interest for up to 24 months, with loan terms increased from five years to 10 years.
However, the expanded scheme will only be open to recipients of JobKeeper payments between 4 January and 28 March, and those that applied during the first phase of the scheme, with the government expecting more than 350,000 current JobKeeper recipients to be eligible. The loans will be available from 1 April and remain open until 31 December, but many industry figures argue that the loan scheme is not a lifeline - but rather, a noose, since many operators are already unsure as to how and when they can pay existing lines of credit back.
On discussing the release of the new subsidy on an episode of ABC’s Q&A last week, even the Minister For International Development and The Pacific, Zed Seselka, said that even he agreed that the package wasn’t sufficient.
"I'm not going to say it's enough. I'm going to say that it is a very substantial package, along with the support for the aviation industry, the extension of the small and medium enterprise loan scheme and all the other supports we've been putting into the economy. What we've said all the way through - and I think we've had a good record of this - we will do what is needed, and we'll adjust to circumstances as they go forward."
Navigating Life Post JobKeeper With The Professionals
There’s no denying that brands and businesses of all shapes, sizes and sectors have done it tough in the last twelve months. Whether you’re starting a business, purchasing an existing one, or even re-evaluating where your current one stands - all require some form of financial know-how if you hope to successfully navigate your legal requirements as well as hitting your business goals.
However, if understanding the legalities that surround your business or finances isn’t your strong point, then it may be reassuring to know that you’re not alone. In fact, many businesses (big and small) enlist the services of an accountant in order to free up their time while knowing that their financial obligations are already taken care of by the professionals.
Ultimately, the team at Muro believe that every business owner is an entrepreneur. However, accounting does not discriminate - finances break down barriers and are not territorial. If you would like to take a deeper look into your finances, please get in touch with us at Muro today to ensure that you’re on the right path for success.