“For businesses to bounce back when this health crisis is over, they need a holiday from all costs that they incur during this extremely difficult period,” says Australian Small Business and Family Enterprise Ombudsman Kate Carnell, who welcomed Prime Minister Scott Morrison’s COVID-19 business hibernation plan that was flagged on Friday.
“The only way for small businesses to survive the coming months is if they can effectively hit pause for the time being,” Carnell says. “Small businesses – including those that are forced to shut their doors as well as those who suffer a significant loss of income – should be able to go into business hibernation.
“It’s a mammoth effort that requires everyone to come together and be a part of the solution. Landlords, utility and service providers, telecommunications and all levels of government will need to put their fees and charges on hold or face losing that customer altogether if there is a tidal wave of insolvencies.
“Part of this needs to be a wage subsidy for staff that remain attached to the business. Those staff would need to be paid at least 60% of their wage up to a maximum monthly amount. This of course would need a minimum safety net built in.
“Small businesses are the engine room of the Australian economy and need our support more than ever right now. We are at a critical tipping point, but we can get through this if we work together.”
The Prime Minister said yesterday that the government was preparing to put in place the third tranche of economic measures “that will be there to support Australians further as we go through the many difficult months that are ahead.
“Part of that plan that we will be announcing will be to seek to hibernate Australian businesses,” he said. ‘This will be a very innovative approach in the circumstances we find ourselves in.
“The idea is pretty simple, there are businesses which will have to close their doors. They will have to keep them closed either because we have made it necessary for them to do so, or simply there is just not the business to keep their doors open. We want those businesses to start again. And we do not want over the course of the next six months or as long as it takes, for those businesses to be so saddled by debt, so saddled by rental payments, so saddled by other liabilities that they will not be able to start again on the other side.
“We want these businesses to effectively go into a hibernation, which means on the other side, the employees come back, the opportunities come back, the economy comes back. This will underpin our strategy as we go to the third tranche of our economic plan, and that will include support by states and territories of managing the very difficult issue of commercial tenancies and also dealing ultimately with residential tenancies as well.”
Carnell also released a video (above) explaining the government's SME Guarantee Scheme and what it means for small businesses, including sole traders.
