Small businesses are in financial distress because of Covid-19 lockdowns and “the reality is some of them won’t survive,” according to the Council of Small Business, which has proposed a new post-lockdown cashflow program called Business Rebuilder.
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| 'JobSaver won't be enough': Alexi Boyd, CEO COSBOA |
“The current JobSaver support is welcome - very welcome - but it won’t be enough on its own to save small businesses and their employees,” said Alexi Boyd, CEO of the Council of Small Business Organisations Australia (COSBOA). “Continued support is needed to transition from lockdowns to economic recovery. That’s why COSBOA is proposing a “Business Rebuilder’ program to provide cash flow assistance to eligible SMEs once the Job Saver program has ceased.”
COSBOA believes the new program should include:
- ·Existing measures such as JobSaver, sole trader & micro support extend into the rebuilding phase of the economy, with a gradual step-down approach as the economy recovers
- ·Continued, tailored support for severely impacted industries (such as events)
- ·Waiver of Payroll Tax for the first two quarters after the program starts
- ·A meaningful rent relief mechanism incorporating mediated outcomes to support recovering businesses and the provision for ‘no fault – no penalty’ early termination for businesses that cannot reasonably continue to trade.
“Recovery takes time, but the JobSaver program is only available when there is a Commonwealth hotspot declaration in place,” said Boyd. “Unlike JobSaver, the financial distress small businesses are experiencing won’t suddenly stop the moment lockdowns and hotspot declarations are lifted.
“The critical time for business survival and job protection is the period immediately after the lockdown is lifted. Without post-lockdown assistance, we might see businesses having to shed staff in order to survive but such assistance should continue to require the maintenance of headcount as an extension of the ‘in lockdown’ Job Saver objective.
“COSBOA’s members have sung the praises of previous assistance measures such as state and federal cash grants, rent relief programs, payroll tax waivers, and incentives to keep people employed. They kept many small businesses alive last year. We know they work, so let’s keep them going as we transition from lockdowns to rebuilding the economy.”
COSBOA’s Business Rebuilder proposal:
JobSaver and JobKeeper
KEY ISSUES:
- Job Keeper Mk II cannot be implemented fast enough to provide the support urgently needed by SME’s – particularly in NSW (In any event, the money flows straight through to employees with no financial benefit to the business). Analysis suggests that it would be 8-10 weeks before payments would flow to eligible businesses if a decision was made to pursue this option – which is too long for SMEs given that affected businesses in NSW have already suffered 5 weeks of lockdown.
- JobSaver only provides support to businesses after a certain period of lockdown, during the COVID declaration period, which means it stops as soon as the COVID HotSpot Declaration is lifted. Unlike JobKeeper where the payment continued during a qualifying quarter, the business does not have the benefit of a wage subsidy as it seeks to restore business revenues back to a sustainable level.
- The current construct of JobSaver encourages businesses to maintain staff levels only up until the point when the COVID Declaration is revoked – and the lockdown ends. Yet the point where jobs will be most at risk is the period after this, when businesses make decisions about reopening and rebuilding.
PROPOSED SOLUTION:
A solution that appears to have significant merit given the above issues is the development of an additional “Business Rebuilder” Program to provides cash flow assistance to eligible SME’s that participated in the JobSaver Program and are now working to get their businesses back on their feet – noting that this is the period when businesses are most likely to shed staff.
The architecture of the proposed “Business Rebuilder” Program might be as follows:
- Program is available to all JobSaver participants and commences upon the removal of the COVID Hot Spot declaration (i.e. cessation of JobSaver)
- Program participants are required to re-employ on the basis of the JobSaver headcount for at least the first quarter after cessation of JobSaver. (This action will also address potential risks and tie staff to the business).
- Payroll tax is waived by the State/Territory Government for two full quarters following commencement. (In NSW, the mechanism will be operated by Services NSW).
- Rental assistance based on mediation process followed by State government funding the negotiated gap between current rent and the level negotiated between the Landlord and the Tenant, for two full quarters, capped
- Continued, tailored industry support for sectors with low headcounts and high outgoings (e.g. events)
- Supporting additional rounds of state administered Cash Grants, appropriate to the length of lockdown
- For Program participants and sole traders who submit BAS quarterly, BAS payments are waived by the Commonwealth Government for two full quarters following commencement (Businesses will be required to submit assessments but ATO will waive payment of same) – that is, mechanism will take advantage of the BAS process for SMEs.
- Eligible non-employing Sole Traders with annual turnover over $75k will receive a one-off $10k payment from the ATO in the first fortnight following cessation of JobSaver.
- Eligible Non-employing Micro Businesses with annual turnover between $30k - $75k will receive a one-off $5k payment in the first fortnight following cessation of COVID-19 Micro Business Grants.
