Innovation

As the economy reawakens, business leaders call for extension to stimulus

Despite the Morrison Government’s insistence that the JobKeeper support measure will be cut off, business leaders around Australia are calling for the Prime Minister to rethink the impact this would have on the economy.

While JobKeeper was originally slated to run until the end of September, the Government aims to review the scheme and reveal its fate on July 23 alongside an economic and fiscal update.

And a majority of company directors want the scheme extended.

A survey of 2300 company directors by the Australian Institute of Company Directors found that 68 per cent want the government to radically rethink their agenda, develop new priorities in a post-COVID-19 Australia, and 81 per cent want an extended JobKeeper.

“As we navigate our way through the COVID-19 recovery phase, it’s clear that going back to pre-pandemic policy settings won’t increase business confidence, strengthen social services or boost the economy,” AICD chief executive Angus Armour said, according to AAP.

“Now more than ever, Australia needs a policy agenda that supports sustainable growth, including energy/climate change policy and tax reform, and a regulatory environment that encourages risk-taking and innovation.”

High on the wishlist of directors is a support to strategically reset businesses, as uncertainty around cash flow and customer demand looms. Additionally, respondents overwhelmingly supported pro-growth, pro-innovation policy settings as an area for the government to step up. 

Forty-seven per cent want virtual annual general meetings to become part of the Corporations Act, while a further 42 per cent would want a pause on all new regulation to help their business recover from the pandemic. 

The fate of JobKeeper

And while JobKeeper has been a lifeline for many businesses during the lockdown, with staff and customers alike cautioned to remain home and avoid crowds to minimise the rate of transmission, many are calling for the scheme to remain in play long after the economy reopens.

81 per cent back a more cautious and conservative approach to the peeling back of economic support measures, such as JobKeeper, that have kept many businesses afloat.

“Overall [JobKeeper] was a fantastic initiative and has been very effective in buffering businesses and employees from what would have been potentially catastrophic outcomes,” Brand Collective chief executive Martin Matthews told Internet Retailing.

“Most businesses impacted will experience their toughest period in the 6 months following the end of JobKeeper, when customer behaviour is not likely to have returned to ‘normal’, yet their normal cost-base will return along with the need to repay any deferred debts or rents incurred during the crisis.

“I’d like to see the programme extended in a diminished capacity for industries where there will be ongoing impacts of COVID – some sectors of retail, travel and hospitality in particular.”

According to National Retail Association chief executive Dominique Lamb the up-front costs associated with the JobKeeper scheme will also lead many businesses to exit the program with additional debt. 

“The end of the JobKeeper program is by no means the end of the road to recovery,” Lamb told Internet Retailing.

“Some businesses, especially those heavily reliant on the travel industry, are likely to be adversely affected beyond the end of the JobKeeper program regardless of the extent to which social restrictions are lifted domestically.”

The travel sector was hit particularly hard by the COVID-19 crisis, with the combination of lockdown, border closures and mass refunds leaving travel retailers in a difficult position moving into the rest of 2020.

The Australian Retailers’ Association, as well, agrees that a simple ‘switching off’ of business support measures could be catastrophic for the industry. Paul Zahra, chief executive of the ARA, said he expects retailers to need ongoing support.

“It would be great to see JobKeeper money flow into areas of high need – for example, extending it on a means-tested basis beyond September,” Zahra told Internet Retailing.

“We would like to see JobKeeper extended specifically for discretionary retailers – the hardest hit, who demonstrate ongoing financial challenge.”