The Mid Year Economic and Fiscal Update announced by Prime Minister Scott Morrison and Treasurer Josh Frydenberg shows that Australia has a long road to recovery. As part of this recovery, the Government announced the details of the second phase of economic support for the JobKeeper and JobSeeker initiatives.
What are the new changes to JobKeeper and JobSeeker?
In this 25-minute webinar, BDO Tax Partner James Trainor steps you through these changes and explains what they mean for businesses.
As part of their COVID-19 economic response for businesses, the Federal Government will continue to support eligible businesses and individuals through to March 2021. However, the rules will be tightened under a revised JobKeeper program and changes to JobSeeker – including lower payment rates. These changes are expected to begin when the first phase of the stimulus package ends in September.
This is welcome news for those businesses and their employees connected to the Tourism, Leisure and Hospitality (TLH) industry. Amid increasing concern around the impending debt cliff approaching at the end of September, along with the potential likelihood of significant redundancies – this announcement, which has been discussed for some time now, provides some certainty to those businesses experiencing a significant decline in turnover from ever-changing restrictions – which at the core largely affects TLH businesses.
Whilst this positive step will provide some much-needed relief for heavily affected businesses, the 30% declines in two consecutive quarters condition (the details of which are outlined in the fact sheets) for accessing the program will limit its reach to the wider hospitality sector. There is a real concern that many hospitality businesses will not survive with revenue declines of much lower amounts and a real gap in financial support may develop quickly. There is also a real risk that it creates uncertainty about accessing the program in future periods which could spell trouble for accurate cash flow planning.
The extension of the JobKeeper and JobSeeker program on revised terms is also only one piece of the puzzle. The key to securing the future of the sector is extending banking relief measures, the rental mandatory code of conduct and other related cash flow stimulus measures that should be made available to these hardest-hit sectors.
What can affected businesses do now?
Businesses must be looking at strategies that will see them through such as:
- Businesses need to accept and understand the debt cliff and begin pre-planning. Some businesses will fail if they are not planning for the repayment of their deferred liabilities
- Engage with stakeholders early and assess options. Stakeholders are more receptive to early intervention over late intervention and will look more favourably on you
- Constantly review your business models. As we move forward, some businesses will need to restructure to survive
- Continually assessing the macro and micro impacts is critical – there is still a high level of uncertainty. This includes the global impact which has the ability to impact local businesses.
To further assist, our Tourism, Leisure and Hospitality team have provided several resources below:
Should you require further information, please contact your local office. We will also be running a webinar shortly for TLH businesses affected, to find out more or register, contact Clayton Eveleigh.
To stay up-to-date with COVID-19 related stimulus measures, please see Australian Government Coronavirus (COVID-19) Stimulus Measures.