Struggling businesses and their employees are concerned about what is going to happen to them once JobKeeper ends on the 28th March 2021. Economists are predicting that over 100,000 jobs could be lost when the government ends the covid-19 welfare supplement later this month.
When covid-19 shattered Australia’s economy in March 2020, millions of people faced an income crisis as a number of industries such as; tourism, aviation and the performing arts were shut down to slow the spread of the virus.
A generous covid-19 supplement on top of existing payments to students, carers and the unemployed significantly boosted people’s incomes.
The JobSeeker payment which was previously named NewStart was doubled. The welfare payment helped lift almost half a million Australia’s out of poverty. This was despite the fact that Australia was entering its first recession in over 30 years.
At the present time, an eligible single person with no children is paid $715.70 a fortnight. $565.70 of this sum of money consists of the JobSeeker payment and $150 consists of the coronavirus supplement.
Some economists argue that when you give extra money to low-income households they spend that money and this is what has helped stimulate the economy post covid.
The JobKeeper payment was also handed to workers at a higher rate than JobSeeker. JobKeeper helped support more than 3.5 million Australian workers who had lost their job during the pandemic. This percentage of people makes up almost a third of the nation’s workforce.
Since September 2020, over half a million businesses across the country have graduated from the JobKeeper. Despite the schemes success at helping businesses survive during the pandemic there are a number of businesses struggling in industries such as aviation, tourism and the arts and recreation services.
Insolvency experts are encouraging businesses who are facing an uncertain future to act promptly as it is imminent that the ATO will be determined to pursue debts once JobKeeper ends.
Since 4th January, many hospitality workers have had their hours reduced from 25 to 30 hours per week all the way down to 10 to 15 hours a week. Some employees have said that even when the restaurant they worked for was busy and they were required to stay back at clean, they would get in trouble with their manager if they stayed past the number of hours which JobKeeper was paying them as their management was reluctant to want to pay them out of pocket.
This difficult situation which has been experienced by many hospitality workers indicates that things could get very messy for a lot of employees once 28th March arrives. When JobKeeper is phased out the risk of covid-19 will still exist and with the possibility of future lockdowns occurring many hospitality venues and their employees are at the crossroads.
“There is a big risk for individuals who are employed in the hospitality industry and it that needs immediate addressing by the Government. JobKeeper has been excellent for businesses but there is an argument that it is time for targeted relief to support employees working in sectors that are still struggling” says Craig Dangar.
The Federal Government has also recently announced that the JobSeeker payment will permanently rise to $615 a fortnight from April 2021 onwards. This means that the base rate of the JobSeeker payment will be increased by $50 a fortnight once the coronavirus supplement concludes at the end of March.
The permanent $50 increase will commence on 1 April and will be applied to JobSeeker, Youth Allowance, Abstudy Austudy, and Parenting Payments. The increase is projected to cost about $9bn over the next four years.
The new JobSeeker payment which starts on 1st April 2021 will be $620.80 a fortnight. This turns out to be $310.40 a week which is slightly above $44 a day. When you compare the new JobSeeker payment to the pre-covid payment. The impending increase on 1st April turns out to be an increase of $4 a day.
To help support businesses post JobKeeper, the Australian Government has announced that Small and medium-sized enterprises (SMEs) are eligible to borrow up to $5 million dollars as part of the federal government’s decision to expand its loan scheme. The recently announced expansion will be included in the governments post-JobKeeper support package which aims to financially assist SMEs.
The SME recovery loan scheme will be an adaptation of the SME Guarantee Scheme which was introduced in March 2020. The scheme provides loans of up to $5 million, 80% of the loan is guaranteed by the government and 20% is paid by a participating bank.
The Australian has also recently announced a new $1.2 billion tourism package to help assist economic recovery in some of the pandemics hardest hit regions and industries. Australians who are wishing to travel domestically will have access to 800,000 half-price airfares to 13 different tourism reliant regions. These airfares have been subsidised by the government in a support package that was announced in the second week of March 2021.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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