TODAY'S economic and fiscal update paints a sobering picture of the state of the Australian and global economy. The huge levels of government support could unfortunately only limit the negative fallout from the pandemic, not keep Australia out of recession.

CPA Australia executive general manager of policy and advocacy, Gary Pflugrath said, “The government’s support spending has allowed Australia to escape the worst of the economic impacts of COVID-19, however the negative consequences on jobs and business are likely to be felt for many years, regardless of when Australia begins to regrow.”

CPA Australia highlighted that the support the government had injected into the economy had so far saved many Australian jobs, however this was "no time to rest on our laurels". While the economy may return to growth soon, consumer spending and business investment was likely to remain subdued over the longer term, impacting jobs.

“While the extension of the JobKeeper scheme has removed the imminent threat of a September ‘cliff’, it does not mean that businesses in distress can bury their heads in the sand," Dr Pflugrath said. "They need to access professional advice to help them make the best decisions for the future of their business, themselves and their staff. With many businesses remaining in distress, government can encourage them to access that much needed advice through funding a business advice voucher.

“COVID-19 continues to pose a risk to the survival of many businesses, especially small businesses. Widespread failure or closure of such businesses would adversely impact local economies, potentially slowing the national recovery and future job creation.

“In other words, a large and disorderly spike in corporate insolvencies can create a serious problem for the economy and jobs and needs closer management,” Dr Pflugrath said.

Much still needs to be done to build the economy of the future so that the nation just doesn’t exit this crisis and return to ‘business as usual’.

“Even before this current crisis and the bushfires and floods, Australia was faced with anaemic levels of growth,” Dr Pflugrath said.  "We need an economy that is different, more dynamic and resilient; and one that considers and adapts to the needs of an environmentally sustainable world.

“Such reimaging of the economy will be critical to jobs creation, enhancing the small business sector and hastening the return to stronger GDP growth. 

“The nature of the economic recovery that follows the COVID-19 crisis will depend in part on not only on the survival of small businesses, but on whether significantly more digitally-capable small businesses emerge. This requires much higher government investment in building the digital capability of small business owners and the workforce,” Dr Pflugrath said.

Governments at all levels have done a very good job at implementing what was considered unconventional policies at the start of the crisis given the circumstance; however, the crisis should remain front and centre in future policy considerations.

“Policy options that may have been dismissed as complex, need to be revisited. There are many people of goodwill in the community that want to work with government to overcome these obstacles for the good of the nation and jobs,” Dr Pflugrath said.

About CPA Australia

CPA Australia is one of the world's largest accounting bodies, with more than 165,000 members working in 100 countries and regions and supported by 19 offices globally. Core services to members include education, training, technical support and advocacy. Employees and members work together with local and international bodies to represent the views and concerns of the profession to governments, regulators, industries, academia and the community. Visit cpaaustralia.com.au

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TODAY'S economic statement delivered by Federal Treasurer Josh Frydenberg shows the profound economic shock that the COVID-19 crisis is delivering to the economy and the community, according to Denita Wawn, CEO of Master Buidlers Australia.

“So far the Federal Government’s handling of the health and economic crisis has saved lives and thousands of businesses and jobs. But today’s statement is effectively only the quarter time siren and they will need to stay focussed on ‘Best on Ground’ performances to underpin economic recovery,” Ms Wawn said.

“Measures such as JobKeeper, HomeBuilder and JobTrainer are proving to be extremely effective but there is no doubt that more is going to be needed before we emerge from the economic wreckage of the pandemic,” she said.

“The 6 percent fall in investment in 2019/20 and 12.5 percent in 2020/21 will be particularly painful for the building and construction industry which is crucial to a strong economy.

“As the industry that provides the most full time jobs in the economy we are deeply worried about the impact of the forecast fall in demand on the industry, the viability of around 380,000 of small builder and tradie businesses and opportunities for future careers for young people.

“We need to go to a new phase where government stimulus and subsidies remain and expand while fundamental policy to maximise private investment in facets of the economy gain pace,” Ms Wawn said.

“The policy reform priorities being pursued by the government to date are largely on the money but the need for continuing IR flexibility and IR reform is now greater than ever and raises the stakes for the government’s IR working groups.

“The construction sector works under very inflexible pattern industrial agreements and our members tell us they need flexibility to deal with the effects of the COVID crisis now, not when it’s too late,” Ms Wawn said.

“The HomeBuilder grants scheme is proving to be one of the most effective government stimulus packages in decades and more highly effective measures to stimulate demand for building activity are necessary.

“With the second largest economic multiplier effect in the economy, stimulating the building and construction industry is a no-brainer.

“Master Builders also wants to see more policy reform, subsidies and stimulus to reskill and up skill people whose employment has been lost due to the pandemic for opportunities in industries like ours which has a strong track record of providing jobs on completion of skills training

“Tax reform and measures to free up investment by institutional investors like industry super funds also need to be fast tracked,” Ms Wawn said.

“With over 630,000 small businesses with between 0-4 employees on currently on JobKeeper, measures to boost the resilience of small businesses are also vital.

“Our industry is 98 percent comprised of SMEs and there are more small businesses in building and construction than any other industry. They need to support to boost their online presence, get across digital ways of doing business and better managing their businesses to survive this crisis,” Ms Wawn said.

“We know that a strong building and construction industry means a strong a strong economy and today’s update just reinforces Master Builders call for policies to ensure that private investment is maximised and supplemented by the Government in form of stimulus and subsidies in the October Budget."

www.masterbuilders.com.au

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AUSTRALIA's hotels, motels and accommodation providers have applauded the extension of JobKeeper but say additional support is critical to keep the tourism sector alive.

They say additional support from Federal, State and Territory Governments must include the extension of banking relief measures and action on the Rental Mandatory Code of Conduct.

Accommodation Australia CEO Dean Long said, “The extension of JobKeeper through to March 2021 is what our sector has been asking for and is very welcome news. The policy settings around the realignment of JobKeeper with JobSeeker are right in terms of incentivising people to work while providing the economic lifeline to keep businesses afloat as we learn to live with COVID.
 
“Our sector is a central pillar of the Australian Tourism industry and was exceptionally strong before COVID-19. As an industry, prior to COVID-19 we directly contributed more than half of the $47.5 Billion Tourism GDP and directly employed more than 113,000 Australians.
 
“While we have already done everything we can to limit the impact on our teams, our workforce has already halved. The JobKeeper extension is a welcome first step but our industry will see further job losses and business closures without additional support including the extension of banking relief measures and the Rental and Leasing Mandatory Code of Conduct.
 
“Since the beginning of March 2020, our income has decreased by more than 75 percent," Mr Long said. "Even if the flattening-the-curve strategy is successful and we have open borders, our expected recovery in March 2021 will only be 50 percent of pre COVID-19 income. Now more than ever we need our Federal, State and Territory Governments to work closely together.
 
“These measures will support an industry which has been disproportionately impacted by COVID-19 and will ensure our sector can rebound in 2021 and beyond.”

 Peak industry body, the Accommodation Association represents close to 3,500 hotels, over 150,000 rooms and nearly 100,000 employees across Australia. Accommodation contributes $17 billion to the Australian economy and is essential to the Australian tourism sector’s recovery, Mr Long said.

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THE Australian Federation of Travel Agents (AFTA) welcomed the news that JobKeeper payments will be extended for millions of stood-down workers.

The Federal Government announced that the scheme would continue beyond September for an additional six months at a new rate of $1,200 a fortnight.

AFTA CEO Darren Rudd said the decision was a victory for the travel and tourism industry which lobbied the government vigorously for the six-month extension.

“COVID-19 hit travel and tourism operators earlier than other industries and will continue to impact for longer so ongoing support is vital. Government is listening to us and this is a new win which has been achieved through collaborative and constructive interaction at all levels of government and across the political spectrum,” Mr Rudd said. 

“Keeping the scheme going – albeit at a slightly lower rate and with tighter eligibility tests – provides a lifeline to viable businesses and our members. These are businesses that might otherwise have closed their doors for good, leaving people without jobs and consumers without support at a time when they need it more than ever.

“We know how tough it is for our member agents and the broader community. For economic survival we now need to turn to reopening of all domestic borders when safe to do so as well as establishing travel bubbles to get Australians travelling again while balancing the health risks.”

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