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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THE EXTENSION of the JobKeeper scheme is the right move for the building and construction industry and will help boost confidence in our industry, the economy and the community, according to Master Builders Australia CEO Denita Wawn.

“Building and construction is the industry with the most businesses registered for JobKeeper and that reflects that 98 percent of the industry is comprised of small businesses and with more small businesses than any other sector of the economy,” Ms Wawn said.

“There’s no doubt that JobKeeper continues to be lifeline for thousands of small builders and tradies as well as many in the building supply chain.The continuing easier accessibility for sole traders  to access the scheme is also important.

“HomeBuilder is proving to be one of the most effective government stimulus measures for at least a decade but many small builders and tradies still face an extremely tough 12 months at least, which is reflected in forecasts of a major contraction in demand,” Ms Wawn said.

“Master Builders recognises the government’s continuing efforts to put together a range of measures to support the viability of businesses and the jobs of the thousands of people they employ. The government’s JobTrainer program will also support these businesses to continue keeping apprentices in jobs which ensure young people have opportunities in the industry as the economy recovers.

“However, while there is no question as to the effectiveness of JobKeeper, and JobTrainer a pipeline of work is essential to the recovery of the industry and the economy. 

"As the government recognises, the massive contraction in demand that we are experiencing is due to the restrictions on economic activity imposed to save lives and therefore more successful stimulus measures such as HomeBuilder will be required to underpin recovery,” Ms Wawn said.

www.masterbuilders.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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THE JobKeeper extension announcement by the Federal Government is welcome news, delivering on an important step towards securing the future for Australia’s export tourism industry.

“The extension of Jobkeeper has been highly anticipated by businesses across the economy and none will be more grateful than Australia’s tourism industry to see its continuation,” ATEC managing director Peter Shelley said.

“This extension will give tourism operators the security of knowing they can plan about retention of staff and management of resources moving forward as they attempt to navigate a difficult period between now and when the international borders re-open.

“Tourism businesses have been hit hard this year not just by COVID, but by bushfires, drought, floods - but they want to get back to business and are waiting eagerly to welcome back their international visitors. Having skilled staff ready and waiting to go will be a critical factor in the speed of their rebuild.”

Mr Shelley said while the new March extension date would be helpful for some tourism businesses, there will be many internationally focused businesses which will require further support and sadly, some who will not survive the distance.

“There are many, many businesses which have invested heavily in building tourism products which appeal to international visitors like reef and rainforest experiences,  unique bridge climbs, natural attractions, indigenous tours, food and wine experiences and eco resorts - and these experiences have helped to deliver huge export income for our economy," Mr Shelley said.

“These businesses need to be preserved, along with our valuable inbound tourism operator distribution businesses, in order to ensure we can reignite export tourism once borders open.

“Our research showed 90 percent of export tourism businesses are currently accessing JobKeeper and 55 percent say they need borders open by the end of the year to be viable, so we needed a solution to support those businesses to hold on until international borders open.

“We therefore welcome the JobKeeper extension news and congratulate the Government on its commitment to supporting the tourism industry. 

“Over the coming weeks and months, we will work with the Government to find solutions we believe will further protect our industry including overheads subsidy support, capital grants, re-boot grants and developing a timeline for the eventual reopening of our international borders.”

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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 extension of the JobKeeper wage subsidy program will provide a further “airbag” for the Australian economy, according to the Property Investment Professionals of Australia (PIPA).

The Federal Government has announced that the JobKeeper program will be extended until the end of March next year, but with reduced fortnightly payments and stricter eligibility criteria.

PIPA chairman Peter Koulizos said the wage subsidy extension would help to soften the economic blow from the pandemic.

“We need to accept that the economic impact of COVID19 is going to be significant,” Mr Koulizos said.

“However, if the various stimulus initiatives and financial support packages hadn’t been implemented, then the fallout would have been severe. In essence, these measures are providing an economic airbag to help slow down, and soften, the impact that we all know is coming.”

Mr Koulizos said a similar strategy of stimulus initiatives was employed during the GFC that ultimately resulted in the Australian economy avoiding a recession.

“Those stimulus packages were vital in keeping people employed during that protracted global downturn,” he said.

“This time, it’s clear we won’t be able to avoid a recession, but these programs will help to prevent our economy languishing for the long-term.”

The tightening of JobKeeper eligibility criteria announced today would also mean that the wage subsidy would be targeted to the people who really need it, Mr Koulizos said.

“The extension, as well as the continuance of mortgage repayment pauses, will benefit homeowners, landlords and tenants who continue to need financial support over coming months,” he said.

Mr Koulizos said the wage subsidy extension also provided some much-needed preparation time for people whose employment was looking tenuous.

“The JobKeeper extension gives people more time to organise alternatives, such as retraining or studying, if their current job is not secure,” he said.

“It also gives people time to breathe and prepare – rather than starting to panic about how to financially survive post-September.”

About PIPA

Property Investment Professionals of Australia (PIPA) is a not-for-profit association established by industry practitioners with the objective of representing and raising the professional standards of all operators involved within property investment.

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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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THE INQUIRY into food pricing and food security in remote Indigenous communities will hold further public hearings over two days this week.

Julian Leeser MP, Chair of the House of Representatives Indigenous Affairs Committee, said the Committee would hear from key stakeholders from the Northern Territory and New South Wales including Land councils, other Indigenous peak bodies and agencies, leading academics, the Northern Territory Government, and key industry players such as Woolworths and Metcash.

"The collective expertise among the witnesses who will appear is extensive, and I look forward to hearing the insights they will share," Mr Leeser said.

"It is very important that the committee gets a thorough understanding of the food pricing and food security issues that are affecting remote Aboriginal communities. We look forward to hearing from witnesses about what dynamics are involved and what can be done to improve the situation."

The hearings will be conducted via telephone and video links due to social distancing requirements relating to COVID-19. Full programs are available at the inquiry website.

Public hearing details

Date: Thursday 23 July
Time: 9am to 5pm AEST
Location: Via conference call

Date: Friday 24 July
Time: 9am to 2.20pm AEST
Location: Via conference call

An audio broadcast will be accessible at aph.gov.au/live

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