“Given the further escalation of COVID-19 impacts both globally and locally Ai Group has proposed a series of new measures to add to the excellent package of stimulus measures announced by the Federal Government last week,” Innes Willox, Chief Executive of the national employer association Ai Group, said today.
“In framing these suggestions, we are mindful of the hoarding mentality that has taken hold; the importance of employment for household incomes and consumer spending; the scope for businesses in particular to make productive use of downtime; and the need to look forward to facilitating a rapid rebound in activity.
“We welcome the Federal Government’s intention to provide additional measures and we believe these suggestions outlined here, which we have been submitted to the Government, will complement the existing package of support.
Households and employment
“The key vulnerability in the household sector is the threat of reduced income from employment including self-employment. Priority should be given to encouraging the retention of employees.
- The PAYG relief measures are well designed and further support could be provided by raising the threshold to include larger businesses (who employ a lot of low-income workers including casuals and part-time employees) and by lifting the maximum level of PAYG relief.
- Sole traders and self-employed people generally are facing growing cash flow issues and relief from their own PAYG obligations can offset this to some extent.
- Direct payments to sole traders and self-employed people could be made based on distinctly lower reported incomes.
“While employment in aggregate is set to suffer, there are areas of activity in need of additional labour arising from specific increases in demand, voluntary absenteeism and reduced availability of backpacker and other temporary workers.
- While existing employment-services arrangements will be able to facilitate the filling of temporary employment, building on the selective relaxation of restrictions on minimum employment hours for some temporary workers would assist a wider range of activities.
- Encouragements such as accommodation or wage subsidies for people temporarily moving to regional and remote areas for employment should also be considered.
“Regrettably there are growing reports of reduced hours and job losses.
- Lifting access to income support by waiving assets and income tests and waiting periods for people facing reduced hours or laid off would materially assist many people including some self-employed and sole traders. These measures should be backed up with faster processing of applications.
- Some employers are considering topping up the incomes of casual employees who qualify for the Newstart level payments for casual employees required to self-isolate or who cannot go to work due to disruptions related to COVID-19. The Government should consider excluding these top-uppayments from the income test that would apply to the income support payments.
“Another segment of the household sector that is adversely affected is the many part-pensioners and people with a level of assets that narrowly preclude them from income support especially if those assets are illiquid.
- A further relaxation of deeming rates could assist a significant cohort of part-pensioners.
- Temporary relaxation of assets test thresholds may also be helpful along with rapid processing of new applicants.
Small Businesses
“Many small businesses will face the prospect of operating at a loss over the coming months.
- Consideration should be given to the targeted provision of tax refunds in respect of their losses. This would be an important business continuity measure that, in general, would simply bring forward deductions for losses rather than the business having to wait for a return to profitability. This could be assessed on a quarterly basis with an annual reconciliation.
Business investment
“The measures already announced are generous and have low, medium-term budgetary costs as they relate to timing of depreciation deductions. They will activate eligible businesses that can invest and are important elements of the already-announced package that will be critical in assisting a stronger rebound.
- We recommend extending the accelerated depreciation regime to a greater range of businesses (i.e. with turnovers above $500 million).
Business credit measures
“Measures to ensure credit lines remain open are critical with many businesses already cash strapped. At the very least banks and other lenders need to be strongly encouraged to have a great deal of tolerance when repayments are delayed and to maintain lending. Government recognition of specific instances of tolerance and forbearance by banks may help.
Contracts with the Federal Government and its agencies
“We recommend the Government and its agencies:
- Continue to accept deliveries to the fullest extent possible.
- Hold off on penalties relating to delayed contractual performance.
- Institute rapid payment for work done (i.e. not just 20 days).
Freight industries
“Offshore freight is emerging as a significant problem getting critical.
- Government facilitation of additional air freight capacity could be very helpful.
- While ocean-shipping may be more difficult, there is significant excess capacity globally that could be harnessed for inbound and outbound freight.
Selected industries / regions
“Events, tourism, airlines and international education are most obviously in the firing line.
- In relation to airlines, while support for the main air transport providers is important, it is no less important to support the specialist businesses in their supply chains. Some examples are the businesses that provide food for in-flight catering and outsourced ground services.
“The $1 billion put aside for discretionary funding is a good idea (although it must be implemented transparently).
- Considerable additional funding of this sort of approach is now appropriate. Bipartisan involvement in the decision-making process should be explored: it would send very positive cooperative signals and reduce adverse political noise around this important measure.
Business advice
“Ensuring that businesses have access to relevant advice is an important element in their survival in the current environment and their successful preparations for the future.
- Business advice programs such as the Entrepreneurs’ Programme could be adjusted to include COVID-19 elements.
- Many businesses may find they can use a period of slower activity to rethink their business models. Lifting the level of support for support for strategic evaluation could be useful.
Regulatory issues
“Finally, there is a range of measures that would ease regulatory obstacles to businesses operating in the current environment. This includes state, territory and local government as well as federal regulations. The federal Government could facilitate a coordinated approach to identifying and relaxing these barriers,” Mr Willox said.
