5 Things Holding Up The Australian Economy For SME's in 2020

We are coming out of lockdown and restrictions, but officially in a recession. How is our economy going to handle this? The Australian government has driven Jobseeker, Jobkeeper and now Jobmaker – everything will be about Jobs, Jobs and Jobs. We ask our resident money man David Rankin from Sort My Money to explain the situation for SMEs and how it impacts them.

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In this episode of Lets Torque! The Economy Post COVID-19, we pull apart the 5 things holding it up and what the danger is of giving money bailouts:
- Jobseeker, enhanced unemployment payments for those already receiving money, and for those who suddenly found themselves unemployed due to COVID-19
- Jobkeeper, payments to keep businesses together with their employees and help sole traders
- Jobmaker, the priority plan from the government around job creation.
- Suspending/deferring of loan payments, the banks came to the table to offer a “holiday” from repayments for 6 months
- Free childcare, enabling our frontline essential workers / businesses to avail themselves of childcare at no cost temporarily to keep them in those services so parents could work.

We examine which industries have been hit – travel, tourism, hospitality, property market, construction etc, and what measures could be put in place to stop the collapse and suffer even more job losses. The imminent fear is for apprentices, history shows they are hit disproportionately and for longer with the loss of apprenticeships during recession. We lose skills and skilled people when unemployment rises substantially.

With September looming as the expected end to government handouts, it could take decades for the impacts on businesses to recover. Debt, productivity decline and industry transitions will see many SMEs close and lose momentum. It’s clear that measures to help soften the blow when the current financial assistance payments expire in September should be a priority.

Australia has done better than expected, many countries around the world are much worse than Australia, and even the RBA seems slightly optimistic with rates on hold. Some countries are in negative interest rates, so even though our rates are low they are still positive.

The fact that the government, effectively, has $60bn up its sleeve thanks to a fortuitous accounting error gives them the ability to be more targeted in their consideration of industry assistance - hospitality, for example.

Australia’s house prices saw a drop of 0.4 per cent over the month of May, according to the latest CoreLogic figures, the first monthly drop in property values since June last year - the damage to the property market has been less than experts had anticipated – a further relatively positive indicator.

Westpac has also announced that it will allow some customers to go from principal & interest to interest only – or to stay on interest only – as a hardship measure, which will also help, and it is likely that other banks will follow.

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