As widely expected, November ushered in a historic drop in cash rates by the RBA to a record low of 0.10%. With responses to COVID-19 leaving states across Australia in various stages of lockdown, the outlook for SMEs is still full of uncertainty.
The end of September brought the JobKeeper subsidy to an end for an estimated 2 million people. The JobKeeper wage subsidy was paid to approximately 960,000 employers covering 3.5 million workers. Many would have felt the last main benefit of Government subsidies end in mid-October with the last payment of JK1 and the last of the Cashflow Boost applied to the Q1 BAS. These subsidies, with the main aim of protecting jobs and stimulating the economy, couldn’t last forever but with the after-effects of COVID-19 still being felt with second and third waves, many SMEs are now turning their focus to reducing costs, protecting cashflow and the ability to increase liquidity within their organisations. The release of data produced by ATO reporting during the first stage of JobKeeper showed clearly that small businesses, particularly in the hospitality, accommodation and tourism sectors, and in VIC, seriously impacted by increases in COVID-19 cases (now thankfully under control), continue to be hardest hit by the pandemic.
Despite all this, businesses remain cautious but a little more optimistic than earlier in the year. No significant change to employment signifies that most organisations have been in a holding pattern buffered by Government stimulus. The current unemployment rate of 6.9% is widely expected to rise as JobKeeper v.2 comes to an end in March 2021. Many will come out of this period with high employee leave liabilities created from the limited opportunities for people to travel that will require payouts if and when workforces are reduced next year.