Government lockdown support packages welcomed but lack clarity
While official support of the lockdown financial initiatives floods in, some in the franchise sector have been shaking their heads at the lack of clarity provided.
While Government support packages in the past covered off on many issues, Price Attack CEO John Pascoe says the biggest and continuing concern for their franchisees remains around rents.
“The Devil is in the detail as they say,” Pascoe said. “Until we see just what is exactly what the packages include this will continue to affect our businesses.
“The Federal and State job keeper supplements have been great, but rent relief continues to be on everyone’s agenda. Many landlords and tenant are still trying to settle costs that have rolled over from the very first lockdowns. Without Federal and or State backing the landlords may not support our businesses and many may not survive after this.”
On LinkedIn the day after the announcement, BaskinRobbins franchisee Justin Budhdeo wrote “While the Covid Stimulus Package of July 2021 announced yesterday is very welcome, is anyone else scratching their head due to lack of detail?”
Budhdeo goes on to outline specific points of confusion, including that employers need to demonstrate at least 30 per cent decline in turnover from a similar period in 2019.
“Some businesses have added operations, new sites since 2019. These new sites come with rent obligations, increased fixed costs. These new sites may have even added to the turnover to the extent that it may not be possible to demonstrate a 30 per cent decline,” he writes.
“Those businesses who decided not to close shop as soon as lockdown was announced, to keep paying wages, may suffer as some of them will not have a decline of 30 per cent in turnover. But if you closed down immediately, and stopped paying wages, you will be fine.
[employers] Will receive 40 per cent payroll assistance (with conditions). 40 per cent of reduced payroll (in many cases down to zero payroll), is not going to help much. I cannot see anything that tells me how this is going to be treated.”
Franchise-friendly accountant Peter Knight joined in the discussion.
“Justin Budhdeo you have raised some great points, and we agree with the questions you have asked. At this stage we are awaiting more detail so fingers crossed some of these will be answered when we have more detail,” he wrote.
Also sharing her confusion in a LinkedIn post lawyer Corinne Attard said “While we all welcome some help to small business so far I am having difficulty working out what exactly is being offered and how to access it. Makes advising clients who are suffering very difficult.”
A media release from the offices of the NSW Premier and Treasurer provides the following information around employee and employer relief:
- An extension to the previously announced business grants program. This means eligible businesses with Australian wages below $10 million can claim grants between $7,500 and $15,000 to cover the first three-weeks of restrictions, and takes the potential size of the program to $2.1 billion
- Up to $2 billion committed to the scheme to provide cashflow support to businesses to help them retain staff, to be delivered together with the Commonwealth.
- Payroll tax waivers of 25 per cent for businesses with Australian wages of between $1.2 million and $10 million that have experienced a 30 per cent decline in turnover, as well as payroll tax deferrals and interest free repayment plans
- A new grants program for micro businesses with a turnover of between $30,000 and $75,000 which experience a decline in turnover of 30 per cent. The businesses will be eligible for a $1500 payment per fortnight of restrictions.
- A capped grant of up to $1,500 for residential landlords who are not liable to pay land tax who reduce rent for tenants estimated at $210 million
- Land tax relief equal to the value of rent reductions provided by commercial, retail and residential landlords to financially distressed tenants, up to 100 per cent of the 2021 land tax year liability
- No recovery of security bonds, or lockouts or evictions of impacted retail and commercial tenants prior to mediation
- Deferral of gaming tax assessments for clubs until 21 December 2021 and hotels until 21 January 2021
- A $75 million support package for the performing arts sector to be administered by Create NSW
- A support package for the accommodation sector worth $26 million
- $5.1 million in NSW funding to support mental health.
The Australian Small Business and Family Enterprise Ombudsman Bruce Billson has welcomed the additional support to small businesses.
“Of course the small business community needs support from the private sector as well and the banks have led with the re-activation of measures to help small businesses with loan repayments.
“It is critical that other service providers and suppliers, such as landlords and utility companies, follow suit.”
Billson also highlighted the funding for mental health.
“It is vital small business owners know that help is available if they need it. We welcome the Australian Government’s commitment to provide an additional $17 million in funding to crucial mental health support services.”
The Australian Retailers Association has also welcomed the financial assistance.
“It’s clear we will be living with Covid for some time and we are pleased to see a national approach to support measures for extended lockdowns,” Zahra said.
“This will provide small businesses in particular with the confidence they need and will help alleviate some of the mental health pressures staff and business owners confront with extended lockdowns.
National Retailers Association CEO Dominique Lamb said that affected NSW retailers are losing a combined total of $1 billion for each week of lockdown.
“Each week this lockdown continues affected retailers lose a combined $1 billion in sales. Even if restrictions are lifted on July 30, we’re still looking at an accumulated hit of $5 billion plus consumer confidence does not rebound overnight,” she said.
“Until restrictions in these areas can be lifted both the state and federal governments need to closely monitor the economic fallout. This absolutely means that further business assistance may be needed.”