- JobKeeper and other pandemic support actions are due to end on 28 March
- Will the Australian economy be able to take up the slack?
- What will happen to the rental and sales side of the property market?
By September 2020, after six months of JobKeeper, commentators wondered whether the Australian economy could take up the slack should the government stimulus end.
The debate at the time was that to cut it off altogether would present as massive a shock to the system as the initial COVID-19 pandemic had back in March.
As it happened, JobKeeper continued, for some, in a watered-down manner. It was extended to 28 March 2021, and is now set to stop completely on that date.
A year ago, the test for a business was a 30% decline in revenue when the pandemic hit. Many businesses were excluded. Meanwhile, there were tales of uni students being paid far more to stay at home and do nothing, as compared to their waiting tables jobs a few weeks earlier. They had been given a whopping pay rise.
JobKeeper was a blunt instrument, for the bluntest of times. It was not perfect. It was implemented quickly. What it aimed to do was retain the relationship between companies and staff, when it was not clear that those companies would otherwise have been kept staff on.
The scary country was the USA. Despite witnessing several deep recessions since the 1970s, no one had seen weekly unemployment requests 3.3M before. Yet, this happened in the first week of lockdown. The next week, another 3.3M signed on.
Unemployment claims in the USA: since the 1970s
Meanwhile, back in Australia, all registered businesses received ‘CashFlow Boost’, for the same six-month period. Whether they had declined in revenue or not, their PAYG and GST payments were subsidised with significant amounts wiped off at lodgement time.
Along with JobSeeker, and other stimulus measures, the Australian economy was kept afloat. After 28 years of continuous economic growth, beating Netherlands’ 24-year record, the economy dipped into a technical recession.
After battling to get the books under control, an emerging government surplus was summarily wiped out, to be replaced by the largest deficit on record.
With all this stimulus effort, plus tenancy eviction moratoriums and rent freezes, all coming to end in a month, what will happen next? Can Australia take up the slack – for real – this time?
“JobKeeper has been a godsend for many businesses and while many no longer need the support, there are still countless others that have been relying on it,” said Bradd Morelli, National Managing Partner of insolvency firm Jirsch Sutherland.
“[JobKeeper’s] conclusion may be a trigger for financial distress, as many businesses have exhausted their cash resources and won’t be able to stand on their own two feet and pay staff wages.”
Mr Morelli said there had been an uptick in enquiries for insolvency services, corresponding with the end of the insolvent trading moratorium on December 31 and the further scaling back of JobKeeper on January 1.
The question for many in the real estate industry is what will happen to tenants who no longer receive JobKeeper payments, and may lose their jobs? With eviction moratoriums ending at the same time, how many will be without a home?
How will the property industry be affected on the sales side? How will real estate agencies and other property businesses manage the transition to a non-government stimulus world?
We will only know once we get to the end of next month. Knowing what we are careering towards should help some people plan for it. We shall see.