Sadly, job losses and business failures will be much higher than were predicted following last month’s termination of the lifeline that was the $100b Jobkeeper payments. It came with the ‘multi-whammy’ ceasing of a range of support mechanisms. Banks ended mortgage freezes, rent subsidies stopped, and regulatory payments re-started. The ATO, for example, has ramped up its collection process.
We’ve heard from employers, welfare agencies and families themselves that Jobkeeper payments saved jobs and kept businesses afloat. They were a salvation to many. Correspondingly, their removal means economic casualties, including the demise of many businesses that limped along thanks to the government assistance. Many were also shielded by the (temporary) relaxation of rules against insolvent trading, and looser regulations for dealing with creditors.
"It is never a good time for any region to suffer catastrophe. But this was the worst of times; in the middle of a global pandemic, just as Job-keeper ended and while many were recovering from drought, bushfires and mice plagues."
I said at the time that the unpalatable reality of the regulatory shield was that many otherwise unworkable operations were left to build up more debt than they could ever repay. In doing so, they jeopardised the livelihoods of suppliers and other small business, who themselves were reliant on bills being paid. But this bumpy start to a ‘return to normal’ has been made worse by the catastrophic effect of the east coast floods.
Lives were lost. The waters swallowed homes, grazing properties and even communities. Houses, crops, businesses and even hope, were destroyed. Infrastructure, like roads and bridges, were so damaged that communities remain isolated despite the polluted waters receding.
It is never a good time for any region to suffer catastrophe. But this was the worst of times; in the middle of a global pandemic, just as Job-keeper ended and while many were recovering from drought, bushfires and mice plagues. It sounds Biblical. But we should not be under any misunderstanding that the economic effects will be substantial. Debts will, by necessity, rise. Payments simply won’t be met.
Easter brought those communities no salvation or financial resurrection. The (at the time of writing) brief lockdown in Brisbane following the latest COVID-19 infections, and the more extensive restrictions in the popular holiday region of Byron Bay in NSW, have wiped out any hope of tourist-led financial boon that can usually be expected over a four-day public holiday.
So, no doubt that those headline, breath-taking predictions of 100,000 job losses and 5000 business failures following the end of the subsidies, will be exceeded.
For our industry this all comes as we face more pressure from clients whose patience has withered after what was a year-long moratorium on debt collections. They now need that income. For those responsible for the debt, it can only mean more hardship.
I remind all commercial recovery specialists that we should continue to do what we can to educate debtors as well as creditors. Communication is vital. Debtors must engage with creditors. Not doing so is when ‘end of line’ actions like insolvency proceedings are instigated.
We must continue to remind the community that bankruptcy action is always a last resort. That is, it is only used when all other options for resolution and engagement have been exploited. It is a process, and it is not final.
We must all continue to act with compassion as families, businesses and communities rebuild.
Yours sincerely,
Brian Carter
Chairman