Deloitte reveals 240k businesses could collapse
Damning new analysis has revealed almost 10 per cent of all Australian businesses will be “at high risk of failure” when JobKeeper ends. But there’s hope for some, providing they are willing to consider taking extreme action.
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ABOUT 240,000 businesses in the hospitality, professional services and transport industries are at “high risk” of collapsing when federal government support ends, a new report reveals.
Data analysed by Deloitte Access Economics – conducted before Sunday’s announcement that JobKeeper would be extended – warns businesses, already fighting for survival amid the growing COVID-19 cases in Victoria, are heading towards a “fiscal cliff”.
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Using ABS and federal government data, Deloitte Access Economics estimates around 240,000 businesses in the hospitality, professional services, and transport industries, in particular, are “at high risk of failure” come September – when JobKeeper was due to end.
It is almost 10 per cent of all Australian businesses.
Deloitte Access Economics’ partner Kristian Kolding said businesses would receive their last JobKeeper payment on 27 September – around the same time many rental and loan repayment deferral agreements end.
“This will put enormous pressure on the viability of many businesses, and the economy as a whole,” he said.
Deloitte’s analysis reveals about 40 per cent of businesses across hospitality, professional services, and transport have indicated cash reserves can cover less than three months of operation in the current environment.
“While it’s expected the business environment will improve over the next three months as restrictions are eased, it’s not known whether any improvement will be enough to enable businesses to recover, let alone survive, without JobKeeper support,” Mr Kolding said.
About 35 per cent of Queensland businesses have accessed JobKeeper, which is slightly lower than Victoria and New South Wales.
Mr Kolding said business owners and directors needed to consider whether a voluntary administration process may maximise the chances of their business surviving.
“This is a tricky analysis to get right, particularly as nobody can know what the future might hold … but it is important to get the right advice and be prepared so that Australian businesses, big and small, can minimise the flow-on effects of that looming fiscal cliff.”