JobKeeper program like ‘Weekend at Bernie’s’: Liquidator

Dead businesses living on life support through the government’s JobKeeper program have been likened to the classic 1989 movie Weekend at Bernie’s with experts saying ‘zombie companies’ need to be cut.

BUSINESSES surviving on financial life support through the government’s JobKeeper program should be cut to prevent a further hit to the economy, economists and liquidators say.

As revealed by News Corp today, Prime Minister Scott Morrison is considering slashing the $1500 JobKeeper payment or phasing it out faster than expected amid fears it’s creating “zombie” companies that don’t exist without the wage subsidy.

Mr Morrison later said he was not considering winding the program up early.

‘TSUNAMI OF BANKRUPTCIES’: BUSINESS COLLAPSES TIPPED

Australian Prime Minister Scott Morrison is not considering winding up JobKeeper early. (AAP Image/Lukas Coch)

It comes as Queensland liquidators report a significant downturn in business collapses following changes to insolvency laws and the introduction of the JobKeeper program.

Queensland liquidator Morgan Lane of Worrells Solvency and Forensic Accountants likened the JobKeeper program to the classic 1989 movie, Weekend at Bernie’s.

“They want to keep things appearing to be fine when the real business is dead,” Mr Lane said.

“A number of businesses were not doing well even before COVID-19, they’re just building more and more debt.

“It’s creating the zombie companies, because the creditors, including the Australian Taxation Office, aren’t taking any action against them.

“You’ve got to stop supporting those businesses that can’t be supported.”

QBM – Worrells Solvency and Forensic Accountants partner Morgan Lane has helped more than 1000 businesses across his career. Pic Mark Cranitch.

Mr Lane said the one-size-fits-all program had provided an economic benefit, but in some cases led to part-time workers being paid more than usual.

Griffith University Professor of Economics Tony Makin said the JobKeeper program was among spending measures putting Australia’s global credit rating at risk.

“The concern of the government is the horrendous public debt that’s been run-up,” he said.

Professor Makin said the slashing of JobKeeper could be compromised with an increase to JobSeeker – the program for people looking for work.

“Maintaining zombie companies is going to be a drain on the economy,” he said.

“If the jobs are not viable going forward … it’s simply unaffordable to keep going with JobKeeper.

The JobKeeper program has been likened to the Weekend at Bernie's movie from 1989.

“It’s going to be painful, but looking further ahead it’s the only way to go.”

The introduction of JobKeeper and changes to insolvency laws have allowed struggling businesses to stay afloat until at least September.

Mr Lane, who has 30 years’ experience in the industry, said eventually debt had to be repaid.

He agreed a tsunami of insolvencies was coming.

“Any business that’s in the tourism or hospitality industry is going to be major candidates, sadly,” he said.