Insolvency rates to flow when stimulus tap turns off

One of the region’s largest liquidation firms fear waves of insolvency rates will flow on the Sunshine Coast once the government support tap turns off.

One of the region’s largest liquidation firms fear waves of insolvency rates will flow on the Sunshine Coast once the government support tap turns off.

ONE of the region’s largest liquidation firms fear waves of insolvency rates will flow on the Sunshine Coast once the government support tap turns off.

Worrells Solvency and Forensic Accountants partner Paul Nogueira said insolvency rates had been down since March due to the Federal Government’s lifeline packages which kept businesses afloat.

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He pointed to the Australian Financial Security Authority, which reported personal insolvency statistics from the March quarter had dropped by 15 per cent nationally.

Bankruptcies were also down for the quarter at 6.4 per cent – the lowest level since 1990.

Mr Worrells said the firm had been “exceptionally quiet” since the world went into lockdown but that it would not last.

The JobKeeper payment schemes are due to expire in September.

“Insolvencies will start to pick up in August and September, then another wave after that once the packages end,” Mr Noguiera said.

“Potentially we will see failures, particularly in retail and hospitality sectors who rely on discretional spending.

“We are speaking to a number of people hopeful of surviving. But that is certainly tipping, especially when the funding stops.”

It comes after the Courier Mail reported the pandemic had wiped out one in 13 jobs in Brisbane’s CBD, Cairns and the Sunshine Coast.

The Chamber of Commerce and Industry Queensland on Tuesday warned more jobs would vanish once JobKeeper payments stopped in September, and demanded the state’s borders re-open immediately to boost tourism.

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Mr Nogueira said the Federal Government had difficult decisions to weigh up whether to extend the support packages.

He said it was a difficult balancing act.

“Hopefully it’s not as bad as anticipated but people should not rely on there being an extension,” he said.

“Our advice is to take action early. As restrictions start to end, people need to look at their budget and cashflow and make whatever changes as possible in order to adapt.

“It may not be insolvency, but just talk to your advisor or accountant.”

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Regional Development Australia Sunshine Coast CEO Paul Fisher said the region had shown resilience in its handling of the lockdown period.

Mr Fisher said once borders and domestic flights reopened, the suffering tourism sector would immediately benefit – he hoped it would create a flow-on affect too.

“Because of the way we were into lockdown, we are coming out the other side we can surge again,” Mr Fisher said.

“Unfortunately though, some just won’t recover but overall it’s positive.”

Mr Fisher said the impact of the Home Builder scheme had had a fast and strong impact on the sector and would create longer-term jobs in construction.

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