Coronavirus Gold Coast: $100b boost for economy ‘not enough’ to help Coast businesses
A whopping $100 billion will pour into Australia’s economy in a second coronavirus- inspired stimulus but experts question if Gold Coast small business will benefit.
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A WHOPPING $100 billion will pour into Australia’s economy in a second coronavirus- inspired stimulus but experts question if Gold Coast small business will benefit.
The city is tipped to be among the hardest hit in coming weeks and even this latest injection would not go far enough to help local small business survive, experts warn.
The small business capital of Australia has a highly casualised workforce, with 32.8 per cent of workers which is significantly larger than other cities.
In the second cash rate cut in 16 days Reserve Bank of Australian governor Dr Philip Lowe yesterday slashed it to 0.25 per cent and rolled out a new money-printing program for the first time in history. The central bank will implement a $90 billion funding facility to try to cushion the economic fallout from the pandemic while the Federal Government has already pumped in a $17.6 billion stimulus package so far.
Treasurer Josh Frydenberg said the new measures introduced by the RBA including providing a three-year funding facility to dish out cheap loans would help offer some relief to panic-stricken Australians.
He said up to $15 billion would be used to allow smaller lenders to continue to support Australian consumers and small businesses”.
It comes as the city’s biggest shopping centres and normally bustling tourist strips were all but deserted yesterday.
Financial expert Martin North, principal of Digital Finance Analytics (DFA) urged the Morrison Government to follow the UK lead and provide direct financial stimulus to people and businesses: “This virus situation will run for about six months and I do not believe we have seen the worst. Unemployment is set to rise nationally and I think it will go higher than seven per cent.
“There needs to be direct cash support to people and businesses to get them through. I expect banks will help with payment schemes and but it must go as far as direct cash support.
“This is a once in 100 year situation and we need a strategy to help households and business because if not it will get much more serious later.”
Mr North tipped the number of Coasters a month away from defaulting on home loans to double in coming weeks.
Data as of January showed 1900 homeowners were under enormous financial pressure, up from 1500 in January 2019.
Of the city’s 89,161 borrowing households, 15,036 are deemed in mortgage stress – spending 30 per cent of income on their mortgage, shows Digital Finance Analytics figures.
Local business leaders yesterday greeted the government and Reserve Bank moves with scepticism it would make any difference in the short term.
Gold Coast North Chamber of Commerce president Martin Brady said federal and state governments announcing a widespread infrastructure program would do more for confidence in a panicked city.
Leading demographer Bernard Salt said: “Modelling I’ve seen would suggest things are going to peak late April and early May so our darkest days will be now and in the next month.
“There is no doubt the Gold Coast is on the frontline. There will be some who will be rebellious and show a cavalier attitude in trying to continue as they have but it will be up to their mates and social networks to reign these people in.”
Bundall’s Whitehouse Private Wealth director Chaz Prezident said the “glaring omission” in the stimulus were sole traders and contractors: “There seems to be a huge gap between government’s understanding of what small business owners are and the vast majority of contractors and sole traders.
He said increased liquidity into the banking sector was not worth much if banks did not adjust their lending policies to small business owners.
“The reality of small business lending is it is incredibly difficult to secure in terms of bank lending policy. I’d love for the banks to step up and do their part and we would naturally call for the banks to ease some of their lending criteria.
“I can’t see the banks will be taking any hurt by wearing any additional risk. I imagine they will still maintain their lending criteria, which most small businesses don’t satisfy without having bricks and mortar to secure the loan against.
“The old overdraft or unsecured business loan is not available from top tier banks.”
Darryl Dyson, director of Robina-based small business and financial services firm Sentrika, said it wasn’t enough.
“Cashflow is the biggest pain point for small business.
“Lodgement deferrals would help with PAYG, GST and income tax, anything that can push out their liability to a date in the future where things are a bit more positive.
“Anything that allows small business to retain cash will assist.”
He also said Government should offer interest-free repayment plans for businesses who will struggle to pay the business activity statement (BAS).
He is advising clients with equity in their motor vehicles, plant or equipment, to sell and purchase new vehicles, which they can then write off against tax obligations
Originally published as Coronavirus Gold Coast: $100b boost for economy ‘not enough’ to help Coast businesses