JobKeeper: PM warned 1 in 10 businesses won’t survive after support ends

Hundreds of businesses are teetering on a knife edge with many warning the PM they may not survive once JobKeeper support is pulled.

Hundreds of “zombie” businesses have warned the government they will close their doors when the JobKeeper cash runs out.

In a shock finding based on a survey run by the Australian Bureau of Statistics, one in ten companies currently securing the wage subsidy have revealed they plan to shut up shop when the wage subsidy runs out, forcing workers on to the unemployment queues.

The warning underlines fears that JobKeeper is propping up hundreds of “zombie” businesses that can no longer survive in the post-COVID economy.

It follows claims that every job ‘saved’ by the scheme is actually costing taxpayers $100,000 because so many of the jobs will disappear when the $1500 wage subsidy is phased out.

Nearly half of all businesses have revealed they are relying on coronavirus measures to survive including deferring loan payments and rent or accessing government assistance including wage subsidies.

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The government’s JobKeeper subsidy will run out in September for many businesses. Picture: NCA NewsWire / Gary Ramage

For many companies JobKeeper could be axed in September when new eligibility rules come into force.

For those companies that still qualify under the new rules, the scheme is scheduled to run out in March 2021.

The ABS report finds 42 per cent of Australian businesses are currently accessing support measures such as wage subsidies, deferring loan repayments or renegotiating rental or lease arrangements, to manage the impacts of the pandemic.

Among medium-sized businesses, a majority of employers - 53 per cent - are relying on support measures, but larger companies are weathering the storm better with only 38 per cent needing help.

Treasury secretary Steven Kennedy told Parliament’s COVID-19 committee that the Victorian outbreak would ensure that a big proportion of the ongoing JobKeeper participants after September would be from that state.

“We now think at least 75 per cent of Victorian firms will stay on JobKeeper ... maybe that number will turn out to actually be even a bit higher,” he told a Senate committee hearing on Thursday.

But in some sectors of the economy, the number of businesses that expect to close their doors forever is much higher than others.

Transport, postal and warehousing firms told the survey that nearly one in five companies - 18 per cent - expect to go under.

Even if companies survive, many claim they will be forced to sack staff when JobKeeper runs out hinting at further increases to unemployment in 2021.

“Businesses were asked how they expect to respond when these measures are no longer available,‘’ Sue-Ellen Luke, Director of Technology, Innovation and Business Characteristics Statistics said.

“One in ten businesses (10 per cent) reported that if support measures were no longer available, they would expect to close the business.”

Prime Minister Scott Morrison has announced that the current JobKeeper program will be extended for Australians until March at a slashed rate of $1200 a fortnight.

JobKeeper payments will be reduced from the original $1500-a-fortnight when the current scheme ends in September.

A new, part-time rate will be offered to casuals after confirmation that around one in four workers on JobKeeper were securing a pay rise that was worth $550-a-fortnight on average.

Businesses will now need to prove a downturn over six months to pass a tough new turnover test to qualify for the payment.