Covid-19 business support ‘will ensure economic bounceback’

A major new support package for firms and workers affected by Sydney’s lockdown has been welcomed by business groups and economists.

Former ANZ chief economist Warren Hogan.

A major new support package for firms and workers affected by Sydney’s lockdown has been welcomed by business groups and economists who say it will cushion the blow of lost income and earnings and underwrite the bounce-back once restrictions are lifted.

The new combined state and federal relief measures included an open-ended commitment to pay up to $600 a week to workers who have lost income and as much as $10,000 a week to businesses that have suffered a fall in earnings of 30 per cent or more because of the social distancing measures.

Warren Hogan, a former ANZ chief economist, said his best estimate was the business cashflow payments and disaster relief were worth up to $3bn a month.

Mr Hogan, who is an adviser to small business lender Judo Bank, said the support was unlikely to be enough to prevent the NSW economy from contracting by about 2 per cent in the September quarter, but the new package would “put a floor under income and demand”.

The new support, alongside measures to encourage rental relief from landlords, would “go a long way to protecting the most vulnerable individuals and businesses by keeping them afloat, so that when we ease the restrictions we can bounce back pretty strong,” Mr Hogan said.

The chief executive of national employer association Australian Industry Group, Innes Willox, said “insulating those worst-affected by longer lockdowns will not only help put a cap on the impacts on individuals and businesses, it will help maintain the overall health of the economy”.

“The measures announced also provide some comfort to businesses around the country that federal support measures will be in place if other states also enforce long lockdowns on their communities,” Mr Willox said.

Business Council of Australia chief executive Jennifer Westacott said that while “vaccination is our ticket back to normality”, the new support package would provide “certainty” to workers and businesses should their state be forced back into lockdown.

“Once again state and federal governments have stepped in and put workers first by keeping them connected to their employers,” Ms Westacott said. “This lockdown will end, and when it does this package means businesses will be ready to ramp back up quickly and keep the recovery going.”

Commonwealth Bank of Australia head of Australian economics Gareth Aird agreed that the newly announced suite of measures appeared “comprehensive”, and that the major announcement appeared to reflect a “resignation that this lockdown is going to go on for a long time”.

“The key thing is that these support payments don’t make up for the GDP you lose, but they do keep the economic furniture intact so that when the economy does reopen it has the best chance to rebound quickly,” he said.

However, the union movement decried the new measures as too little, too late, and again called for the Morrison government to reinstate JobKeeper.

ACTU secretary Sally McManus said “they have radically cut the support given to workers in 2021 compared to 2020”.

“Weekly payments have been slashed by up to $150 per week, there is no guarantee jobs will be kept and those who have already lost their jobs will get nothing,” Ms McManus said.

Professional services giant EY said the boosted disaster relief payments were “not JobKeeper per se, but it is significant support”.