Industry needs a feed to survive lockdown
Justin Hemmes has urged the government to craft an industry-specific stimulus package to avoid mass unemployment in the hospitality sector.
Pub tsar Justin Hemmes has urged the federal government to craft an industry-specific stimulus package to avoid mass unemployment in the hospitality sector when the $130bn job-saving wage subsidy scheme ends on September 27.
He is also pushing for the fringe benefits tax on dining to be scrapped to help the industry back to its feet once venues reopen.
The hospitality entrepreneur, who owns Merivale Group and the company’s 70 Sydney-based venues, said the industry would require a second rescue package when JobKeeper payments ended in six months.
“I am hoping for a hospitality stimulus package, but it’s not what I am banking on,” he told The Australian. “Social-distancing rules alone will mean a lot of hospitality businesses won’t even break even so there will be a lot of casualties.”
The scale of job losses across the nation’s hospitality sector occurred at a breathtaking pace — 270,000 people out of work and 120,000 people stood down — and that the toll is expected to widen in the coming months.
Mr Hemmes said bars, pubs, and restaurants operated on wafer-thin margins, with little financial cushion to sustain them through prolonged periods of reduced income. “Hospitality is such a marginal business anyway,” he said. “You need to be full to be turning a dollar, and if you’re reducing your capacity by 75 per cent, the business model doesn’t work.”
He said the industry was on life support and could require a “full resuscitation” in the form of a government rescue package when the JobKeeper payment ended.
Even Mr Hemmes’s Merivale Group, an industry giant, has not been immune to the upheaval. “We went from 3000 staff down to 50 and that hit hard. Now we are just tackling it four weeks at a time because the environment is changing so rapidly and this is a once-in-a-lifetime experience.”
Mr Hemmes was among the key players behind the government’s $130bn wage subsidy scheme announced on March 30.
“Prior to the mandatory shutdown, I was in discussions with the government regarding salary support for staff,” he said. “We wanted to secure salary support for staff to be paid through businesses so they could avoid Centrelink queues.”
Mr Hemmes, JB Hi-Fi chief Richard Murray, Wesfarmers chief executive Rob Scott and Solomon Lew told Josh Frydenberg they could use their payroll systems to offer government support to their employees.
Mr Hemmes said the wage subsidy package, covering an estimated six million workers, “changed the entire dynamic”. Instead of sacking its 3000 employees, Merivale stood down the workforce and every employee was given a one-off payment of $550.
The battle to stay afloat was only just beginning, he said. Now he is pushing for the FBT to be abolished so companies can entertain without being severely penalised. “Abolish the fringe benefits tax on dining to kickstart support to the hospitality industry.”
In the meantime, he is taking on the home-delivery giants, redeploying staff as delivery drivers. Merivale Pick Up and Delivery, designed to rival Uber Eats and Deliveroo, will be launched on Friday. Takeaway will be available from some of its top restaurants.
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