Hospitality and automotive industries warn of mass job losses, closures under JobKeeper 2.0

Business leaders are calling for changes to JobKeeper 2.0 and warning thousands of struggling firms will not meet tougher eligibility requirements.

Australian Chamber of Commerce and Industry chief executive James Pearson.

Business leaders are calling for changes to JobKeeper 2.0 and warning thousands of struggling firms will not meet tougher eligibility requirements for the wage subsidy, triggering large-scale job losses.

More than two million workers are expected to be removed from JobKeeper by January, with the government tightening eligibility criteria so that from September 28 a business must show its turnover has fallen 30 per cent or more in the June and September quarters.

For large businesses earning more than $1bn, their turnover must have reduced 50 per cent.

Restaurant and Catering Australia chief executive Wes Lambert, whose organisation represents 45,000 cafes, restaurants and catering businesses, said the hospitality industry had “woken up from the hangover of JobKeeper 2.0” and realised many businesses would not qualify for an extension, including those going through the second shutdown in Victoria.

Mr Lambert said employers had pivoted their business in the June quarter to keep people employed, and they would start learning as early as this week if they would receive the next round of payments.

“They may have achieved somewhere between a 20 to 29.99 per cent (revenue decline in the June quarter) compared to last year, just breaking even due to JobKeeper 1.0 and business ­activity statements top ups and the landlord code of practice,” Mr Lambert said.

“Now faced with a September quarter that will be much worse due to government restrictions and hopelessness and desperation, they will be given no wage subsidy from September 28 to March 28.

“To have the test in JobKeeper 2.0 be both the June and September quarter is the death knell for hospitality, which will continue to face further headwinds with state borders shut, international borders shut and further restrictions on their doorstep.”

The Victorian Automobile Chamber of Commerce expected 70 per cent of its 334 new car dealer members, who employ about 15,000 people, would not qualify for JobKeeper 2.0.

This was because of the “outlier” month of June in which car sales rose as Australians sought to take advantage of the instant asset write-off, used their JobKeeper payments and accessed $10,000 of their superannuation contributions under the Morrison government initiative to buy vehicles.

“The new car market was heavily impacted by the banking royal commission in 2019, they’ve had pre-COVID challenges with a slipping car market over 27 months consecutively. What we’re worried about now is that one spike (in sales) in June,” VACC’s chief executive Geoff Gwilym said.

“The only way they’d be able to comply and be eligible for future JobKeeper payments (beyond September) was to shut the dealership in the June quarter and sell cars and get rid of staff.”

The industry groups said ­instead of employers having to show a 30 per cent turnover ­reduction in both quarters compared to the previous year, they should be able to show an average revenue decline of 30 per cent across the six-month period.

Josh Frydenberg’s spokesman said the tax commissioner would have discretion to set out alternative tests that would establish eligibility in specific circumstances where it was not appropriate to compare actual turnover in a quarter in 2020 with actual turnover in a quarter in 2019.

Australian Chamber of Commerce and Industry chief executive James Pearson, who met with 60 of his members from across the country on Thursday to discuss JobKeeper’s second phase, said the government needed to relax the new eligibility rules and should not leave it up to the tax commissioner to make exemptions.

“We’d hope the government would make it clear what the rules are because businesses need as much certainty as possible in order to plan. If it’s left to the commissioner’s discretion that leaves significant uncertainty,” he said.

“Averaging their revenue drop over the June quarter and September quarter avoids the situation where you could’ve just missed out on eligibility in the June quarter because you reopened — because the government was encouraging you to — and then you had a bad next quarter.”

“Surely the point here is to keep jobs. That’s why it’s called JobKeeper.”

Mr Pearson said the hotel ­industry was also concerned about the stricter eligibility rules.

Under the first phase of the scheme, which is expected to cost $70bn, employers had to show a turnover fall of 30 per cent over a four-week period to qualify for up to six months of $1500 fortnightly payments for their employees.

From September 28 payments will be reduced to $1200, or $750 for employees who work less than 20 hours a week, and in January they will drop to $1000 and $650 respectively.

Opposition employment spokesman Brendan O’Connor said businesses needed clear guidelines from the government to alleviate understandable anxiety over their future operations and employment opportunities.

“We don’t want to see unemployment any higher than it has to be and the government should listen to affected businesses,” Mr O’Connor said.

“The Treasurer has the ability to make changes with the stroke of a pen to ensure the government is doing everything it possibly can to support businesses and ensure as many Australians remain connected to the labour market as possible.”

Treasury’s review into JobKeeper discovered that 15 per cent of businesses on the payments had an increase in turnover in April compared to a year earlier. Once firms were able to get over an ­initial slump, Treasury found business may have come back much more strongly than expected.