Allan government pulls small business support program as restaurateurs warn of exodus

As small businesses fight for survival and well-known restaurants shut up shop for good, the cash-strapped Allan government has pulled this support service.

Victorian small business owners fighting for survival have been stripped of a key counselling service after it was axed by the cash-strapped Allan government.

It comes as new data shows insolvencies and late payments are continuing to rise, with growing pressures forcing some restaurant and retail businesses to close their doors for good.

Despite the huge strain, a specialist program which previously helped 5000 small business owners manage debt, finances and draw up business plans has been scrapped.

Under pressure to wrangle debt, the state government failed to extend the Partners in Wellbeing small business program in May’s budget.

Bourke St lobster and champagne restaurant Pinchy's will close its doors this month. Picture: Supplied

Small business owners have lashed the state government for failing to back them, warning Melbourne’s “crook” business conditions could result in an exodus of much-loved restaurants.

Among them was heartbroken owner of well-known lobster and champagne restaurant Pinchy’s, which will shut its doors this month.

Jeremy Schinck said rising rent, energy bills, wages and penalty rates and unpredictable disruptions like protests had meant the once booming Bourke St restaurant was “no longer sustainable”.

“We’ve tried everything — from reinventing our menus to adjusting how we trade — but the current climate just isn’t viable,” he said.

“The margins in hospitality are already razor-thin, and any disruption can be devastating.”

He told the Herald Sun small business owners like himself had been abandoned by the state government.

Pinchy's owner Jeremy Schinck said operating a small business in Melbourne no longer “adds up”. Picture: Supplied

“Small businesses are the heartbeat of the hospitality industry, yet support continues to be withdrawn,” he said.

“I understand the economics of running a business — but right now, it simply doesn’t add up.”

Southbank institution Pure South Dining has also been forced to close their doors after 21 years on the Yarra.

Owner Philip Kennedy pointed to ongoing tenancy issues and “generally crook” business conditions in Melbourne.

“Economic conditions are not great, Victoria is worse and Southgate worse again,” he said.

“The landlord is not aspirational for the precinct at all.”

Pure South owner Philip Kennedy said “crook” business conditions and ongoing tenancy issues had led them to close the award-winning restaurant. Picture: Jake Nowakowski

Pure South on the Yarra has closed its doors. Picture: Jason Edwards

It comes as new data from credit reporting agency Equifax shows there were 348 insolvencies reported in Victoria in April – up from 266 in the same month last year.

Among them was beloved Lonsdale St eatery, Tsindos Greek Restaurant, which entered voluntary liquidation.

The figures also show an increase in late payments among small and medium businesses, suggesting that pressures are taking their toll, as well as reduced credit demand.

Executive general manager Moses Samaha said the data showed that Victorian consumers were saving rather than spending, despite interest rate cuts.

“This could delay any rebound in the small business sector,” he said.

Legalise Cannabis MP Rachel Payne said it made “no sense” for the government to axe the Partners in Wellbeing program in the current climate.

Legalise Cannabis MP Rachel Payne is calling for the government to reinstate the program. Picture: Tim Carrafa

“To prevent more Victorian businesses going to the wall, the government must fund an ongoing dedicated small business financial counselling service, combined with a small business community legal centre, plus mental wellbeing supports,” she said.

Not-for-profit retirement village operator Ross Turner turned to the program for help after floodwater inundated the accommodation in 2022.

After battling his insurance company over the huge bill, he was connected to a financial counsellor who provided pro bono legal advice on the insurance claim and on updating the retirement village’s policies, procedures, and contracts.

“I’d exhausted all other options and we couldn’t afford legal fees as a self-funded not-for-profit,” he said.

“Without a small business financial counsellor, I would have gone over the edge.”

Financial Counselling Victoria CEO Zyl Hovenga-Wauchope said the program’s axing meant the 600,000 small businesses in Victoria had been left without access to dedicated face-to-face support.

“Financial counsellors can help to mitigate the risk of business failures, reduce the burden on the legal system, and support the sustainability of local economies – the social return on investment stacks up,” he said.

A government spokesman said the small business support service was prompted by the pandemic and continued through the floods, but that it was no longer needed.

“The Partners in Wellbeing continues to offer phone-based wellbeing support and help Victorians navigate the mental health system, acting as the primary entry point to the Mental Health and Wellbeing Locals and Mental Health and Wellbeing Hubs,” he said.

Originally published as Allan government pulls small business support program as restaurateurs warn of exodus