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Business support payments flow amid warnings of permanent job losses

National

More than $4 billion in support subsidies have already been paid out to businesses and staff hit by coronavirus shutdowns, as Treasury warns some jobs and businesses won’t survive the nation’s biggest economic shock since the Great Depression.

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Treasury secretary Dr Steven Kennedy told a Senate committee examining the federal government response to COVID-19 that the tax office had originally said it could start sending the cashflow support payments to small and medium businesses from April 28.

But it had actually started delivering those last week and had paid out more than $4.5b, he said.

More than 500,000 businesses have formally applied for the $130b JobKeeper wage subsidy scheme, announced in the wake of coronavirus restrictions which shut down industries nationwide within hours, throwing hundreds of thousands out of work.

Asked whether payments could have been delivered to businesses and workers faster, Dr Kennedy said he had been incredibly impressed with how speedy the tax office and Services Australia had moved.

“Making literally billions of dollars of payments within four weeks of their announcements – which I appreciate is of no comfort to the broader community that’s been hit by these shutdowns – I would actually regard as a rapid payment of money,” he said.

Dr Kennedy said Treasury officials had worked flat out on policy options throughout the whole of March, with three successive support packages announced during that time.

But rapid policy development meant the packages needed to be continually looked at and refined.

“They are by no means perfect … I wouldn’t want to leave the committee with the sense that you develop these things and they don’t require continuous work,” he said.

The Treasury boss warned the size and speed of the economic shock meant some jobs and businesses will be lost permanently.

“We have never seen an economic shock of this speed, magnitude and shape, reflecting that this is both a significant supply and demand shock,” he said.

“Unemployment rose to higher levels in the Great Depression but it did that over the course of a couple of years – these movements are happening in just a couple of months.”

Jobkeeper payment extension to small business

His comments came as small businesses were granted an extension to pay staff under the JobKeeper program.

To qualify for the scheme, businesses had to show they had lost at least 30 per cent of revenue compared with the same time last year.

But if they were accepted, they had to pay $1500 fortnightly upfront to each worker, before being backpaid by the federal government.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell said small businesses struggling to make the first payment now had until May 8.

“This will come as a welcome relief for small businesses struggling with cash flow,” Carnell said.

“Small businesses now have extra time to deal with cash flow pressures as a result of any delays with their financial arrangements.

“It’s especially critical now that those small businesses that had chosen not to apply for JobKeeper because they were worried they couldn’t pay their staff by April 30, do so now.

“The big four banks have established JobKeeper help lines that are dedicated to ensuring small businesses have the funding they need to pay their staff. They are promising to fast-track these applications.”

Businesses have until 31 May 2020 to formally enrol to claim JobKeeper payments.

However, the sooner an employer pays their staff for April and enrols, the sooner the ATO can reimburse them the JobKeeper payments.

-with AAP

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