Confusion, uncertainty and compliance: The cost of varying COVID-19 support
Under the current fragmented approach to COVID-19 support, businesses in each state contend with different systems with varying eligibility.
With Victoria and Queensland descending back into lockdown, and NSW restrictions in place for at least a month or more, states are shouldering the burden of business support — and making mistakes on the way.
Rules are inconsistent between jurisdictions, applications can be onerous and confusing, and the compliance rules don’t always align with the way businesses work in practice.
COVID support in August 2021 is a far cry from the uniformity of JobKeeper last year, or even the federal government’s cashflow boost program, which automatically credited support to employers after lodging their Business Activity Statements.
Under the current fragmented approach, businesses in each state contend with different systems, with varying eligibility and amounts available.
In NSW, experiencing the longest lockdown this year, the 2021 COVID-19 Business Grant provides a one-off amount of $7,500 to $15,000, as a cashflow boost in relation to the first three weeks of closures.
More substantial support is available through the state’s 2021 COVID-19 JobSaver payment, which offers the equivalent to 40% of the business’ weekly payroll, up to $100,000/week.
This payment covers employers with an aggregated turnover of between $75,000 and $250 million, provided they meet other eligibility criteria, but unlike JobKeeper, the money is paid to the business to maintain its headcount and cover costs rather than being directly linked to payments made to employees.
In Victoria, businesses affected by the lockdown in May and June could access a grant of up to $7,000, through the second round of that state’s Business Costs Assistance Program.
Victoria offers $20,000 grants for some hospitality and licensed venues, amounts between $5,000 and $20,000 for 430 alpine businesses, and a Business Continuity Fund dedicated to for 24 sectors affected by restrictions such as gyms and hairdressers.
There’s also a hardship fund for businesses otherwise ineligible for support that have seen a revenue reduction of 70% or more.
Look north to Queensland and the rules are different again: $5,000 for businesses affected by the lockdown in the southeast of the state, or impacted by repeated border closures.
In South Australia and Western Australia, $3,000 grants are available, though eligibility varies. And in four of the six states, a direct-paid disaster payment for workers affected by lockdowns is available through Centrelink.
What does this mix of options mean for business? Confusion, uncertainty and compliance costs.
Business owners are often unsure of what is available to them, or whether they meet the eligibility criteria for a growing number of similarly named schemes that sometimes overlap and sometimes are mutually exclusive.
The application process, particularly for larger sums such as NSW’s JobSaver payments, can be unclear. Without a comprehensive set of questions and answers it is challenging for business owners to understand what is being asked of them and why.
There’s also the disconnect between state systems used to dealing only with businesses on limited financial data such as payroll.
Unlike the federal ATO, state departments are not experienced in understanding the many nuances of business operations, and that’s causing challenges as they suddenly expand the range of information they need to collect to include revenue, business models, timing of reporting and other issues.
This isn’t to say the states are not doing their best in trying circumstances. Many of these schemes have been set up at speed, and are being tweaked on the run as feedback allows departments to adjust eligibility, broaden options for business and settle ambiguities.
But for business thrust back into the dark uncertainty not seen since the early days of the pandemic, there’s a need for clear, uncomplicated assistance that allows owners to budget and plan their operations and headcounts accordingly.
What’s the solution?
Some of the answer lies with the business itself. Continuity planning and cashflow must be back at the top of the agenda, and with that comes making sure every possible support is accessed, debts are collected on time, and the business model is scrutinised to determine what new revenue streams can be created.
For state governments, it’s the time to listen to business — take feedback on any flaws in the support process on board and be responsive to concerns.
And for the federal government, it’s past time to provide a more coherent approach to support Australian business. We hear time and again that Australian business will be the driver that leads the Australian economy back out of lockdown.
Business needs clear, consistent support now to be ready for that future.
