By working in close collaboration with Mosman, Manly and Warringah Chambers of Commerce.
Zali Steggall MP speaks about the desperate need for more business support in Warringah
I rise to speak on the Treasury Laws Amendment (COVID-19 Economic Response No. 2) Bill 2021. This bill makes the necessary amendments to the legislation to enable the COVID economic response package which has been announced in recent weeks, following the recent outbreak of COVID-19 in New South Wales and around Australia. The consequential lockdowns in New South Wales have been really, really hard, and testament to that is my appearing by video link to represent the people of Warringah in parliament.
I welcome the assistance that the Commonwealth government has provided to the businesses and individuals of New South Wales who are being greatly impacted by the current lockdown measures, but I have to say that this support doesn't go far enough. The small businesses have used up all their savings. People—especially small-business owners, especially here in my electorate of Warringah—are at breaking point. They were locked down already during the most profitable time of the year—at Christmas and in the holidays—while the rest of Sydney roamed free. They're confused and distraught, with no end to this lockdown in sight and with case numbers that continue to rise. People are really at breaking point. I feel for businesses, and I'm doing all I can to support them and to advocate for their needs. It is so important that the government hears this message loud and clear. These measures are welcome, but much more is needed. It's not enough. I would say to the Treasurer, who I know is going to address some businesses in Warringah this evening by video link: 'It's not enough. You need to really listen to businesses, to listen to how they are coping, and to understand the cracks. Don't be too proud to think that this is all perfect. You can do better and things can be adjusted. It's important to attend open forums to take questions and really listen to people on the ground for their experience.'
Many local business owners have been speaking to me and—like many other members of parliament, I'm sure—I've been attending numerous forums over Zoom to understand their plight and make sure that the issues they're having are conveyed to the government. There are issues with the packages from the state government but the issues are mostly with the federal government's JobSaver program. There's so much confusion and bewilderment for small business about why the government couldn't continue with the JobKeeper plan. It was a system that they knew, that they understood and that worked. It was a success story. If you tightened up the areas of excess and where money had been wasted, this was a program that worked. But now these businesses, absolutely distraught with lockdown and facing all the challenges, have to adjust to a whole new system—and there are issues with that system.
The new JobSaver program and the COVID disaster payment actually act as disincentives for employees to actually work where work is available. The fact that the employees now receive a payment when there's been a reduction of hours, and that payment comes directly from Services Australia rather than from their employer, which was what was occurring under JobKeeper, means that it's more akin to a social security payment than a wage subsidy. It no longer ties employees to their employers. Whereas JobKeeper did tie employees to employers financially, this new combination of JobSaver and the COVID disaster payment doesn't have the same effect. For example, a small business that has pivoted and is staying afloat by, for example, serving takeaway still needs to pay staff directly to come in. But, at the same time, staff are receiving the disaster payment and some are, in fact, not making themselves available to work.
Small businesses who are trying desperately to maintain their business need to meet their fixed liabilities and, in addition, wages—and it's simply not possible. Fixed liabilities like rent, insurance, stock and energy bills are things that they need assistance with, and the current structure of the program simply doesn't address these things. One large hospitality venue in Warringah estimated that they are about $70,000 a month worse off under the latest package than they were under the supports last year before they even pay wages, which are no longer subsidised. So there really is an issue with the current structure of the package. Some of the wages that they have to pay include wages for COVID marshals and additional cleaners to improve the safety of venues.
Another issue that has been raised is the hard thresholds for support. I do agree that there needs to be evidence of reduction of turnover. We simply can't afford to see that kind of abuse of the system where businesses that have not suffered a loss take so much public funds. But I've also got feedback from local businesses that the hard cut-off of a 30 per cent, 50 per cent or 70 per cent reduction to qualify for support is creating an uneven structure. For example, a business that has suffered a 28 per cent reduction gets nothing and yet it is substantially in the same boat as a business who has suffered 30 per cent. Likewise, a business with a 68 per cent reduction receives significantly less than one with a 70 per cent reduction. So I would urge the government to think about these threshold categories, because what you are creating are very uneven outcomes for businesses that are all in the same boat. A more gradual approach to tiers would be welcomed by many businesses.
Another issue that has been raised with me is that basing the grants on the payroll liability alone is not an accurate reflection of the cost for a business and the challenges they are facing in staying open. For businesses that have been struggling since the beginning of the pandemic and are operating with skeleton staff it means that their fixed costs such as rent, power, insurance and indemnity—all those aspects—are not covered in the assessment of the level of support they receive through JobSaver. They are simply not being supported to the extent that they need.
Staff wages are often only about 20 per cent of the operating costs of a small business. So the government is essentially only assisting 40 per cent of 20 per cent of those costs. That's not enough. So whilst the name of this policy, JobSaver, is nice in theory, it simply won't save jobs, because businesses will not be there when the lockdown finishes. So it's really important for the government to listen and for the Treasurer to listen and adjust this program to take into account the needs. The grants don't reflect all those expenses.
Rental support is a major issue so part of those fixed expenses are that rental cost. Many local businesses are calling for a return to the mandatory code of conduct for leasing that was implemented last year. While there are concessions and incentives for landlords to provide the rental relief, and they're welcome, they're not having the desired effect. I see from the ground, from businesses here in Sydney, in Warringah, that are under lockdown, that this is not working. They are still being met with demanding landlords and this is just not tenable for them. Especially if landlords, for example, are benefitting from reductions and benefits themselves and then not passing them on. That really is unconscionable. I appreciate that incentivising landlords is an approach that is preferred but it's simply not enough at the moment. With an extended lockdown period we have businesses here in Warringah that have been shut for five weeks now. We have another three weeks to go. On the numbers announced today it is highly likely we will be in lockdown for some more weeks to come. Businesses will not survive. At the moment the only reprieve is in the form of a deferral of rent where the businesses are permanently suffering losses. The landlords will get their rent back eventually but businesses will not get their lost turnover back. I would urge the government to consider a return to the mandatory code to make landlords come to the table because at the moment many are not willing to negotiate.
The current New South Wales regulation only applies from the period of 13 July to 20 August. Ironically the lockdown started on 26 June and will continue beyond 20 August, so national cabinet needs to work to reconsider these time frames. I urge the government to redesign some of these support packages. It needs to provide the subsidy to business owners—such as one-third of cost of rent payment, a third paid to the landlord and a third by the tenant. There are a lot of proposals that have been put forward. There needs to be progress on these issues.
A key issue of concern is support beyond the lockdown. There's going to need to be support for a good three to six months beyond lockdown. Many industries and businesses work way in advance and all of their bookings have been cancelled. They will not emerge with a full trading capacity at the end of this lockdown. They need that certainty to know what will happen on the other side. At the moment it is a deadly silence coming from government, from national cabinet, on what happens beyond lockdown. I urge the government to deal with that, to give businesses some certainty. The events industry, for example, takes bookings three to six months in advance. They've lost all their bookings for the remainder of the year and they won't miraculously appear again the other side of the lockdown. Businesses like events, conferences, major sporting events, performing arts are all on their knees. They have already been suffering so much since the start of the pandemic. They are calling for some clear policies, like a COVID cancellation insurance policy, to be jointly funded by the government and the industry so that there can be some confidence for people in businesses in these industries to be able to schedule and plan events, so that if they have to be cancelled they are covered to an extent. This includes mass participation sporting events. They bring huge value to our society. They've been decimated in the last 24 months—even outside lockdown zones because as states shut down borders we simply see events cancelled. We have recently seen the Port Macquarie ironman cancelled with millions lost to the local community but also lost to local charities because so much is erased through our events like this. It really is important to understand.
I have met with the members of AMPSEA—the mass participation events alliance. I know they have met with the minister for trade and tourism. I urge him to come up with that plan and that event cancellation policy. Travel agents have been suffering since the beginning of this pandemic—they are still—with no end in sight. Whilst under JobKeeper they at least had some level of subsidy while they processed cancellations they are now left at a loss. They need some certainty. There needs to be further announcements from the government in relation to grants packages beyond the current round, the consumer travel support grants. There really needs to be more certainty.
In relation to individuals, I welcome the announcements of the COVID disaster response payment. But it would have been so much better if this could have been announced in a timely way, at the beginning of the lockdown, so people could know they were going to be covered and could comply. Instead what we see is two or three weeks delay in announcing, people still going about with business because they fear for their ability to feed themselves and meet their liabilities, and transmission continuing in the community. It is so important for government to provide certainty.
I'm pleased the government has finally given additional support to those on JobSeeker and payments and those who have lost work, especially students, but there are still many that aren't getting access to that. We need to make sure all those individuals in those groups are able to get support. In particular, tradies who, for example, are under 18 and may have left school and lost their hours of work. They are not eligible for the support packages. So there needs to be that flexibility in the programs to ensure that all of those who need help are able to receive that support. The Australian National University has found that people on JobSeeker, with the COVID supplement at that higher rate, were demonstrably more likely to find work when the coronavirus supplement was in place because they experienced reduced poverty and less housing stress. So if we want people in work—and we do want people to work—then we need to ensure they are appropriately supported to be able to do that.
So I welcome the measures, but I do urge the government to be realistic. To save jobs, you need businesses to survive. The programs need to be tailored to ensure businesses' needs are met and that they are able to deal with it. It is a shame it is always reactionary policy that is not proactive. We have all been calling for plans and for more proactive policy in providing support. Finally, I thank everyone around the northern beaches for doing such an amazing job at complying with orders and the high levels of testing. Please, please get vaccinated.
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