Invest
240,000 businesses to collapse, Deloitte warns
Economists are warning that 10 per cent of Australian businesses face financial ruin as JobKeeper and loan deferrals end in September.
240,000 businesses to collapse, Deloitte warns
Economists are warning that 10 per cent of Australian businesses face financial ruin as JobKeeper and loan deferrals end in September.
Analysis by consultants Deloitte has found around 240,000 businesses in hospitality, professional services and transport industries, in particular, are at a high risk of failure once government support ends in September.
Under the current federal government arrangements, businesses will receive their last JobKeeper payment on 27 September — around the same time as many rental and loan repayment deferral agreements are also set to end.
Deloitte warns 40 per cent of businesses across hospitality, professional services and transport have indicated their cash reserves can cover less than three months of operations in the current environment.
“While it’s expected the business environment will improve over the next three months as restrictions are eased (but don’t forget Melbourne), it’s not known whether any improvement will be enough to enable businesses to recover, let alone survive, without JobKeeper support,” Deloitte said.
The consultants found that New South Wales, Victoria and Tasmania had the highest percentage on JobKeeper, but noted all states and territories will be impacted by the changes in September.
“Unsurprisingly, this doesn’t bode well for Victoria, where the latest outbreaks have led to increased restrictions. Already one of the states with the highest proportion of businesses claiming JobKeeper, along with New South Wales, this new round of restrictions is likely to create further problems. In addition, one in four businesses in Victoria operates[s] in the high-risk industries identified above. ”
Businesses operating in Australia’s two territories face relatively lower risks. While around 30 per cent of those in the Northern Territory and the ACT have accessed JobKeeper, this is much lower than the rest of the country.
Business insolvency hurts business owners, employees as well as creditors and suppliers.
“Canberra may well announce specific packages to support businesses beyond September. But in the meantime, it’s incumbent on suppliers, creditors and insurers to prepare contingency plans for a significant rise in hardship and bad debts,” Deloitte said.
“To do so, it’ll be important to consider the characteristics of the businesses they deal with — the industry they operate in, their size and their existing financial resilience, including the ability to borrow and service any additional funds.”
About the author
About the author
Economy
‘Locked in or locked up’: Albo blasts budget in reply speech
Labor leader Anthony Albanese has used his budget reply speech to take aim at what he has termed "eight years of failure", accusing the government of being all talk and no action. ...Read more
Economy
Is the government treating women as a political problem?
Following on from the recent cabinet reshuffle that Prime Minister Scott Morrison was pushed to implement as a result of disturbing allegations of sexual misconduct in Parliament, the government has o...Read more
Economy
‘More marketing, mismanagement and missed opportunities’ – 2021 budget falls flat
Short of a big-ticket spending item, the FY21-22 federal budget has underwhelmed, with the opposition labelling it yet another ‘missed opportunity’. ...Read more
Economy
Budget confirms road to recovery
The Australian economy continues to recover from the COVID-19 pandemic, with the budget showing an improvement in labour productivity and economic output. ...Read more
Economy
Budget 2021: What’s in it for you
The federal government had handed down possibly the second most anticipated budget in history, outlining its plans to help the economy recover post-COVID. Here’s a breakdown of what’s in store fo...Read more
Economy
Budget 2021: What do we know so far
In the lead-up to the federal budget, Treasurer Josh Frydenberg has announced a number of key policies as the country rebounds from its first recession in nearly three decades. ...Read more
Economy
‘Neglect’ and ‘issues of own creation’: Albanese slams budget leaks
‘Budget leaks’ and spending boosts have failed to impress Opposition Leader Anthony Albanese, who has accused the government of trying to paper over its own ‘neglect’, and this is likely befor...Read more
Economy
Is this the goldilocks recovery?
Strong consumer savings throughout the COVID-19 pandemic are tipped to drive global growth over the medium term, with consumer spending ultimately deciding the economic outlook, new research has revea...Read more
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Economy
‘Locked in or locked up’: Albo blasts budget in reply speech
Labor leader Anthony Albanese has used his budget reply speech to take aim at what he has termed "eight years of failure", accusing the government of being all talk and no action. ...Read more
Economy
Is the government treating women as a political problem?
Following on from the recent cabinet reshuffle that Prime Minister Scott Morrison was pushed to implement as a result of disturbing allegations of sexual misconduct in Parliament, the government has o...Read more
Economy
‘More marketing, mismanagement and missed opportunities’ – 2021 budget falls flat
Short of a big-ticket spending item, the FY21-22 federal budget has underwhelmed, with the opposition labelling it yet another ‘missed opportunity’. ...Read more
Economy
Budget confirms road to recovery
The Australian economy continues to recover from the COVID-19 pandemic, with the budget showing an improvement in labour productivity and economic output. ...Read more
Economy
Budget 2021: What’s in it for you
The federal government had handed down possibly the second most anticipated budget in history, outlining its plans to help the economy recover post-COVID. Here’s a breakdown of what’s in store fo...Read more
Economy
Budget 2021: What do we know so far
In the lead-up to the federal budget, Treasurer Josh Frydenberg has announced a number of key policies as the country rebounds from its first recession in nearly three decades. ...Read more
Economy
‘Neglect’ and ‘issues of own creation’: Albanese slams budget leaks
‘Budget leaks’ and spending boosts have failed to impress Opposition Leader Anthony Albanese, who has accused the government of trying to paper over its own ‘neglect’, and this is likely befor...Read more
Economy
Is this the goldilocks recovery?
Strong consumer savings throughout the COVID-19 pandemic are tipped to drive global growth over the medium term, with consumer spending ultimately deciding the economic outlook, new research has revea...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
