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Lockdowns May Be Last Straw For Some Firms In Australia

Commonwealth Bank of Australia chief executive Matt Comyn said his bank stands ready to assist customers in lockdown.

CANBERRA, Australia — Financial support from federal and state governments may not be enough for some businesses struggling through yet another lockdown. Independent economist Nicki Hutley has warned with half the population now in lockdown, it is inevitable jobs will be permanently lost and some businesses won’t be able to keep going.

“If you think about Melbourne in particular, effectively in its fifth lockdown, there will be some that this will be the straw that breaks some backs,” said Hutley.

Greater Sydney and some regional areas of the southeastern state, New South Wales, Victoria, and South Australia are all in lockdown. But the boss of the nation’s biggest retail bank has assured customers he stands ready to provide help.

Matt Comyn, chief executive of the Commonwealth Bank of Australia said that his bank has received 500 requests for financial help on July 20, particularly for home loan deferrals, and anticipates this will build in the coming weeks.

The bank is offering loan deferrals for two months, as well as more tailored solutions because people are unevenly impacted by the latest round of lockdowns.

The Commonwealth Bank of Australia bank is offering loan deferrals for two months, as well as more tailored solutions because people are unevenly impacted by the latest round of lockdowns. (Erik Anderson/AAP Image)

“Clearly, Delta (a strain of Covid-19) is causing all sorts of challenges around the country at the moment, but we will continue to work closely with our customers,” Comyn said.

The Commonwealth Bank of Australia and other banks offered similar support to businesses and individuals during the recession last year and, as then, Comyn expects foreclosures to be small.

“The vast majority, because of the economic recovery and the strength of the labor market, has been able to recommence repayments and the deferrals right across the industry have been successful,” he said.

Like the federal government and a number of economists, Comyn is predicting a negative impact on the economy in the September quarter from the spate of lockdowns.

However, he believes the economy should “bounce back quite strongly”.

But peak accounting body CPA Australia believes businesses will need support beyond the point state economies to start to reopen.

Andrew Hunter, the chief executive officer says that the new national arrangements for Covid-19 business support are a positive development.

“The missing piece is what happens once a lockdown ends,” he said. “The impact on businesses doesn’t stop the moment a government calls time on a lockdown. If support is withdrawn immediately, many businesses may experience a damaging hard landing.”

CPA Australia is calling for tapered support for small- and medium-sized enterprises based on a decline in turnover, the deferral of Commonwealth and state revenue collection, and a moratorium on compliance.

It also wants consumer incentives, such as dining, travel and accommodation vouchers, and financial assistance for businesses seeking professional advice.

BDO tax partner Mark Molesworth is also calling on the Australian Taxation Office to extend the ‘short cut’ tax deduction for the millions of people who have been forced to work from home.

These 80 cents per hour tax deduction for people having to work from home during the pandemic was introduced as a temporary measure last year, but cannot be used for claims after June 30, 2021.

“The shortcut, that doesn’t currently apply for this financial year, was designed to cover all costs of working from home, without the need to make difficult calculations,” Molesworth said.

“With current lockdowns affecting over half of the country’s population, BDO is calling on the Australian Taxation Office to extend the shortcut method to the 2021/2022 financial year.”

(Edited by Saptak Datta and Ritaban Misra)

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