Victoria offers $3 billion lifeline to SMEs as reopening looms

Victoria is expected to see the first significant business reopenings from the second wave lockdown in the middle of this week as continued low COVID-19 caseloads pave the way for a fast-tracking of the restart of the $45 billion regional economy.

The first business reopenings come after the government announced about $3 billion of business cash flow support for beleaguered small and medium-sized businesses on Sunday. Most have not traded without major constraints for nearly six months.

To date Victoria has committed $6 billion in COVID-19 support for business – equivalent to a quarter of annual tax revenue – with Premier Daniel Andrews expected to announce more this week.

Under intense pressure over the conservative reopening plan, Mr Andrews has signalled the state will spend up to 2 per cent of its gross state product, or around $18 billion, on economic recovery measures.

The state has a $25 billion loan facility in place and Treasury is undertaking work with agencies on fast-tracking a variety of hard and soft infrastructure projects now under way ahead of the Victorian budget, expected late this year.

The number of new cases continued to fall with 35 cases announced on Sunday, and the Premier confirming regional caseloads were now at a level to enable businesses to reopen "around the middle of the week".

Chief Health Officer Brett Sutton also confirmed Melbourne's 14-day average was on track to reach the 50-case threshold this week, ahead of the first tentative metro business reopenings for 100,000 workers in the construction and manufacturing sectors slated for September 28.

I have had no business leader come to me and say, 'The best outcome here is to open and then have to close again'.
— Daniel Andrews

Mr Andrews and Professor Sutton continued to defend modelling informing the cautious reopening schedule, and said it would be unlikely case numbers would be low enough to enable Melbourne businesses to reopen ahead of the scheduled October 26 date.

"The modelling will be updated and it will benefit not just from assumptions, as robust as they are, but by what is actually happening," Mr Andrews said.

"I have not had – despite the pretty vocal criticism from many in the business community – I have had no business leader come to me and say, 'The best outcome here is to open and then have to close again'."

Epidemiological experts have called for a more selective approach to closures, noting that the majority of cases are now coming from aged care and health facilities.

The federal Health Minister Greg Hunt pushed for a review of the modelling.

“They have suggested that the modelling should be redone and that the roadmap should be ­redone in consultation with the academic community, the business community, the broader community, and the commonwealth — and we agree with that,” Mr Hunt said.

The business package was widely welcomed by business groups, but with reservations that it did little to help businesses with debt.

“This is what the business community has been calling for," Victorian Chamber of Commerce and Industry chief executive, Paul Guerra said.

"A forward-looking announcement that provides confidence in being able to manage without cash flow for now, and how businesses can begin to reskill and recover when the virus is under control."

Melbourne lord mayor Sally Capp also welcomed the cash support.

"Thanks to the Victorian government for listening to businesses about what's needed to assist with cash flow and so they can open their doors when restrictions ease," Ms Capp said.

Crown was also supportive, issuing a statement: “A vibrant hospitality industry gives Melbourne its unique edge and this support package will help the industry get through these difficult times."’

Prime Minister Scott Morrison also commended the additional commitments saying they were "consistent with the Reserve Bank governor’s recent advice to national cabinet".

Mr Andrews announced an extension of the state of emergency and the state of disaster for a further four weeks.

The extensions give legal force to the state's COVID-19 restrictions and come amid further limited protests about the tough stage four restrictions in Melbourne over the weekend.

Raft of grants

Treasurer Tim Pallas released details of a third round of the business cash program, with 80,000 small- to medium-sized businesses entitled to share in $882 million of cash grants of up to $20,000 for companies with annual payroll of less than $10 million.

The grants are for heavily restricted or closed businesses not allowed to reopen on September 28.

These include accommodation, tourism operators, media and film production, creative studios, outdoor entertainment, museums and galleries, hospitality and a variety of other retail services.

He also announced $1.7 billion in business cash flow support, deferring payroll tax for businesses with payrolls up to $10 million for the full 2020-21 financial year.

"This should have been a waiving of payroll tax offered to businesses across the board," the Victorian head of the Australian Industry group Tim Piper said.

A further $137 million in waivers and deferrals of charges includes liquor licence fees, the congestion levy and increases to the landfill levy.

The 50 per cent stamp duty discount for commercial and industrial property across all of regional Victoria will also be brought forward to January 1, 2021. The Vacant Residential Land Tax will be waived for properties that are vacant in 2020.

Amid major disappointment in the hospitality industry over continued harsh restrictions, a $251 million dedicated Licenced Venue Fund has been established, with grants of between $10,000 and $30,000 for bars, restaurants, pubs, clubs, hotels and reception centres.

Anticipating continued limits on trading into next year the government also said it would be waiving liquor license fees for 2021.

Grants of up to $20,000 to cover $4.3 million in ski resort fees will also be available.

Acknowledging the large support demands on industry associations, the government also announced a $3 million program of grants up to $20,000 to help their members adapt to COVID-19 restrictions.

A $20 million voucher program was also unveiled to assist sole traders and small businesses building their digital capability, including access to cloud services such as e-commerce platform Shopify or online payment facility Square.

'Ring of steel'

The acceleration of regional reopenings – including the 253,000 population strong Geelong – will also facilitate relaxation of border rules that have divided communities across the NSW and South Australian borders.

The expected early regional reopening will also require strong management of movement with metropolitan Melbourne, with Mr Andrews saying there would be "a ring of steel" to ring fence regional Victoria.

Small Business Australia executive director Bill Lang said 300,000 small business operators had been “left out in the cold again”.

“Whilst the state government’s announcements offer some support to larger businesses, particularly larger traders in the hospitality sector, the vast majority of small businesses in Victoria remain without support,” Mr Lang said.

“These ‘micro-businesses’ made up of sole traders and those who employ a handful of staff represent over 300,000 Victorian businesses who have not had a cent in support from the state government, despite many being unable to trade for the past six months.”