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There has been a lot of talk about how businesses will cope post-JobKeeper. A comment I heard just today said, “The end of JobKeeper in March 2021 will result in an economic cliff face.” Really?

Government Stimulus

A year has passed since COVID-19 ravaged the economy. Regretfully, some industries are still struggling to recover from closures, lost sales, reduced or lost staff, etc. But, for many small businesses, the pandemic was the platform for a bumper year. Government stimulus packages can take a large chunk of credit for that outcome. There have been regular calls through the media to retain JobKeeper for some of the ravaged industries. Hospitality is one of those still struggling. However, the Government is holding firm to predicted and current economic outcomes. Accordingly, retention of JobKeeper post-March 2021 is very unlikely. If any form of stimulus does continue, it will be very targeted.

Treasury Forecasts of Future Growth

Here are some economic indicators from the Mid-Year Economic and Fiscal Outlook 2020-21, released on 17 December 2020, reinforcing the Government stance:

  • “The risk of virus outbreaks will continue to create uncertainty for both households and businesses.”
  • Australia’s major trading partners are forecast to grow by 5¾ percent in 2021…
  • Australia’s real GDP grew by 3.3 percent in the September quarter, its strongest quarterly growth rate since the March quarter of 1976…
  • Recent indicators suggest that momentum has continued into the December quarter.
  • Real GDP in 2020 is expected to fall by 2½ percent before growing by 4½ percent in 2021…
  • Activity will be supported by the Government’s economic measures and a gradual easing of social distancing restrictions, and continued improvements in confidence…
  • It [the unemployment rate] is then forecast to fall to 6¼ percent by the June quarter 2022…”
  • Treasury estimates households and businesses have stockpiled more than $200 billion of extra savings as of the end of December 2020 (Australian Financial Review).

In addition to the above forecasts, recent commentary promises even better outcomes:

  • A continued low interest rate environment.
  • Australia is one of just five nations – Taiwan, China, Vietnam, New Zealand, and ourselves – who enter 2021 very well-placed. (Deloitte).
  • A current unemployment rate of 5.8% and declining is below forecasts for March 2021.
  • In March 2021, the USA announced a $1.9 trillion stimulus package.
  • “Business conditions after vaccines will look very different to those before vaccines” (Chris Richardson).
  • “because the downturn was so sharp and the impact so big, the opposite would happen on the way out.” (Chris Richardson).
  • As confidence grows concerning the virus’s management, there will be an “…unleashing of pent-up consumer demand…” (Australian Financial Review 13 January 2021).

Opportunities for Small Businesses

Businesses can take a lot of confidence from the above forecasts and expectations. Small business operators know that, in many ways, they can’t compete with large cashed-up businesses. To some extent, that is true. However, small businesses need to educate themselves on what they can do to tap into the expected economic boom heading our way.

Where to Get Help

At Maynard Accounting, we don’t just look after tax compliance. We are aware of business trends, opportunities, and how to help clients position themselves for future growth. Contact our office and ask for an appointment with one of our tax and business consultants.

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