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The government must focus on providing alternative forms of support rather than purely financial aid in the upcoming 2022/23 federal budget, according to Gavan Ord of CPA Australia.
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Shift from financial COVID support key for businesses in the long run
23 February 2022
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10 minute read
Speaking on episode three of CPA Australia’s “With Interest” podcast, Gavan Ord, senior manager for business policy, said he believes that the government must shift away from direct financial support for businesses in the 2022/23 federal budget.
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Mr Ord believes that with COVID-19 still a major contributing factor in the upcoming budget, the time is now for the government to pivot away from direct financial support for businesses and instead focus on providing alternative forms of support.
Mr Ord pointed to the major jump in government debt, a direct consequence of the pandemic, as well as the need to manage and reduce this debt as a key factor in shifting away from direct financial support schemes, such as JobKeeper.
“The question is; would the return of a big support program like job keeper be prudent and warranted at this stage? We don’t think so. Given we are facing of a few extra years of Covid disruptions, Governments need to consider more cost-effective support programs,” Mr Ord said.
“Programs that build the ability of businesses to better respond to future challenges without the need for big cash handouts.”=
“The government should be using this budget as opportunity to build small business resilience capability. The short to medium term future remains highly uncertain and turning off the taps at this time risks the recovery.”
Speaking on the podcast, Mr Ord offered up a solution presented to the federal government by BDO in their pre-budget submissions. He suggested that the federal government provide businesses with a voucher that they can then cash with their advisers to access advice, a scheme successfully implemented in Tasmania.
CPA Australia believes this scheme will provide businesses struggling financially due to COVID-related issues with financial incentive to access advice and subsequently build resilience and knowledge to navigate through crises.
“It’s our experience that one of the best and fastest ways is through professional advice. Members have informed us that because of current business challenges, many of their small business clients don’t have the capacity to pay for advice or have not prioritised seeking advice due to competing pressures,” Mr Ord said.
“We know this can potentially endanger the viability of such businesses and limit their options for recovery”, the recommendations report continued, “the consequence of not seeking advice is that the range of options available to business owners to respond to their difficulties can reduce significantly.
“This may lead to otherwise viable businesses needlessly struggling. In a worst-case scenario, decisions on the future of a business may be made by creditors, not the business owner.”
For Mr Ord and CPA Australia, it is crucial that the government implement a voucher system, rather than expand the current government business advisory services.
This is due to the small reach of such services, which Mr Ord stated is only received by 5 per cent of small-business owners as opposed to the 44 per cent of small businesses that received advice from their accountant or business consultant last year.
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