After one of the most challenging years on record, the good news for SMEs is that Australia’s economy is recovering.
Earlier this month, the Federal Government released its 20/21 Mid-Year Economic and Fiscal Outlook[i] that included an additional $6.3 billion in new stimulus measures, including some support for beleaguered small businesses such as travel agents, while an extended HomeBuilder will support the residential construction sector.
There’s jobs growth, while the Federal Government’s budget is in slightly better shape than it was two months ago when Treasurer Josh Frydenberg handed down the belated 2020/21 Budget.
An unusual update
In a typical year, the Federal Government releases its annual budget in May and present the half-year update in December. However, this is hardly a typical year, and the Federal Government was forced to postpone its budget until October. So, this month’s half-yearly statement merely updates a budget that’s over two months old.
Nonetheless, there have been enough positive developments in the economy since October to make the mid-yearly statement noticeably different.
First comes jobs growth
Most importantly, new data released in December showed Australians were still returning to work in significant numbers. Around 85% of the 1.3 million people who lost their job or were stood down on zero-hours in April are now back at work. As such, the government is now predicting unemployment of 7.5% in March 2021 whereas in October it provided a forecast of 8%.
While these improvements are welcome, the government conceded that parts of the economy continue to be impacted by COVID-19 restrictions. There remains a long way to go until the economy fully recovers, and the unemployment rate is brought down comfortably below 6%.
Since the October Budget, the economy has recovered faster than expected – highlighted by a 3.3% rebound in September quarter GDP. Moreover, Treasury officials are now forecasting the economy to grow this financial year, rather than shrink.
With the more substantial than expected growth, and with employment recovering strongly, Treasury has revised slightly lower the budget’s forecast deficit. The budget’s forecast deficit was revised down in 2020-21 to $197.7 billion (or 9.9 per cent of GDP), down from $213.7 billion (or 11 per cent of GDP).
What’s in the mid-year statement for small businesses
The government will provide $128 million for a one-off targeted grant program to support travel agents. Payments will be scaled, with a minimum of $1,500 for a business with a turnover of $50,000, up to a maximum payment of $100,000 for a business with a turnover of up to $20 million.
The government recognises that many travel agents continue to process refunds for consumers who have cancelled travel, at the same time as they manage ongoing uncertainty about international travel due to the impacts of COVID-19.
The government has also pledged up to $241 million in additional funding by extending the HomeBuilder program to 31 March 2021. This announcement is expected to support the construction or major rebuild of around 15,000 homes across Australia. This funding will underpin small businesses operating in the residential construction sector.
Likewise, the government is committing a further $506 million over three years for priority transport infrastructure to support local jobs in the construction sector and economic recovery.
Get in touch today to find out about OnDeck’s funding options that could support with finance for your SME’s recovery planning.
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