JobKeeper ‘a lesson’ for future disaster support programs

JobKeeper was overall an effective and well-administered program that ultimately protected Australians from the worst economic impacts of the pandemic, the major accounting associations have told the Independent Evaluation of the JobKeeper Payment.

However, the JobKeeper program has also demonstrated the need for a “holistic, pre-prepared and tested disaster relief package for business and their employees”, the Institute of Public Accountants, CPA Australia and Chartered Accountants ANZ said in a joint submission.

“With the benefit of hindsight, many of the less-than-ideal aspects of JobKeeper, the Cashflow Boost and state government COVID business support programs may have been avoided had the government had available a well-designed and tested ready-to implement disaster support program for business,” the professional bodies said.

The submission said that government support is likely to be needed again in the future with experts predicting pandemics like COVID-19 are likely to occur with greater frequency.

Australia is also expected to face more regular and severe natural disasters such as droughts, floods, bushfires, and cyclones.

“The probability of human-made disasters such as significant cybersecurity incidents and conflict are also increasing,” the submission said.

“Government support is likely to be needed to help businesses adversely affected by such disasters.”

The professional accounting bodies said JobKeeper had many positive elements that are useful for future policy developments.

“In short, it was the economic ‘security blanket’ Australia needed at the start of the pandemic. Its size, speed of delivery and focus on business and employees helped avert a major economic slowdown and positioned Australia for a quick rebound,” the submission said.

However, the JobKeeper program did highlight the need for better co-operation on disaster support for businesses between federal and state governments.

A lack of co-ordination between the federal and state governments resulted in confusion, delays, constant changes, and differing levels of support across state borders, the accounting bodies said.

“This was particularly evident in highly populated areas of the borders between states. We found that the federal government was better equipped to respond than state governments,” the submission said.

“Businesses and advisors in those areas needed to be across multiple support schemes with often different approaches to the same issue such as calculation of turnover, whether the business owner qualified for payment and whether advisers such as accountants could apply on behalf of their clients.”

Preventing strain on the accounting profession in the future

Having a ready-to-deploy disaster support program would also reduce unnecessary workload pressures on advisers during a disaster, the accounting bodies said.

“Accountants worked incredibly hard to help their small business clients during COVID period. They had to learn JobKeeper’s continuously changing rules and state government COVID support programs, shift to working fully online, and aid clients comply with the obligations attached to COVID support payments,” the submission said.

“Being the trusted adviser of many businesses, accountants were also expected to handle clients who were suffering significant financial, personal and mental health issues. The combination of these issues also impacted the mental wellbeing of many of our members.

“Having a ready-to-deploy disaster support program that is understood by advisers should reduce unnecessary workload pressures during a disaster.”

Businesses need more support in recovery phase

The accounting bodies have also called for more support for businesses transitioning back to normal operations.

“Cutting off all government support early in the recovery may have negative impacts on business and the economy,” the submission said.

Businesses are likely to benefit from access to advice during the recovery phase, it said.

“As part of developing a ready-to-deploy disaster support program for business, the government should consider including incentives for impacted businesses to access advice from their existing adviser,” the accounting.

Such support should become available as direct financial disaster support is removed.

The accounting bodies have also urged the government to make the loss carry back tax offset to be a permanent feature of the tax system to help once profitable entities to recover.

Importance of timely, accurate data

The importance of accessing quality data more regularly was also highlighted in the pandemic.

“While some data was accessible to the government in close to real time, such as single touch payroll, other data was subject to substantial delays, for example quarterly business activity statements for small and micro businesses. This information was critical as it had information on turnover,” the submission said.

“Encouraging necessary accounting and tax data to be available to government efficiently through natural accounting systems in a timely manner could aid the targeting of future support. It may also reduce the need for estimates/forecasts and clawback mechanisms.”

The accounting bodies said they support efforts by the ATO and the government more generally to digitise and recommend that the government fund investment into programs including Modernising Business Registers “to ensure the necessary digital infrastructure is in place to improve the quality and timeliness of data”.