An extension of the lockdown for Greater Sydney and surrounds could be the tipping point for small businesses to consider insolvency, leading bodies have warned.
The Australian Retailers Association (ARA) estimates that for every week the lockdown continues, retailers collectively lose about $1 billion in trade.
As ARA CEO Paul Zahra tells 9News.com.au, the retailers most at risk are owner-operator small businesses in Sydney’s CBD where foot traffic has plummeted to near-zero.
“We’ve got grave concerns for businesses, and particularly smaller retailers in the CBD. They were already crippled by last year’s lockdowns and with the absence of JobKeeper this time, it’s a double whammy,” Mr Zahra said.
“At first the lockdown felt like Groundhog Day compared to last year but I think it’s actually worse now because we’ve got COVID fatigue and it’s left people with a high level of uncertainty.”
As CBD workers are urged to work at home, Sydney’s once-thriving city retail premises lose contact with millions of face-to-face customers.
Warnings for shoppers to only buy essentials – and a rising fear of public transport – has seen many retailers tell the ARA that it has become easier to shut up shop than to continue.
“We’ve got small businesses that are completely decimated and you only have to walk through the CBD streets to see more and more ‘for lease’ signs going up as people are just exiting completely. Some of these businesses have been going for decades,” Mr Zahra said.
“There’s also a double cost to this – there’s a financial hit and there’s the mental health hit for business owners who are deciding that it’s just not worth it.”
While larger retailers will often have their flagship store in the CBD, smaller businesses such as coffee shops, drycleaners, florists and tobacconists are more at risk because they don’t have a network of outlets to fall back on.
“The major retailers have got other store locations that they may be able to offset losses with but small businesses – think about an owner-operator café who’s been in the CBD for more than a decade,” Mr Zahra said.
“They’ve got rent to pay and unfortunately at some point insolvency becomes the easiest answer.”
Eight days ago NSW Treasurer Dominic Perrottet announced grants of between $5,000 and $10,000 to small businesses impacted by the lockdowns.
While retailers welcome the measure, they say it’s not enough to cover costs.
“This is the issue. We’re grateful for the business support grants but they just don’t go far enough to compensate the downturn that businesses will suffer during a three-week lockdown. They just don’t go far enough,” Mr Zahra said.
“The other piece to this is they’ve offered payroll tax deferrals. That’s just more debt. That’s really not that helpful.”
Mr Zahra said retailers are wholly onboard with efforts to keep the population safe, and fully support preventative measures such as masks and vaccinations – but more needs to be done to support retailers financially.
“Today’s exemption comes as a surprise because NSW was a state that was reluctant to go into lockdown and yet we are seeing lockdowns occur,” Mr Zahra said.
“If you’re going to do a lockdown you’re going to need to provide proper support. It’s now week three for retailers and the state government has given its support, I think it’s time for the Federal Government to seriously think about reinstating JobKeeper.”
Mr Frydenberg said NSW Treasurer Dominic Perrottet has requested JobKeeper be reinstated for NSW during its current lockdown.
This was denied, but Mr Frydenberg said people can access the emergency support payments.”We are not bringing back JobKeeper,” Mr Frydenberg said.
Mr Frydenberg said the Federal Government was providing NSW “the same support” Victoria received a few weeks ago.
“The payments of $500 and $325 are available.”
Business NSW has labelled the extension a “crushing blow” for owners and employees, arguing that this lockdown has no safety net for those struggling to keep the lights on.
“This time around there’s no JobKeeper to help cushion the fall,” said Business NSW Chief Executive Daniel Hunter.
“Concerningly, around 1 in 5 businesses say they only have enough cashflow to get them through the next month of operations – so an extended lockdown will see businesses close down, and unlikely to reopen.
“That will have a huge impact on our society – not only in the loss of jobs but the mental health of those business owners and their employees who’ve dedicated their lives to their business.”
The lockdown of Greater Sydney, the Blue Mountains, the Central Coast, Wollongong and Shellharbour will now continue until midnight on Friday 16 July.