Research highlights the need to extend JobKeeper

20 July, 2020 by Andy Young

The Australian Hotels Association (AHA) and Tourism Accommodation Australia (TAA) have released modelling which outlines the benefit of continued assistance to Australia’s hospitality and accommodation sectors.

In response to the impact of COVID-19, a draft report from Ernst & Young (EY) has focused on the extension of JobKeeper until March 2021 and the suspension of Fringe Benefits Tax (FBT) on accommodation, meal, beverage and entertainment expenses, for three years.

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AHA National CEO, Stephen Ferguson, said the report helps with the key requirements from Treasury and Government which is to build the evidence base for continued economic support.

“The draft report shows that depending upon final Government policy settings, three of the four JobKeeper scenarios examined indicate economic returns range from 1.42 to 3.38 times the initial cost to Government,” Ferguson said.

“In regard to suspending FBT, EY found that accommodation, meal and beverage entertainment only forms a relatively small portion of the total fringe benefits tax collected by the Government, but suspending FBT for our sector would produce economic returns ranging from 3.25 to 3.81 times the direct cost to Government.”

As several states stare into the face of a second wave of COVID-19, TAA CEO Michael Johnson said the need for additional Government support is clear.

“The EY report noted that 84 per cent of businesses reported decreased revenue, with more than half (53 per cent) reporting revenue decreases of 50 per cent or greater. This is the highest proportion of any industry to report revenue decreases in this range,” Johnson said.

“The report also showed that female workplace participation in our sector is well above the national average with 60 per cent of workers being female, as well as high levels of employment for younger Australians, with 47 per cent pf workers being under the age of 25.

“AHA and TAA research also shows that 15 per cent of businesses reported that their operations could be supported for less than a month with current available cash at hand.”

JobKeeper payments are scheduled to finish in September, but the future of the payment and details of a possible extension are expected when Treasurer Josh Frydenburg delivers his economic and fiscal update on Thursday.

There is widespread speculation the payment will continue beyond September, but not at the current flat rate of $1500 per fortnight. Instead a tiered-system may be introduced with different payments for different people and businesses, based on their needs.