Fixing Jobkeeper

Scott Morrison is said to be ‘furious’ banks are not lending businesses enough money, but the real problem is how the program works.

The government is trying to blame the banks for flaws in its jobkeeper program, but the real problem lies closer to home.


The prime minister, Scott Morrison, is reportedly “furious” with the banks for not lending businesses enough money to tide them through the month or so until the jobkeeper payments kick in.


But businesses say the fundamental problem with the jobkeeper scheme is that it’s paid in arrears. In other words, businesses have to front the money to pay their workers for each month, and then claim it back through the tax office.


This has left many businesses, particularly in the sectors worst hit such as hospitality, with an unbridgeable gap of tens or hundreds of thousands of dollars that they need to pay now to get into the program, but just don’t have.


And expecting businesses that are already broke to borrow more money is also pretty rich.

Banks have so far loaned $700m to businesses to help them get through the crisis – which sounds like a lot but really isn’t anywhere near enough.


Guardian Australia understands about half has come from Australia’s biggest bank, the Commonwealth, and reports from businesses suggest smaller banks have struggled to get their systems up to scratch quickly.


But the big problem with going to the bank is those businesses are borrowing to get behind.

This is, once again, because the jobkeeper payment is made after the fact.


If you borrow $100,000 to meet this month’s payroll, you will be able to pay it back next month … and have to immediately borrow the money again to meet the next month’s payroll.


While banks are offering an interest deferral for six months, that just means interest payments are quietly compounding in the background, ready to mug business owners when the crisis is over, and they’re expected to resume making payments.


As a result, many businesses have done the sums and closed their doors rather than get further into hock.


For the Liberal party, which is supposed to be the champion of small business, a failure to understand the basics of cashflow seems mind-boggling.


MORE INFORMATION:

For the latest advice, information, copy and resources, go to

Fixing Jobkeeper: Why the Banks Are Not To Blame For Flaws in the Wage Scheme

Ben Butler - https://www.theguardian.com/business/2020/apr/25/fixing-jobkeeper-why-the-banks-are-not-to-blame-for-flaws-in-the-wage-scheme


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