Australia’s startup sector has reacted favourably to the Morrison government’s $130 billion economic stimulus package, announced on Monday.
The government will pay a $750 a week wage subsidy to businesses who retain workers over the next six months. The program also applies to sole traders.
“We will pay employers to keep paying their employees, and make sure they do,” Prime Minister Morrison said.
The scheme will be administered by the ATO through the Single Touch Payroll system, with the money flowing to businesses from May. To be eligible, a company will have lost at least 30% of its revenue and the people retained must have been on the books as of March 1.
More details are available here.
In the meantime, here’s what startup founders and small business leaders think about the government’s plan.
Mike Pritchett,
founder and CEO, Shootsta
This policy balances the fact that you can’t throw cash at every company while attempting to bail out those in need, based on data, rather than blanket assumptions or verticals.
Shootsta have offices in 7 different countries. This is by far the best bailout packages we have seen. The backdating of these payments makes it possible for us to continue to pay our employees while keeping them working and productive. This is where it differs greatly from the UK and other countries.
I really do give credit to the Australian Government for coming out with this package and for offering it for 6 months to see companies through and hopefully out the other side of this.
Rebecca Schot-Guppy,
GM, FinTech Australia
We welcome this policy and expect it to help hold jobs in our innovation industries. However, we firmly believe that fintechs and scaleups in Australia power job growth during this downturn and this policy does not support that.
While a safety net is welcome and will help founders sleep at night, we need an additional stimulus that supports innovative companies. That’s why we will continue to advocate for bridging finance for VC backed companies and accelerated R&D payments.
Will Richardson,
Managing Partner, Giant Leap Fund
I reckon it’s a great policy and really important to keep trust with employees and with suppliers and customers.
There are so many dominos here. When revenues are hit, employees get let go and suppliers and rents can’t be paid. Then the company could default, the supplier can’t be paid, everything moves to cash on delivery and bad debt write-offs.
This policy is necessary duct tape to help maintain basic levels of trust and certainty to keep the economy ticking over.
For startups it extends their runways, helps them preserve the loyal, devoted teams with customer product and market knowledge which are all attractive attributes for investors.
Des Hang,
co-founder and CEO, Carbar
This is great policy as it helps those in need, without letting get too weak to have a dent. This will allow us to preserve our core team regardless of what happens over the next six months.
Not all startups will be quick to admit that they’ve taken a hit from this crisis. Many run several revenue strategies, and it’s realistic to assume that if one part of their strategy is affected by COVID-19, they could see a 30 per cent loss, but still aim to grow.
We’re keen to learn more about this policy, and crucially learn if it applies to staff who are not Australian citizens.
Overall, these are unprecedented times, and anything that helps startups and business see the other side of this period is welcomed.
Ben Leeds,
Country Manager, Perkbox Australia
We welcome the government’s subsidy package and believe it will have the intended effect of helping companies hold staff during this crisis.
Remote work has placed a number of challenges on maintaining culture and momentum within the workplace. Many of which companies are still grappling with them, while trying to balance their revenue during this difficult time.
But nothing hampers morale more than having to gradually let employees go due to cost-cutting. It can have a compounding effect on the mental health of the rest of the company, during what is a really trying time.
The government has realised this, and in some ways has beyond UK’s subsidy, targeting both those in a job and those who have been stood down due to closures.
Guy Saxelby,
co-founder and CEO, Earlytrade
It’s a sensible policy from the government. However, a loss in revenue is a lagging indicator. If your revenue is going down, you’re going to have to consider cutting staff among other costs regardless of the payment. What could secure more jobs is details around how quickly this subsidy will be paid.
Overall, the government is doing a good job of managing a fluid situation and any further break to business is welcome.
Marko Njavro,
co-founder and CEO, FlexCareers
Greg Ellis,
CEO, MYOB
Small businesses around the country have spent weeks trying to keep their doors open, pivoting their businesses to comply with rapidly evolving COVID-19 requirements and, most importantly, continuing to pay their employees. This is only the start of what will be an extremely tough time for the nation’s economic lifeblood.
We applaud the Government’s $130 billion package announced to keep small and big businesses paying their staff throughout the downturn ahead. The JobKeeper allowance will help keep many thousands of Australians who work in the small business sector employed.
The ATO will use Single Touch Payroll data to pre-populate employee details for most businesses and with the Government requiring visibility of payments to employees, what’s key is that small businesses use a reliable approach to tracking and reporting payroll, which accounting software can support.”
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