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Policy body warns that thousands of tourism businesses face closure without $1 billion lifeline

Policy body warns that thousands of tourism businesses face closure without $1 billion lifeline
January 4, 2021

Amid warnings that tourism will be wrecked by border closures that have disrupted the holiday season, the Federal Government is facing calls for an extra $1 billion in financial support for the industry.

Danielle Wood, Chief Executive of non-aligned public policy group the Grattan Institute, predicts keeping the JobKeeper wage subsidy scheme for the tourism industry for an extra three months could cost as much as $1 billion, assuming one-quarter of the sector's workforce remains on the wage support after its scheduled end in March.

As reported by the Sydney Morning Herald, Wood said the extra spending "would be justified given the recent hit from border closures" intended to stop the spread of a coronavirus outbreak in Greater Sydney.

The reintroduction of hard borders between NSW and Victoria, South Australia and Western Australia was estimated by tourism industry groups to shave $3 billion off revenue for travel businesses over the critical Christmas period.

This is a hit to turnover of more than 50% and follows significant revenue declines from bushfires during the December 2019 to January 2020 period.

Wood advised “many operators were relying on school holidays to get through and the loss of revenue has been directly a result of the policies taken to contain the spread of the virus.

"(It) could raise some administrative challenges to offer (JobKeeper) to just one industry, but it's probably worth the complexity in this case."

In response to the border closures, industry peak bodies Tourism Accommodation Australia, the Tourism and Transport Forum, the Australian Tourism Industry Council (ATIC) and the Australian Chamber of Commerce and Industry on Friday flagged the need for more financial help from the Federal Government, either in the form of an extended JobKeeper or other cash grants.

Advising of pressure on the Federal Government to extend JobKeeper, ATIC Executive Director, Simon Westaway stated "JobKeeper remains an important business support policy while we remain faced with a hard international border close and severe domestic travel restrictions. "Without this program, thousands of businesses, through no fault of their own due to government responses to the virus, will be impacted to the point of closure."

While it would be hard to use industry data to determine whether some businesses hit by the closures should be eligible, Westaway said a 30% reduction in revenue test would be a suitable measure.

In July, when it was announced JobKeeper would be extended for six months to March at lower rates, the estimated cost was $16.6 billion. The overall scheme is forecast to cost $90 billion, down from earlier estimates of $101.3 billion amid business recovery in some sectors.

In mid-December, the Australian Federation of Travel Agents said in mid-December it intended to make a pre-budget submission this month asking for a JobKeeper 3.0, on top of an extra $128 million in support already provided for travel agents and tour operators in the form of one-off grants.

Federal Treasurer Josh Frydenberg said in a statement the Australian Government had "always maintained that JobKeeper is a temporary program designed to taper off as economic confidence and momentum builds".

He said fewer businesses and employees needed the wage subsidy and other support, with 734,000 jobs created over the past six months and a range of stimulus measures introduced as part of the economic recovery plan.

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22nd July 2020 - Live Entertainment Industry Forum applauds Australian Government’s JobKeeper extension

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19th June 2020 - Tourism and Transport Forum calls for extension of JobKeeper for another six months

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7th April 2020 - Fears tourism businesses may not be eligible for JobKeeper payments

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