by Schon G Condon RFD

As I’m writing this, Sydney and parts of NSW have entered another lockdown – one which will have far-reaching consequences for not only this city, but for our nation as a whole.  Just as there appeared to be a “return to normalcy”, we are plunged back into uncertainty; something that Victorians, regrettably, know all too much about.

Victoria’s latest lockdown was shown to have surprising consequences to our national economy, according to new data released by the Australian Bureau of Statistics.  During their recent two-week lockdown, the number of people on business payrolls across Australia fell by 0.9%; the biggest hit came in Victoria where jobs on payrolls tumbled by 2.1%

In fact, every State and Territory (bar the Northern Territory) suffered a fall in payrolls over the period that covered part of the Victorian lockdown, which started on 27 May.  The drop in people working also had a substantial impact on wages.  Total wages paid across Victoria over the period dropped by 2.8% while in Tasmania they edged down by 2%.

Whilst trying to minimise the damage by locking down a particular city or state, this doesn’t prevent the rest of our country suffering – in fact, far from it. The payrolls for accommodation and food service businesses in Victoria dropped by 10.2% in the fortnight while they dropped for similar businesses in Tasmania by 3.5% and in South Australia by 3.3%.

It’s clear that lockdowns continue to hurt specific industries; and, that once these localised industries become affected, there is a bigger fallout when you add restrictions that affect interstate travel and the like. There is this “knock-on effect” that then begins to impact these same industries in other states and territories.

Although recent unemployment figures show that the jobs market has bounced back remarkably to pre-covid levels, the data shows much of the recovery in jobs has been in particular areas.  For example, the number of jobs in public administration has risen 12.5% and financial services has risen 7.6%.  However, accommodation and food services are still down 12.3%.

Restaurant & Catering Industry Association chief executive Wes Lambert said the sector was “absolutely flabbergasted” by the latest lockdown in NSW.
“Businesses, based off of the rules introduced this week, proceeded to order stock, prepare for events and prep staff,” he said. “Today, we are told that events must cancel, stock is useless and that staff must be stood down.”

Mr Lambert said the industry faced more than $200 million in lost bookings and events and $60 million in rubbished produce. And if Victoria’s recent lockdown has taught us anything, it’s that many more industries across the country will be affected by our current lockdown… and they will be impacted for many months to come.

Lockdowns are regrettably a necessity at present, but they are a double-edged sword and serious thought must be given to their use and duration.  Oddly, it has reminded me, for those in business long enough, of Paul Keating’s “Recession we had to have”, it destroyed many a small business, and many families lost a great deal in the process.  Many years later, Keating was to lament that in hindsight, he made the recession longer and harder than it needed to be.  Alas, that did little for those that lost a lot. 

For the hundreds of thousands of small businesses in Sydney and NSW that are currently affected, I encourage you to stay strong, be diligent – and to take stock of your current financial situation.  Whilst the future is uncertain, now might be the perfect time to have a discussion about what the future of your business looks like, with a trusted expert. You have nothing to lose, and potentially everything to gain.

Schon is the Managing Principal of Condon Advisory Group, a national firm of Forensic Accounting, Solvency and Turnaround Practitioners.
He has dedicated the past 40 years of his working life in the Greater Western Sydney region, helping the community and businesses to grow.