Business groups demand a plan for the Vic-NSW border, as challenges for SMEs escalate

Influential business groups in Victoria and New South Wales are calling for the borders between Australia’s two most populous states to reopen once 80% of both populations have had two doses of the COVID-19 vaccine.

Business NSW and the Victorian Chamber of Commerce and Industry have clubbed together to call for some kind of roadmap regarding the reopening of the state border, to help boost business on either side.

The news comes as statistics from the latest CreditorWatch Business Risk Review report paint a bleak picture of a small business community barely holding on, as receivables across the board continue to dip.

The CreditorWatch statistics, released yesterday, showed a 12.5% month-on-month dip in trade receivables for Australian businesses in August.

Credit enquiries were also down 19% compared to July, showing that business activity is generally slowing. Defaults for August are also up 20% compared to the previous month. 

Over the three months to August 2021, defaults were up 10%. However, the number of defaults was down 13%, compared to the same time period last year.

Comparing August 2020 to August 2021, the number of defaults are up very slightly, by about 0.6%, compared to August 2020.

At the same time, the number of external administrations are actually down by 6% for the three months up to August 2020, compared to the previous three months.

“There’s no sugar-coating it. It’s dire out there for small businesses at the moment,” CreditorWatch chief executive Patrick Coghlan tells SmartCompany.

Receivables are going down month-on-month-on-month, he says. That means businesses have less cash in the bank, in general.

That said, he is heartened to see that administrations are not spiking. That’s largely due to support from the ATO and the banks, which are “by far the biggest creditors in Australia”.

He expects that support to continue at least in 2022, he says. It’s not their MO to put businesses into administration.

Coghlan is also optimistic that, even when government support starts to drop off this year, we won’t necessarily see a sharp increase in insolvencies.

Currently, insolvencies are down about 50%, compared to pre-COVID levels, he explains. So while we may see an increase in the coming months, that will be more of an adjustment than a spike.

“The overall hope — and it’s a fairly educated economic guess — is that once restrictions ease, states open back up internally and to one another, that there will be that bounce back in economic activity and trade that we saw late last year.”

The big continuing challenge for small businesses in particular is the ongoing uncertainty, Coghlan says.

Without knowing when they will be able to reopen, and exactly what reopening is going to look like, nor exactly when international borders will open again, it can be difficult to plan anything.

They’re not hiring and they’re not buying in goods or stock.

“That has that domino effect through the whole supply chain,” Coghlan says.

Once businesses have a goal to aim towards, and some guarantee that it’s not going to move again, they can start working towards that, he explains.

“Regardless of whether they’re small or large, they’re not push-to-start engines,” he adds.

“They are old steam trains that need to be warmed up and fed before they really get going.”

“This is a race”

Business NSW and the Victorian Chamber of Commerce are also calling for some kind of a plan regarding state borders, allowing businesses on both sides to go back to ‘daily living’ once the 80% double-vaccination threshold is met.

The groups also want both states’ recovery roadmaps to include a plan for border communities, allowing them to go back to ‘daily living’ when 70% of the community is fully vaccinated.

While the New South Wales plan has already released plans to start easing restrictions for vaccinated people at the 70% threshold, it hasn’t mentioned any specific plans for border communities.

The Victorian government is set to release its own reopening roadmap within the next few days.

In a statement, Business NSW chief Daniel Hunter said businesses need some certainty as to what life will look like when we start to hit vaccination targets.

“Australia’s COVID recovery should transcend politics,” he said.

“Our businesses in NSW and Victoria need clarity on when they can resume their strong economic and socioeconomic connection. Business needs certainty so they can re-employ staff and re-engage with their customer base,” he added.

“We need to be able to say to NSW and Victoria: ‘at 80% double dose our businesses will be open, our state borders will be open and you can plan your Christmas holiday, catch up with family or attend that conference without fear of it being cancelled’.”

Victorian Chamber chief executive Paul Guerra noted that pre-pandemic, the Sydney-Melbourne flight route was one of the busiest in the world. That’s testament to the inter-dependencies of the two economies and communities, he said.

“Both states and our governments must facilitate a return to that collaboration to get our nation’s business heart pumping once again.

“This is a race — a nation-wide race — to get Australia humming again and we all know that the best way to win is through teamwork, collaboration and determination.

“Victorian and NSW businesses are up for the challenge and are looking to our political leaders to guide the way.”

Last week, the Victorian Chamber of Commerce also unveiled its own suggested roadmap to reopening, including significant easing of restrictions once 70% of the population have had two doses of the COVID-19 vaccine, and scrapping restrictions altogether — while keeping COVIDSafe plans and QR codes in place — once 80% is double-jabbed.

“It is time to get off this COVID-19 treadmill,” Guerra said at the time.

“Business — indeed all Victorians — deserve a clear roadmap which gives them clarity about when and how they will be able to open. They cannot keep existing on life support and we need something to strive towards,” he added.

“Victorians are good at coming out of lockdowns — we’ve done it five times now — but the sixth time must be the last.”