The coronavirus, toilet paper and Australian businesses
If you think the only impact of the coronavirus on Australian businesses is the inexplicable mad rush on supermarket supplies of toilet paper, you’d better think again, writes DG Institute’s Founder and CEO Dominique Grubisa.
Both the human and business impacts of the virus are currently a ‘moving feast’. Information about the virus and how it is spreading is constantly being updated by the media, governments and health authorities around the world.
The coronavirus is the biggest global health scare since the outbreak of the SARS virus in 2003. The coronavirus has just been declared a pandemic by the World Health Organization (WHO), just like SARS was.
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What is a pandemic virus?
A ‘pandemic’ is a term used to describe a disease that affects some people in regions or countries around the world simultaneously. It shouldn’t be confused with the term ‘epidemic’, which refers to large numbers of people in specific regions or countries being affected by a disease.
The potential impact of the coronavirus on Australian businesses
Australian businesses in the tourism and education sectors are likely to be hit hardest by the coronavirus pandemic. That’s because Australian business statistics show that our economy is heavily dependent on Chinese tourists and students.
There is currently a travel ban in place for foreign nationals coming to Australia from China, South Korea, Italy and Iran. The coronavirus disease outbreak has been the most severe in those four countries. Travellers to Australia from these countries are put in quarantine for 14 days when arriving in Australia, which significantly discourages them from visiting our shores.
The flow-on effect of less international tourists and students coming to Australia while the travel ban is in place will hit small businesses like retailers, restaurants and accommodation providers. According to the Australian Bureau of Statistics, small businesses in Australia employ 44% of Australians. Any downturn in small business revenue could therefore affect the jobs of many Australians.
In a worst-case scenario, some otherwise profitable businesses in Australia could become loss-making businesses for an indefinite period due to the effects of the coronavirus.
The future of the Australian economy
The federal government is so worried about the potential business and economic impact of the coronavirus that they have announced a $17.6 billion stimulus package. Key business components of the package include:
- cash payments of between $2,000 and $25,000 being available for 700,000 small-to-medium-sized Australian businesses to help them pay wages or hire extra staff.
- support payments being made available to businesses to help them keep apprentices.
- an increase in the instant asset write-off threshold to help businesses reduce their tax bill. The write-off threshold will be increased from $30,000 to $150,000 immediately. The threshold will also be extended to include businesses with an annual turnover of up to $500 million (which is a massive increase on the current turnover threshold of $50 million).
In addition to these direct business measures, people in Australia who currently receive various federal government benefits will receive a one-off cash payment of $750. It’s hoped that this money will be spent by recipients to help keep Australian businesses and the economy moving, in much the same way as the GFC stimulus package in 2007 helped the Australian economy to be one of only a few in the world to avoid a recession.
Unfortunately, the coronavirus is coming hot on the heels of the bushfire disaster in Australia, which some analysts forecast will cost the economy $2 billion in terms of lost tourism, agriculture and retail income in the current financial year.
The Reserve Bank has also responded to the coronavirus outbreak by cutting Australia’s already record-low interest rate even further. This move is an attempt to encourage Australians to feel confident about borrowing and spending money to stimulate the Australian economy.
The Australian share market has already recorded a sharp downturn since the outbreak of the coronavirus. How the virus will affect the property market is less certain at this stage, though if history is any guide, people tend to invest more in property during times of economic uncertainty.
Pandemic plans for businesses
Some businesses are proactively preparing business continuity plans for the pandemic, including:
- ensuring their employees can work safely from home if necessary,
- determining minimum on-site staffing priorities, and
- creating a communications plan that allows all staff to be kept up to date with any potential changes in work policies due to the effects of the coronavirus.
The bottom line
The economic impacts of a pandemic was certainly not the business news Australia was expecting to start 2020. How long the coronavirus panic will last and whether business chaos will ensue is uncertain.
The impact of the virus on business performance in Australia will vary. Some businesses (like those in the tourism sector) are likely to be directly affected, while others may only be indirectly affected by the overall Australian economic impact.
Unfortunately, no one has a crystal ball to be able to accurately predict the future. We can’t be sure how the coronavirus health crisis will pan out globally. We also can’t be sure how it will affect the Australian economic outlook or our businesses.
But it’s important to monitor the latest developments and to stay informed. That will help you to make the right decisions to ensure both your personal and financial health, whether you’re running a business in Australia or not.
How we can help
At DG Institute, we’re hosting an emergency briefing on how to quarantine your business and personal wealth from the coronavirus fallout. Book now to find out about strategies you can use in these uncertain times to:
- safeguard and control your cash flow,
- protect your assets,
- minimise your financial risks,
- and much more!
Lawyer, Asset Protection Specialist and Property Educator
Dominique Grubisa is a practising legal practitioner with over 22 years of legal and commercial experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author. You may contact Dominique at firstname.lastname@example.org
This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.