Government to put businesses in ‘hibernation’

Speaking to media following a national cabinet meeting, Scott Morrison said on Friday (27 March): “The Treasurer and I will have more to say about that in the next few days, as we are preparing to put in place the third tranche of the measures that will be.

“Part of that plan that we will be announcing will be to seek to hibernate Australian businesses.”

Essentially, the PM explained, the hibernation period will mean that businesses are able to come out at the other end of this crisis as unscathed as possible.

“We want these businesses to effectively go into hibernation, which means on the other side, the employees come back, the opportunities come back, the economy comes back,” he said.

Asked whether this could mean businesses will emerge out of the crisis debt-free, the PM said: “There will be a burden for everyone to share and that will include the business as well.”

Banks and landlords are also expected to bear some of the brunt. 

The PM said: “There will be landlords who will suffer, either the banks will be having to make arrangements with them, whether councils are involved in providing waivers on rates and things of that nature… whether land tax will be relieved for those who have tenants in a distressed situation."

Eviction moratorium and rent relief for commercial tenants

Speaking on Sunday (29 March) evening, Mr Morrison revealed that - as part of its work on helping businesses hibernate - the National Cabinet has greed that short-term intervention is needed for commercial tenancies. 

The National Cabinet, which meets again today (Monday 30 March 2020), has agreed to work to common set of principles:

• a short term, temporary moratorium on eviction for non-payment of rent to be applied across commercial tenancies impacted by severe rental distress due to coronavirus;
• tenants and landlords are encouraged to agree on rent relief or temporary amendments to the lease;
• the reduction or waiver of rental payment for a defined period for impacted tenants;
• the ability for tenants to terminate leases and/or seek mediation or conciliation on the grounds of financial distress;
• commercial property owners should ensure that any benefits received in respect of their properties should also benefit their tenants in proportion to the economic impact caused by coronavirus;
• landlords and tenants not significantly affected by coronavirus are expected to honour their lease and rental agreements; and
• cost-sharing or deferral of losses between landlords and tenants, with Commonwealth, state and territory governments, local government and financial institutions to consider mechanisms to provide assistance.

"Work on this has begun, but there is more to do, including for residential tenancies," Mr Morrison said.

"National Cabinet agreed to a moratorium on evictions over the next six months for commercial and residential tenancies in financial distress who are unable to meet their commitments due to the impact of coronavirus. 

"Commercial tenants, landlords and financial institutions are encouraged to sit down together to find a way through to ensure that businesses can survive and be there on the other side," he said.

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has welcomed the announcement of more help for SMEs, stating:

“The only way for small businesses to survive the coming months is if they can effectively hit pause for the time being,” Ombudsman Kate Carnell said.

“For businesses to bounce back when this health crisis is over, they need a holiday from all costs that they incur during this extremely difficult period.

“Small businesses – including those that are forced to shut their doors as well as those who suffer a significant loss of income – should be able to go into business hibernation,” she said.

While Ms Carnell noted that the details of the government’s business hibernation plan are still being considered, she said it was a “mammoth effort that requires everyone to come together and be a part of the solution”.

The ASBFEO suggested that landlords, utility and service providers, telecommunications and “all levels of government will need to put their fees and charges on hold or face losing that customer altogether if there is a tidal wave of insolvencies”.

“Part of this needs to be a wage subsidy for staff that remain attached to the business. Those staff would need to be paid at least 60% of their wage up to a maximum monthly amount. This of course would need a minimum safety net built in,” she said.

“My office, as always, is working with the small business community to ensure we are advocating for the best way forward.

“Small businesses are the engine room of the Australian economy and need our support more than ever right now.

“We are at a critical tipping point, but we can get through this if we work together.”    

[Related: SMEs given resources to tackle COVID-19 stress]