Small businesses have rejected claims by the federal treasurer, Josh Frydenberg, that a “war chest” of private savings means they no longer need financial support, as the NSW treasurer, Matt Kean, increased pressure on the commonwealth for more funding.
On Monday Kean ratcheted up attacks on his federal counterpart for not matching the NSW government’s latest $1bn support package, accusing them of leaving small business behind.
“Ash Barty didn’t win the [Australian] Open saying ‘I don’t need to try in the final because I had a good semi’,” he told the ABC.
“You have to address each of the challenges as they come along.”
Frydenberg earlier argued that federal emergency support should now taper off, and that $245bn in household savings and $179bn in business savings would support the Australia’s economic recovery.
“We will continue to provide economic support through various initiatives that we have in place but I do want to move away from those emergency settings,” he said.
“We do need to move back to normalised settings, and so therefore off those emergency support payments.”
But the Council of Small Businesses Australia (COSBA) chief executive, Alexi Boyd, said most small businesses did not have significant cash reserves, and there was no sign that money was flowing from household savings accounts.
“On the ground, it’s not really happening,” Boyd said.
“A lot of [small businesses] are treading water when it comes to just being able to make ends meet, just being able to pay wages.
“There’s talk about there being a lot of cash available in the economy, but for small businesses, they’re not able to make decisions about what the rest of the year looks like because they haven’t had a normal month to base those decisions on.
“You only need to go down to the high street and see how many businesses are trading with limited hours because of the worker shortages.”
The owner of Sydney’s Jim Jam Music, Kylie Clift, said she was at “breaking point” after two years of uncertainty.
She had remained positive until the Omicron wave but she is struggling to see how she will make it through without losing staff due to severe cashflow issues.
“It will take me two to three years to recover financially and also just grow those student numbers back up again,” she said.
“I’ve been running my business for 16 years … I’m having to kind of go back to the things that I was doing at the beginning to try to drum up business.”
She said the situation is so dire she has been feeling like a burden to her husband and kids after being forced to take out loans to cover rising costs.
“I know that it’s not my fault, but at the same time it’s really hard for me to get my head around that,” she said.
“I feel as if I’m letting them down.”
Clift welcomed the state government plan but said more needed to be done by the federal government given the impact of Omicron over the summer.
The Australia Institute chief economist, Richard Denniss, criticised Frydenberg’s reasons for not continuing support payments.
“He’s literally outsourced fiscal stimulus to high-income Australians,” Denniss said.
“He’s hoping that families will go out and spend the government stimulus but lots of them are simply saving up for an overseas holiday in a year or two.”
The scaled-down jobsaver-style NSW payment revealed on Sunday aims to support businesses with a turnover of less than $50m that have experienced a 40% drop in turnover in January due to the Omicron wave.
It will be capped at half of what was offered during the Delta outbreak last year.
Speaking alongside the NSW premier, Dominic Perrottet, on Monday morning, Kean said he expected a response from Frydenberg after writing to him warning the state’s economy could shrink by 4% if cases rise.
“This is such a huge burden that will be borne by our small and medium businesses and they need the commonwealth government’s help now more than ever,” he said.
“We want to ensure that small businesses in NSW, particularly those who have been hardest hit – retailers, tourism, hospitality, restaurants, cafes – are able to keep trading.”
Asked if he backed his treasurer’s public row with his federal counterpart, Perrottet said supported Kean fighting every day “for NSW to get further funding”.
“When I was treasurer, that’s exactly the approach I took.”
