NT News

Lockdowns wear down local firms

390 insolvenci­es last month

- DAVID ROSS

AT LEAST 390 businesses across Australia entered liquidatio­n in August, in a month that marked the worsening of economic shutdowns gripping the country’s two most populous states.

The spread of the Delta variant of Covid-19 has resulted in shops and restaurant­s being shuttered across Victoria and NSW, while efforts to contain the spread have meant reduced numbers on work sites and a softening in demand for materials.

However, the latest figures show economic support payments continue to support troubled businesses, with no jump in failures. But some industry watchers say the longer lockdowns drag on the worse the recovery may be.

EY partner Stewart McCallum said savings buffers and motivation to go on for many was wearing thin.

“It’s almost like Covid is wearing businesses down,” he said. “They were able to make it through 2020 on the back of

JobKeeper and commercial landlord relief, but with every lockdown comes an increased psychologi­cal and financial hurdle to jump over.”

Mr McCallum said EY was also seeing a growth in Australian divisions of internatio­nal businesses seeking assistance.

“All those financial operationa­l issues that we’re facing here, the overseas parents are facing as well,” he said.

“But all of their focus is on what’s happening on their home patch and ... they don’t have the management bandwidth or financial resources to focus on what’s happening in Australia.”

Mr McCallum said some businesses were taking a more immediate hit from lockdowns, with hospitalit­y venues forced to destroy stock, while others were suffering a slow burn from closed borders. “Most businesses coming to us are because of the impact of Covid,” he said.

“You’ll always get situations where businesses are managed badly and will fail, but by and large the impact of Covid that are resulting in the business coming to us.”

NSW was the worst-affected state in August, with 150 businesses entering liquidatio­n. This was more than double Victoria’s tally of 67

That’s compared to the 113 NSW business that failed in August 2020 and the 72 Victorian businesses that went bust in the same month.

Queensland lost 59 businesses in August, followed by 26 in Western Australia, 16 in South Australia, 14 in the ACT and one in Tasmania. The Northern Territory had no failures, and 59 collapses were listed as “no state”.

Newspapers in English

Newspapers from Australia