Immediate impact: January - July 2020

The negative impact of COVID-19 on Australian entrepreneurs has varied, based on industry sector and region. Initial impacts in March and April 2020 were felt when business models were disrupted by sudden closures, social distancing and supply chain disruptions. From February to June 2020, Australia lost close to 800,000 jobs, with the largest declines being in the arts and recreation services (down 35%), accommodation and food services (down 31%), and information and media telecommunications (down 10%). For firms already in investment portfolios, the impacts were negligible as of June 2020. In a survey of 15 top venture capital funds in Australia, an average of 4– 7% of their portfolios experienced job losses. COVID-19 has also impacted the entrepreneurial ecosystem. A number of co-working spaces have closed due to social distancing requirements. The university sector has been impacted by a loss of revenue from international students, who made up, on average, 52% of the student enrolment in higher education. A number of university innovation hubs and programs have either ceased operation or been rolled into internal university operations. Logistics, including export markets, have been impacted by supply chain disruptions. There have been positive impacts for companies set up for virtual work, such as telehealth, Internet services, data centres, remote workforce automation and fintech. A number of sectors have seen an increase in employment, including: agriculture, up 9%; financial and insurance services, up 4%; and public administration, up 3%. Aspects of the entrepreneurial ecosystem have adapted as well. Hackerspaces have engaged with local government contracts to develop IoT (Internet of things) solutions for COVID-19 responses. Local manufacturing has rapidly transformed to accommodate the development of personal protective equipment. Co-working spaces, innovation hubs and major events have shifted to virtual delivery to maintain and support member bases.

Immediate policy interventions: January - July 2020

As a point of comparison, during the 2008–2009 Global Financial Crisis, policy measures focused on infrastructure, cash stimulus and training. Initial financial stability measures included interest rate cuts, an Australian government guarantee of all Australian bank deposits, and wholesale funding of Australian banks. Financial stimulus measures included an AUD 10.4 billion Economic Security Strategy (ESS), with $8.7 billion in cash payments to pensioners and low-income families, $1.5 billion to housing construction and first-home buyers, and $187 million for training. Soon after, a $15.2 billion package addressed housing, hospitals and education; a $4.7 billion National Building Plan invested inroad, rail and higher education; and a $3.9 billion energyefficient homes package was passed. In early 2009, further investments were made into: improving school infrastructure and social housing projects; the National Broadband Network; clean energy technologies; and the health, tertiary education and research sectors. While the stimulus response to the financial crisis was focused on infrastructure, the initial response to COVID-19 has been on keeping jobs. The COVID-19 stimulus package has targeted job retention, with over AUD 259 billion, or 13.3% of GDP, allocated to support workers, households and businesses.

The main programs include the JobKeeper and JobSeeker programs, and the recently released (as of July) JobTrainer and JobMaker programs. The JobKeeper scheme provides payments to companies to help retain their staff if they have experienced an over 30% decrease in revenue as a result of the COVID-19 pandemic. Eligible employers, sole traders and other entities can apply to receive $1,500 per eligible employee every two weeks. JobSeeker provides payment from $565.70 to $790.10 every two weeks to employees who have been stood down or let go, including sole traders, self-employed, casual workers and contract workers who meet the income test. The JobTrainer program provides access to free or low-cost training in areas of identified skill needs through the establishment of a new $1 billion fund to help graduates and job seekers gain the skills they need to find employment. A further $1.5 billion will be made available to expand and extend the Supporting Apprentices and Trainees wage subsidy. The JobMaker program is a targeted package that aims to fast-track investment into major infrastructure projects, as well as provide access to a range of new grant and loan programs for certain sectors.

Future economic / policy outlook

There is a range of economic forecasts: national economic contraction will be 5.5% according to the International Monetary Fund, 3.2% according to the Commonwealth Bank of Australia, and 5% according to the OECD. The OECD predicts a rebound in 2021 of 4.1%. Jobless rate forecasts are uncertain, with a current 22-year high of 7.4%, up from 6.2% in June. In June, the Australian Treasury secretary predicted a potential top level of 8%. The recently announced JobTrainer and JobMaker programs will be implemented over the coming months. The other stimulus packages, JobKeeper and JobSeeker, will enter their 2.0 phase in September and are expected to be reduced from a flat rate to a figure that depends on an individual’s circumstances. Other programs and actions include: the Research Sustainability Working Group to address the $4.7 billion shortfall in research funding to universities; $250 million in grants and low-interest loans to help the arts, film and entertainment sectors; and fast-tracking disbursement of the new $50 million Manufacturing Modernisation Fund to ensure local manufacturers are tooled up and ready to embrace a post-COVID economic bounce. State and local governments have also implemented various initiatives that assist businesses on a more regional and targeted basis, with a strong focus on infrastructure investment. There is a risk that new firms and new technologies will fail to emerge. This will have an impact in the medium to long term, as the pipeline of new firms diminishes and Australia’s global competitive position diminishes along with it. There is some evidence of this effect within the Australian Business Register data.