Economist says business stimulus needed as JobKeeper end looms
An economist believes small businesses will still require ongoing monetary support despite Reserve Bank governor Philip Lowe showing his support for the federal government’s winding up of the JobKeeper scheme.
Earlier in the week, RBA governor Philip Lowe said he backed the government’s intention to end JobKeeper at the end of March.
“Given the recovery of the economy, I can understand why the government wants to stop that program,” Mr Lowe said at an address at the National Press Club on Wednesday.
“Am I disappointed the government’s stopping the JobKeeper program? No.
“The government made it very clear this was a temporary program. It’s been an incredibly important program. It has saved many people with jobs and helped people in their lives.”
The RBA also released the latest statement on monetary policy that gave a more upbeat look on the economy than the statement back in November 2020.
The statement noted that employment has recovered faster than previously expected and has supported growth in household spending.
But according to CreditorWatch chief economist Harley Dale, ongoing fiscal and monetary support will be required as the next stages of Australia’s economic recovery will be bumpy and uneven.
As a result, he said tracking how businesses fare across different industries will be crucial.
“The JobKeeper program has provided indelible support to Australian businesses but draws to a close at the end of March,” Mr Dale said.
“At present, it is uncertain how the business community will perform into the June 2021 quarter, when the time frame will also have ended for businesses to appoint a small business restructuring practitioner to avoid falling into administration.
“I expect to see a considerable increase in the number of companies going into administration and taking court action, in what the RBA notes again today will be an uncertain economic environment.”