This week's political news
Treasurer unveils major insolvency reforms
With thousands of businesses in distress during the coronavirus restrictions, the Federal Government has moved to reform the insolvency process to enable more small companies to stay in operation. Federal Treasurer Josh Frydenberg announced a new debt restructuring process for incorporated businesses with liabilities of less than $1 million, drawing on features of the Chapter 11 bankruptcy model in the US. The proposed model would allow eligible small businesses to restructure their existing debts while remaining in control of their business. The Treasurer said the reforms would cover around 76 per cent of businesses subject to insolvencies today, 98 per cent of whom had less than 20 employees.
Extension of temporary disclosure provisions
Treasurer Frydenberg has also extended for a further six months the temporary continuous disclosure provisions that apply to companies and their officers. With the impact of Covid-19, the Government said that it remained challenging for companies to release reliable forward-looking guidance to the market. Companies and officers would remain liable under the Corporations Act where there had been “knowledge, recklessness or negligence” with respect to price-sensitive information to the market.
Emerging technologies to drive energy reforms
Federal Energy Minister Angus Taylor has announced a series of energy technology reforms, to strengthen the Morrison Government’s push to reduce energy emissions and lower the costs of energy production. Mr Taylor said the Government would invest $1.9 billion in a new energy technology package, with a focus on establishing Australia’s first regional hydrogen export hubs and a future fuels fund to support new and emerging technologies. It also plans legislative reforms to ensure that the key agencies, the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation, focused on accelerating the priority technologies. Mr Taylor said getting the technologies right would help Australia avoid up to 250 million tonnes of emissions by 2040.
Income tax exemption for business grants
Prime Minister Scott Morrison said the Federal and Victorian governments had agreed to ensure that grants to small and medium-sized businesses paid under the state’s Covid-19 support package would be exempt from income tax. A statement from National Cabinet said the Federal Government would extend this arrangement to all states and territories on an application basis. Eligibility would be restricted to future grants program announcements for small and medium businesses facing similar circumstances to Victorian businesses. Any tax exemption would be time-limited for grants paid until 30 June 2021.
Household income rose in recession, says RBA
Australia has witnessed the rare occurrence of household income rising as the economy contracted, according to the Reserve Bank of Australia. RBA Deputy Governor Guy Debelle said in a speech that while gross domestic product slumped seven per cent in the June quarter, household income was boosted by support from the Federal Government’s JobKeeper and Job Seeker programs, as well as early withdrawals from superannuation funds. Normally in recessions, household income falls along with the decline in output and employment. The RBA also noted that Western Australia had experienced the strongest recovery, with some skill areas finding it difficult to find labour, especially with border closures. But Victoria’s continued lockdown would subtract around two per cent from national GDP in the September quarter. Meanwhile, the Australian Bureau of Statistics has reported that the number of payroll jobs in Australia fell 4.5 per cent from mid-March to early September, with falls ranging from 8.3 per cent for Victoria to just 0.9 per cent for Western Australia.
New restrictions hammer retail trade
National retail turnover fell 4.2 per cent in August as restrictions on movement and interstate travel were imposed in response to Victoria’s second wave of Covid-19, the Australian Bureau of Statistics has estimated. The ABS said that in seasonally-adjusted terms, retail turnover in Victoria fell 12.6 per cent on the previous month, while falling 1.5 per cent in the rest of Australia. Household goods retailing suffered the biggest falls, while NSW saw a large fall in turnover for cafes, restaurants and takeaway food services.