SYDNEY — The Australian Parliament has passed a 130 billion Australian dollar or $80 billion at current exchange wage subsidy package designed to assist businesses retain their workforces throughout the coronavirus crisis.
Called JobKeeper, the package, which was passed late Wednesday evening in a special one-day sitting of the currently suspended Federal Parliament in Canberra, will see 1,500 Australian dollars, or $927, per fortnight distributed to around 6 million workers over the next six months and is worth the equivalent of 70 percent of the median Australian wage.
The payment program, which applies to sole traders and full-time, part-time and longtime casual workers who have been with an employer for longer than 12 months as of March 1, is part of 213.7 billion Australian dollars, or $132 billion, in economic stimulus packages and other assistance measures that have been issued to date by the federal government in response to the crisis. Not counting an additional 50 billion Australian dollars, or $31 billion, thrown in by state governments and an emergency 90 billion Australian dollars, or $56 billion, funding facility opened by the Reserve Bank of Australia to encourage banks to extend credit to small and medium-sized businesses.
“This is the greatest economic crisis to afflict the world in many generations; we have responded with the biggest economic lifeline in Australia’s history,” prime minister Scott Morrison told Parliament during Wednesday’s sitting.
At the time of writing there were 6,109 confirmed cases of COVID-19 in Australia, and 51 deaths. Border closures, increased testing and strict social distancing measures would appear to have helped.
According to ratings agency S&P Global, which has put Australia’s AAA credit rating on negative watch, the economic impact of COVID-19, notably the response costs, will plunge the country into recession for the first time in almost 30 years. According to Roy Morgan Research, the crisis represents the biggest shock to the Australian economy since World War II.
A shutdown of all nonessential services from March 23 saw the closure of thousands of consumer-facing businesses and stores across the country and an additional 1.4 million people unemployed overnight.
Among the store closures are RM Williams, Cotton On Group, Mecca Brands, Rip Curl, Kathmandu, Zara, H&M, Uniqlo, Cue Clothing Company, the Myer department store chain and the Country Road Group, which is owned by Woolworths South Africa. The latter has left all 46 of its large format David Jones department stores open for the time being, while closing two smaller stores in Sydney and Brisbane — even though Louis Vuitton, Gucci, Prada and others have shuttered their concept boutiques within DJs’ major flagships.
Other relief measures made available to small to medium-sized businesses with a turnover of less than 50 million Australian dollars, or $31 million, include a 100,000 Australian dollar, or $61,807, tax-free cashflow boost and unsecured bank loans of 250,000 Australian dollars, or $154,517. Announced on April 7, the new COVID-19 Commercial Leasing Code of Conduct will see landlords obligated to reduce commercial rents in line with the drop of revenue experienced by tenants due to the crisis.
According to the Australian Retailers Association store closures have impacted approximately 40 percent of Australia’s 1.3 million retail workers.
“From a retail industry perspective, we are 1,000 percent supportive of the JobKeeper package” said ARA executive director Russell Zimmerman.
“There are a whole lot of packages that the federal and state governments are putting out there,” Zimmermann said. “You’ve got things like land taxes going to be returned back, payroll tax reductions. There are so many opportunities for people to look at how they can defer things or how they can get a holiday on things, so there’s plenty of things happening. I think there’s a willingness from both industry, employees, employers, landlords…everybody is trying to work through things together. The country has never seen anything like it, it’s so scary. The Spanish Flu, no one remembers.”
To get a better handle on the specific impact to the fashion sector, on Friday, in association with McKinsey & Co., the Australian Fashion Council launched an industry-wide COVID-19 impact survey, with an April 15 deadline for responses.
Results are due in a couple of weeks, but based on anecdotal feedback to date from its 500 members, the organization anticipates there could be as much as a 50 percent industry-wide decline in revenues for fiscal 2020, which finishes on June 30, AFC chief executive officer Leila Naja Hibri told WWD. Beyond zero clarity on when the shutdown will end, there is also the matter of “prolific” order cancellations, she said.
“Even at the time when the some of the stores were still open they were reporting anywhere between 60 to 80 percent decreases in sales,” said Naja Hibri. “In some instances, they will have had days where they had zero sales and then had some returns and came out with negative cashflow.”
To assist members through the crisis, the AFC has organized an educational webinar series and been an active participant in a retail roundtable that was launched four weeks ago by Perth retailer Richard Poulson, the cofounder of the Morrison fashion chain.
A kind of virtual COVID-19 fashion war council, Poulson’s roundtable has rallied together almost 100 fashion brands to discuss problems, survival strategies and ideas, meeting on a weekly basis by Zoom, with as many as 60 participants.
Participating brands include Ellery, We Are Kindred, Aje, Bassike, The Daily Edited, Camilla, Nobody Denim, Nique, Ginger & Smart, Matteau and R.M. Williams.
Previously on track to turn over 12 million Australian dollars, or $7.4 million, in fiscal 2020 revenues, Poulson estimates his own business will take a 30 percent hit in revenues for fiscal 2020. All 10 Morrison stores have closed, some 50 staff have been stood down and Poulson has also had wholesale orders canceled.
Poulson estimates that among the brands he is talking to, at least 2.7 million Australian dollars, or $1.7 million, in Australian-based wholesale orders have been canceled, not counting international orders.
Among the ideas borne out of the Zoom meet-ups is a campaign called #WeWearAustralian, which will run from April 9 to 30 via the pop-up web site wewearaustralian.com, which aims to help Australian brands shift current season inventory.
Poulson is also in discussions with Alibaba’s Tmall for a pop-up e-commerce store for Australian collections.
“It’s about dragging everyone through” said Poulson, who welcomed the government’s JobKeeper program as a means of “really opening up the opportunity to bring back some of our people and to ensure longevity of their employment.”
He added, “I think that this is really a time to all pull together, evaluate the situation together and really just try to innovate and find news ways to do business, new channels and new opportunities through open discussion.”
Among the brands joining the #WeWearAustralian campaign is Sydney-based personalized accessories brand The Daily Edited, whose cofounder and creative director Alyce Tran has temporarily closed her 12 stores in Australia and New York and stood down 80 retail team members.
Tran said she is expecting a 30 to 40 percent decrease year-on-year on sales for 2020, which she had previously projected to be 28 million Australian dollars, or $17 million.
Although JobKeeper doesn’t help with her underlying cashflow problem and many issues, including rents, are still in a state of flux, said Tran, she is feeling hopeful — “so far.”
“It [JobKeeper] is great for our individual team members and I’m very excited that we can pass something on to them,” Tran said. “I’m upbeat, compared to other people. I just think people will always want things and everyone in the industry will be there to serve them and sell the appropriate products.”
She added, “Look, something happens and you kind of just have to keep going and see if you can get through it all and get to the other side.”