Business and Finance, Free Access Articles , ,

DEALERS say they are fearing that sacking staff may be the only way to ride out the ongoing effects of COVID-19 because changes to JobKeeper eligibility may rule out wage support for many dealerships.

The Victorian Automobile Chamber of Commerce (VACC) said that the Victorian Dealers Association (VADA) recently held a specially-convened meeting where many of its members said they would be forced into a situation of reducing staff levels at their dealerships if the eligibility criteria is not amended to reflect the current JobKeeper or similar.

Melbourne dealer Nick Strauss of Berwick Motor Group said in a newspaper report that he will have to sack a quarter of his staff after September 27 if he remains ineligible for JobKeeper 2.0.

He said he kept his 140 employees in the first phase of JobKeeper but the stricter eligibility of JobKeeper 2.0, effective from September 28, will make it harder and he described the outlook as “Armageddon”.

JobKeeper 2.0 requires businesses to show turnover has fallen 30 per cent or more in both the June and September quarters, compared with the same period in 2019.

VACC CEO Geoff Gwilym said that, by using the previous three months of income, it includes June which – because of the asset tax write-off, access to super funds, demand for personal transport and other factors – has been one of the busiest months on record.

“This distorts the actual downturn in the economy,” Mr Gwilym said.

“With the instant asset write off, people accessing their superannuation, and the cases where people are being paid more on JobKeeper than they were previously, then add in the fear of getting on public transport, it encouraged a lot of people to go and buy a car.

“Ordinarily, we would be over the moon. But it produces the anomaly of one month in a 12 month period that effectively knocks employers and employees out of the JobKeeper payments.

“We want the flexibility of the industry to use the previous six months so it smooths out any lumps over that period of time.

“Though we love JobKeeper and asset write offs, they are government interventions that have distorted the normal buying behaviour.”

Mr Gwilym said dealerships could now be penalised and that even the roll-over sales and delivery into July could make them ineligible for the next quarter.

“We can’t allow the government to penalise the industry by removing JobKeeper because we are told that large dealerships will just let staff go,” he said.

“In March and April when we saw a decrease in staffing with 28 per cent let go or stood down. In June it looked good again but then we had a second lockdown.

“In Victoria particularly, it is getting way more COVID-19 rates than the rest of the country.

“The federal government believes it can’t change JobKeeper to suit state anomalies. We are saying that the only person we can appeal to is the commissioner of taxation.

“We may have to go case by case, dealership by dealership, to the commissioner to ask for modifications or exemptions.”

Mr Gwilym said the VACC had many dealerships come to them with this problem and said the issue was industry-wide but is more profound in Victoria. It also affects motorcycle dealers and extends to other industries, especially hospitality and catering.

“We are very worried about the August-September period because we can see there are businesses that will not be able to meet JobKeeper 2.0,” he said.

“It’s fantastic that JobKeeper is continuing but the criteria has to be modified.

“We contacted around 60 dealerships and they are very concerned about losing staff. It was obvious that they are looking at sacking people to maintain their business activity.

“We are now collecting data through a survey from members so we can encapsulate the position to the government.”

By Neil Dowling

KPMG
Gumtree
Schmick