If we were to be honest about it, most of us welcomed 2021 hoping that it was going to be different to 2020. Many businesses, particularly those in Victoria, who had limped into the last quarter but were rightly enthusiastic about a surprise return to strong trading conditions. Most businesses were stocking up and holiday communities were preparing for a flood of tourists keen to get out and about locally, as a result of having their wings clipped by international travel restrictions.

Yet as we watched Sydney’s NYE Fireworks on TV, Australia’s most populous city was carefully managing a COVID outbreak and State/Territory Governments had created mass confusion about constantly changing border restrictions. In addition, the Nation’s health professionals and virus experts were warning about the arrival of a more infectious variant of COVID19 in Australia.

Globally, the year opened with many developed economies grappling with major ‘second wave’ and ‘third wave’ outbreaks. Just four days into the New Year, the British Government announced a new lockdown in England and Scotland – a harsh lockdown that is not expected to ease before the end of February 2021. The USA reported an unprecedented daily death toll of over 4,000 people in the first week of 2021 – a daily toll that was 30% higher than the number of people killed in the 9/11 terrorist attacks that outraged the world.

Meanwhile, global health authorities started questioning the effectiveness of the new COVID19 vaccines in the face of new virus variants and public criticism was emerging about slower than expected roll-out of vaccines in many countries.

Welcome to the year 2021 – the Year of the Mask.

But before you all pull down the shutters on your businesses and find a cave to wait out the next 12 months, it is worth remembering that all of us in Australia are in a very different position now when compared with the same time last year.

“While it is true that we were grappling with major challenges (i.e. bushfires, floods and drought) this time last year, we have all benefited by the 2020 experience of living with uncertainty – not the normal uncertainty that comes with the ‘ebb and flow’ of economic markets, but the unprecedented uncertainty that comes with navigating a course through a global pandemic”, said ACAPMA CEO Mark McKenzie.

“As we journey into 2021, I believe that there are five important factors that will define the business and economic environment in Australia during 2021 – and it is not all bad”, added Mark.

  1. COVID19 will continue to cause economic and social disruption in much of 2021.

First, wea are all going to have to learn to live with COVID for at least the next 12 months. While the vaccine is on its way, the five stages of the Australian Government’s recently approved national vaccine roll-out strategy (see Australia’s Epidemiology and COVID-19 Vaccine Roadmap (health.gov.au) suggests that the Australian community is unlikely to have the required level of immunity against COVID 19 before the end of 2021.

That means that the COVIDSafe business practices are here to stay for the foreseeable future. Staff will need to wear masks consistently. All equipment, especially customer facing equipment, will need to be sanitised regularly. Social distancing markers will need to stay in place and customer registration will need to continue for business that provide in-store dining facilities.

“Given the recent experience of businesses in other customer-facing industries in recent months, it is clearly better to take precautions against infection now as opposed to dealing with the substantial costs of business closure, workplace sanitisation and business recovery after a workplace infection has been identified”, said Mark.

  • Border confusion and inconsistency of restrictions will remain.

One of the major business and industry complaints of late has rightly been the devastating effect of constantly changing border restrictions – many of which appear to have been advanced opportunistically and without appropriate consideration of the adverse impacts on cross border communities and road freight movement.

Border restrictions have also dramatically reduced cross border road travel – particularly domestic tourist travel – which has seriously impacted revenues for businesses operating in regional tourist areas and cross-border regions.

The reality, however, is that this issue is unlikely to be resolved anytime soon given that nature of Australia’s Federation Model. Accordingly, we are all going to have to learn how to do business with continued stop/start Border restrictions in 2021.

ACAPMA is currently working with other industry bodies and the Council of Small Business Organisations of Australia (COSBOA) to encourage all Australian Governments to adopt consistent thresholds for the implementation of border restrictions and the standardisation of cross-border permits for worker movement.

“If we can encourage Australian State and Territory Governments to implement standard practices for Border closures, then we can at least seek to minimise the adverse impact of stop/start border restrictions on business and industry in the future”, said Mark.

  • Further national lockdowns are unlikely but more localised lockdowns will occur.

Barring a large-scale outbreak, such as now occurring in the USA and Great Britain, Australia is not likely to experience another nation-wide lockdown in 2021. Rather, Australian governments are expected to seek to manage COVID outbreaks by imposing ‘short & sharp’ community lockdowns in discrete geographic areas to provide government contact tracers to locate and isolate the primary source of the contagion.

We have already seen examples of this type of response with localised lockdowns imposed in Adelaide for six days (November 2020), Sydney’s Northern Beaches for 3 weeks (December 2020 to January 2021) and three days in Greater Brisbane (January 2021).

Different to lengthy and large-scale lockdowns, these types of lockdowns impose severe restrictions on businesses over a short period of time. A major disadvantage of this approach, however, is the fact that they will occur without warning to business and can result in businesses suffering disproportionate financial impacts due to perishable stock being spoiled.

The challenge, therefore, is for businesses to prepare for the possibility of these types of lockdowns. Typically, this means rethinking past traditional approaches to practices for the management of perishable stock and stock delivery, as well as strengthening cash flow reserves as far as practicable – with a view to ensuring that the business can survive the cash-flow consequences of a 14 lockdown being introduced at short notice.

“For its part, ACAPMA is currently lobbying State and Territory Governments for the introduction of emergency cashflow assistance measures for businesses that are directly impacted by localised lockdowns in the future – and this will continue to be a strong focus of our advocacy efforts in coming months”, said Mark.

  • Government assistance will reduce but national savings are stronger than ever.

Despite industry calls to the contrary, Australian Governments are unlikely (and indeed unable) to sustain the levels of financial assistance for businesses that were provided during 2020. It is highly unlikely, for example, that the current national Job Keeper Programme will be extended beyond 31 March 2021.

In addition, many of the business assistance programmes introduced during 2020 terminated on 1 January 2021. These included the Federal Government’s Bankruptcy and Insolvency provisions and the various Commercial Tenancy protections introduced by State and Territory Governments, to provide rent relief to small businesses.

Despite the withdrawal of these programmes, the 2021 trading outlook is better than 2020. Australian businesses and households, for example, have entered 2021 with record savings and cash reserves – due largely to the COVID19 support measures introduced by the Morrison Government during 2020. The Federal Treasurer, the Hon. Josh Frydenberg, has recently reported that Australia has amassed $200Bn in its’ ‘COVID19 war chest’ with household saving deposits jumping by a massive 11% in 2020 and business deposits growing by a whopping 17%.

“The combination of reduced government assistance and increased private sector savings (i.e. households and business) means that their business and industry will be increasingly expected to fund its own survival against the destructive financial impacts of lockdowns and border restrictions in 2021,” said Mark.

At its most basic level, this means that business owners should be talking to their financial services provider now about what options could be put in place to provide access to emergency cashflow if required at short notice in the future.

“Business owners should also speak to their insurers – including ACAPMA Insurance – about their current business insurance policies provides case assistance in the event of community lockdowns – or whether it is possible to source such cover now”, said Mark.

  • If in doubt, call out for help.

One of the most pleasing aspects of 2020 was the level of co-operation that was developed between all Australian Governments and Industry bodies such as ACAPMA, to protect the health of the Australian community will also seeking to minimise the adverse financial impact on Australian business and industry. These efforts also saw collaboration between different industry bodies, often under the umbrella of peak business groups such as the Council of Small Business Organisations of Australia (COSBOA), to resolve issues of concern with government.

This unprecedented level of access and input to government decision makers meant that ACAPMA was able to secure timely information from Australian Governments soon after new lockdowns and restrictions were announced – and then immediately relay this information to members and the wider industry via the Association’s COVID 19 updates.

That said, there were often occasions where ACAPMA made urgent representations to remedy industry issues that had been inadvertently overlooked by government or address problems being experienced by individual members in securing urgent assistance from the banking industry.

One of the most significant examples of this co-operation involved the submission of a letter jointly signed by ACAPMA’s CEO and the Secretary of the Transport Workers Union (TWU) to all State and Territory Leaders seeking immediate resolution of issues relating to the operation of roadhouse dining facilities for the nation’s heavy vehicle drivers. The joint signing of this letter – by two traditional foes in the Industrial relations space – provides a strong signal about the level of the unprecedented level of stakeholder collaboration that now exists to ensure that the valid concerns of business and industry are resolved quickly and effectively.

“On a final note, and as we all enter a year of unprecedented business uncertainty, all businesses can be assured that your industry association is strong position – perhaps better than at any other time in our 42-year history – to help you survive and thrive in 2021”, said Mark.

“All you need do is ask for help when needed”, concluded Mark.