Businesses are also enjoying deferrals on almost 300,000 loans while a range of state government fees, charges and payroll tax have been paused or waived.
Once this support ends, many businesses are expected to discover they cannot continue or will have to shed staff to remain viable.
The government is looking at measures to help troubled firms close in a way that leaves operators in a position to start new businesses, setting up the economy in 2021 and beyond. It is also considering assistance for firms that are not bankrupt but still facing a tough future to restructure or rewrite their business plans.
Tax assistance for businesses planning to invest in new plant or equipment will also feature in the package.
Council of Small Business of Australia chief executive Peter Strong said the sector needed a range of initiatives that recognised the economic reality facing many firms but gave hope and assistance to those that had a future.
“We need a way to help those small businesses that are going to close to do so properly so people can restart their lives and get into another business,” he said. “There is going to be a lot of tough times but we can also help small firms get through and even expand after this.”
While insolvency actions have fallen, data compiled by one of the nation’s biggest credit reporting firms, CreditorWatch, shows a spike in the number of days businesses are behind in paying their bills. In June last year, businesses on average were 11 days behind on bill payments. This year, that has grown to 49 days.
Some industries, such as mining, are showing little to no growth. But the time has blown out to an average 53 days from 15 last year in construction, and soared to 90 days from 12 in the transport, postal and warehousing sector.
Treasurer Josh Frydenberg said the government had already delivered a large amount of support, either directly or through regulatory reforms such as the changes to insolvency laws, which had provided a “shield” at a time of financial stress.
“As we move into the recovery phase, the government will continue to help businesses and households get back on their feet,” he said.
“The government will continue to evaluate these and any other regulatory measures needed to support businesses and individuals successfully adapt to the new COVID-safe economy.”
Australian tax leader for Chartered Accountants Australia New Zealand (CAANZ), Michael Croker, said creditors including the Australian Tax Office were preparing for a surge in insolvencies in the second half of the year.
He said debt levels, including tax debts, were rapidly rising.
“To help businesses unlikely to survive, CAANZ is hoping for some announcements on streamlined processes to enable them to exit in an orderly fashion with dignity and opportunities to start again,” he said.
A spokesperson for the Tax Office said the organisation was aware of the financial pressures facing many firms.
“Whilst some businesses will be able to stay on track, we understand that others may encounter continued or new difficulties later in the year,” they said.
“We will continue to work with those businesses to offer help and assistance tailored to their circumstances.”
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.