Governments across the globe are putting in place a variety of different measures in an attempt to halt the spread of COVID-19.
Inevitably, some of these measures have a significant impact on the economy but are necessary in order to slow the spread of the coronavirus. In addition to the effects social distancing and other preventative measures are having on the economy, the virus also has the potential to significantly affect the workforce, place an increased burden on health services and otherwise exacerbate economic upheaval.
Against this background, the government’s decision to defer the announcement of the 2020/21 Federal Budget until October 2020, is unsurprising.
Why has the budget been deferred?
The simple explanation is that, at this stage, it’s impossible to predict the impact COVID-19 will have on the economy, or how long the virus-related disruption is likely to last.
With this in mind, longer-term planning has to take second place to short-term measures which will bring the country through the worst of the pandemic with as little human, social and economic damage as possible.
The government has already announced a multi-billion dollar package of support for businesses adversely affected by COVID-19.
It is expected that there will be further announcements regarding appropriate economic responses as time goes on.
Unfortunately, at this stage, any Federal Budget would have to be so speculative and full of caveats that it would be unworkable.
The decision to postpone the budget is, therefore, a sensible one, but does leave businesses unclear what challenges and opportunities may be affecting them in the next year or so.
How best to deal with the current situation
Given the speed with which the economic situation can change as the virus unfolds, businesses need to develop both short- and medium-term strategies for weathering the storm.
Although many businesses will undoubtedly be adversely affected, paradoxically, the pandemic does present some organisations with the opportunity for growth.
It may be the case that temporary diversification, or a change in the method of service delivery (for example substituting premises-based retail trade for a postal or no-contact delivery service, or using technology to deliver training remotely), could enable businesses to continue for the next few months.
It is worth noting that the government’s recent announcement regarding “stimulus packages” for the economy could see many businesses recoup some of the losses the pandemic has prompted.
Accountants can help
Pherrus Financial Services is committed to providing the very best possible advice to clients during this difficult time.
We ensure that our team are constantly updated on the latest financial information and economic policies from government, equipping us with the knowledge necessary to give our clients the high-quality, professional input they need for informed decision-making.
If you have any concerns about your current financial position or would value information on possible options to reduce the tax burden, reschedule payments or otherwise shore up your business’s financial situation, we are here to help. For further assistance, please get in touch with us to arrange an appointment.