Waiting for the ‘snap back’: Will Omicron business relief be enough?

Kean attributed the lower level of payroll support to the lack of federal involvement.

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“What I’d like to see is the Commonwealth, instead of stepping aside, stepping in to support those small businesses so that we can pay 40 per cent of payroll,” he said.

Mr Frydenberg responded to the criticisms on Monday saying the Commonwealth “can’t fund every program that the state government comes up with”. He also pointed out the federal government has spent $63 billion on pandemic support measures for NSW and some federal measures are in place to support households and businesses.

The payroll support for small firms, estimated to cost about $700 million, is by far the biggest component of the NSW government’s $1 billion Omicron package.

The remaining $300 million will go to three smaller schemes. A small business rebate to offset the cost of fees and charges will be lifted from $2000 to $3000 (eligible firms will also be able to use the rebate to cover half the cost of rapid antigen tests from March). Grants for commercial landlords giving rent relief to small firms will be extended until mid-March. And the hard-hit performing arts sector will be targeted with an $85 million program to underwrite ticket sales for events affected.

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There was a further boost on Monday when the NSW government said all primary school students would get a $500 voucher for out-of-school hours care. As well as assisting parents, this scheme will target a badly affected segment of the state’s childcare industry.

While the latest business support package is more modest than predecessors, it is still likely to keep vulnerable firms afloat. The overall number of businesses insolvencies has fallen markedly since the onset of the pandemic thanks to massive handouts from federal and state governments (and loan repayment deferrals by banks).

The latest support measures for NSW firms are more time-bound than previous pandemic-related schemes. The payroll assistance will only be available in February, although the door has been left open to extend the program should the “self-imposed” lockdown caused by the Omicron wave linger.

This short time-frame suggests the government is anticipating Omicron’s economic disruption will begin to ease over the next six-to-eight weeks.

“We know household balance sheets are strong at the moment,” Kean said on Sunday. “When we get out of this wave we expect a snap back.”

The economic toll being now is also less severe than last year’s disruptions.

Kean estimates the cost of the Omicron outbreak “has been about 60 per cent” of the cost of the Delta outbreak.

Even so, the additional spending made necessary by Omicron loads more pressure on the state budget – this year’s deficit was forecast to blowout to nearly $20 billion even before the latest outbreak.

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