Keep Our Venues Alive

Keep Our Venues AliveKeep Our Venues Alive

The hospitality community has come together to fight the good fight.

Venue owners employees suppliers and producers are working with industry bodies hospitality heavyweights and media partners to seek relief for people in Australian hospitality.

We're a team of people from across the hospitality industry who have come together to work on this national campaign - Keep Our Venues Alive - which was first launched by the Night Time Industry Association and is gaining wider industry support every day.

KOVA seeks to:

(a) mitigate the human impact on the hospitality sector (including venues and their supply chains) across:

- all employees whether full part-time or casual whether resident or foreign; and

- self employed business owners

(b) help businesses in the sector trade to the best of their ability for so long as physical distancing measures prevail; and

(c) otherwise protect the sector so that it can ramp up quickly after the crisis and as part of Australia's economic recovery



The Night Time Industries Association in the context of the Keep Our Venues Alive campaign believes that the current governmental support available is not enough to save a majority of small and medium businesses in the hospitality sector.

In relation to the Federal Government's JobKeeper programme in particular we believe a majority of these venues are going to slip through the cracks and that there will be sector-wide administration and insolvency unless urgent cash flow support is provided.

We are asking for back state-based government rapid cash flow loans with support from the Federal Government (using Queensland as an example the other states can follow) to ensure the broadest possible uptake of JobKeeper.

We welcome the pressure the Government has put on banks in recent days to speed up cash flow financing and applaud the banks for setting up dedicated hotlines to expedite applications and get cash to businesses as soon as possible.

We urge SMEs in the hospitality sector to call their banks and to do everything they can to make use of this financing. Nevertheless we are calling on state governments to provide cash flow loans of their own as many small businesses will not be successful in their loan applications to commercial banks.

The loss we are about to experience is due to a problem in execution not intention and is avoidable with broad and coordinated support for government cash flow loans like those seen in Queensland.

Access to Cash

Cash-strapped hospitality SMEs are struggling to access the government-backed bank finance. Bank financing has been repeatedly touted by the Prime Minister and Treasurer as the avenue of best approach for businesses struggling with JobKeeper payments due to cashflow issues. Anecdotal evidence collected by the NTIA from business owners suggests that the application processes are slow and administratively burdensome adding stress and work without any guarantee of a favourable outcome. Some banks are simply denying SMEs access to cash given that many hospitality enterprises have little access to collateral and were already struggling after a horror bushfire season making them high-risk applicants from the banks' point of view. Many cash-strapped businesses are also unwilling to take on more debt that will eventually have to be paid back regardless of the unpredictable future trading conditions.

Treasurer Josh Frydenberg announced on 23rd April that Australia's four major banks have now agreed to provide "bridging finance" to help businesses pay their employees before receiving the JobKeeper payment in arrears each month. He announced the major banks would set up hotlines for businesses to call to have their loan applications expedited. "Go to your bank ring their hotline ask for that support and the support will be forthcoming" Mr Frydenberg said.

While the Government has put pressure on banks to process applications faster and help customers in need this may be too little too late. Sydney-based hospitality financial services firm Cafe Bookkeepers agrees."They're cutting it way too fine to get money in People's pockets for April. Businesses are supposed to apply get the loan approved get the funds and then process the wages in four business days before the April 30th cutoff? It's highly unlikely. Even if some do manage to squeeze through most will not."

Other funding is also difficult to come by. We are aware that one non-bank financial institution has specifically excluded hospitality as a sector for loan applications. Other sources of Government support such as grants waivers and tax refunds across are taking too long require too many resources (many SMEs don't have access to in-house financial knowhow) and would only yield amounts that are ultimately insufficient to materially address current cash flow pressures. A $5000 grant or tax break isn't going to address the immediate shortfall for a $100000 wage bill.

The immediate consequence of this inability to access government-backed bank finance would be a failure of JobKeeper relief in regards to the hospitality sector.

Willing But Unable

The NTIA's own survey data shows that businesses who were initially keen on enrolling for the JobKeeper scheme have not done so because of the cash-flow implications of funding wages upfront. Only 14% of respondents believe they have enough cash to reinstate or keep employees until the Government's JobKeeper payments are received from the first week of May. Almost 70% of those respondents said the JobKeeper scheme encourages them to reinstate employees and/or keep their staff employed; they just don't have the funds to achieve this.

According to an article in The Age on 23rd April "900000 firms expressed interest in JobKeeper after it was announced. So far 275000 have submitted formal applications of which half are sole traders." Therefore only 137500 companies who employ more than one person have applied.

The Consequences for Hospitality

Evidence gathered by The Guardian from ASX announcements media releases and media reports shows that the hospitality sector has been the worst hit by the current economic crisis. The Australian Bureau of Statistics has reported that the accommodation and food services industry has seen the largest reduction in jobs (decreasing by 25.6% or 272816 employees) followed by the arts and recreation services industry (down by 22000). A further 120584 employees have been stood down.

The Jobkeeper scheme is not saving hospitality jobs as intended particularly in SMEs. A significant portion of the $130 billion package dedicated to the hospitality sector will be left untouched as many of these businesses will not apply for the scheme.

The NTIA and KOVA Response

Over the past fortnight the NTIA has intensified its lobbying at the NSW state level. We encouraged the NSW Opposition to call on the NSW Government to extend Government rapid cashflow loans replicating the state government response rolled out in Queensland. We then submitted an original report directly to NSW Government evidencing the failure of the Federal Government's loan guarantee scheme as described above and imploring NSW Government to provide hospitality SMEs with immediate access to enough cash to sustain them over the next 3-6 months. Our report has been shared with the NSW Premier's and Treasurer's offices and has growing bi-partisan support.

NITA/KOVA has also encouraged hospitality businesses to call the bank hotlines and attempt to secure financing through these mechanisms but not all hospitality SMEs are able and not all banks are willing leaving a significant but avoidable gap. If the banks will not lend the Government must lend. And quickly. We have formally called on the NSW state Governments to do this and we implore other states to do the same. Submissions from NTIA/KOVA to other state governments are forthcoming as we continue to collect evidence from hospitality SMEs around the country. The Federal Government can and should support this idea.

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