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CreditorWatch calls for early end to JobKeeper as economy rebounds

One of Australia’s leading credit bureaus says the Federal Government should begin tapering support measures such as JobKeeper.

The agency is calling for greater means testing for businesses to access Government support, with recent payments data highlighting business conditions are normalising.

CreditorWatch’s latest business risk review found the average number of days it takes a business to pay bills has dropped to 33 days, a 14-day reduction compared to the blowout in June because of the pandemic.

CreditorWatch chief executive Patrick Coghlan said the positive outlook regarding the economic recovery should prompt the Federal Government to implement further criteria in being able to access financial assistance measures.

“The recovery in payments data is a clear indication that the economy is on the way back, supported by better-than-expected gross domestic product numbers for the September quarter, with economic growth sitting at 3.3 per cent,” he said.

“As a result, there’s potential for the Federal Government to consider introducing further means tests for economic stimulus programs such as JobKeeper, to reduce pressure on the public purse and allow economic conditions to normalise.”

The Morrison Government implemented sweeping stimulus measures at the beginning of the pandemic to support businesses through the COVID-19 financial tsunami.

Measures included wage subsidies such as JobKeeper, government-backed loans and a moratorium on insolvency laws.

CreditorWatch claims more than 3000 businesses have avoided going into external administration because of the suspension of the country’s insolvency laws.

“We believe the temporary moratorium on trading while insolvent should end on 31 December as planned,” Mr Coghlan said.

“Extending this provision risks causing damage to the economy as solvent firms could be extending credit to insolvent firms, potentially creating a domino effect down the track if insolvent firms are allowed to continue to operate.”

According to CreditorWatch, agriculture, education, accommodation and hospitality businesses performed the best in terms of reducing payment times for bills.

Mining, health care, arts and recreation were among the worst performers.

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