10 Apr 2020
Covil-19 illustration Tabitha Walker

Rolling Updates From Australia and New Zealand

By EY Oceania

Multidisciplinary professional services organization

10 Apr 2020
Related topics COVID-19

9 April 2020 - 5:30pm

Webinar - JobKeeper: Everything you need to know

The Federal Government's JobKeeper package passed in to law this week. We have fielded many questions from clients and interacted with Treasury and the ATO consistently since it was first announced on 30 March.

In our JobKeeper webcast, hosted this morning we attempted to deal with a number of those questions, bringing together our:

  • Oceania Government and Health Services Tax Markets Leader, and Mining & Metals Leader Scott Grimley
  • Oceania Consumer Tax Markets Leader Peter Janetzki 
  • Tax controversy Partner Fiona Moore
  • Tax Partner Paul Lombardo
  • People Advisory Services Partner Tanya Ross Jones

Nearly 4000 people registered and given the demand, level of detail the session contained, and Q&A at the end, rather than providing a written synopsis we recommend accessing the webinar in full, on demand, here

You can read our initial response to the wage subsidy policy, Turning Job Seekers into Job Keepers, here, and the EY Global COVID-19 Stimulus Tracker is a useful tool collating the latest government subsidies and new legislative provisions from around the world. 

9 April 2020 - 6:30am

Commecial Real Estate rent negotiations code of conduct 

The new Mandatory Code of Conduct introduced by the Federal Government this week is intended to help level the playing field between landlords and tenants during rent renegotiations. As retail and commecial office tenants see rapid declines in turnover as a result of isolation measures against the coronavirus landlords are being asked to, amongst other things, reduce rent proportional to the trading loss in the tenant’s business and reduction must be in the form of rent waivers for at least half of the required amount.

Real Estate Advisory Partner Marco Maldonado says there are a few issues at play:

  • The intention of  Government to keep a level playing field and get a code agreed quicky, versus the lack of details about how parts of it should be interpreted, which is likley to cause angst for all parties; 
  • How landlords will need to consider the impact of implementating the Code on their own asset in the post-COVID re-emergence period, and the increased counter party risk in repaying the deferrals; and 
  • How our habits will change both in shopping behaviour affecting retail stores and centre landords, as well as new working habits affecting everything from how office tenants use their space to demand for city car parking. 

"More needs to be considered around the flow on effects of things like the proportionality rules," Maldonado says. The proportionality rules require landlords to reduce rent by a percentage equal to the fall in the tenant’s revenue as a result of the lockdowns. That means if a tenant has lost 30 per cent of its business, then rent should be dropped by 30 per cent.

“Does the drop in turnover rule apply across the whole of the tenant’s business, or just to that asset? And is the landlord required to pass on the drop in rent to every location? What about online sales? Is it fair for landlords to only consider sales attributed to the physical presence? or will they be able to offset the online sales,” Maldonado says. “Also, if a tenant’s revenue drops, there are other components of input costs that also drop, such as staffing and product. These saving are not being considered."

The challenge for landlords is juggling:

  • the need to help tenants stem the immediate bleeding resulting from loss of trading; 
  • digesting and accessing the aray of Government stimulus being made available; 
  • and deciding on a medium term strategy based to execute in an environment of which no-one really knows how it looks. 

“[Retail landlords will] have to work out what their definition of a shopping centre will be and its ongoing role in the community,” Maldonado says, pointing to a growing expectation that once people are allowed out of isolation, there will be a clamour for experiences and re-socialisation. “How will their centres look with the businesses that will re-emerge and will they be the same business coming out of this period as going in?"

Read the full story here

8 April 2020 - 6:30am

What I learned: "It's never about the taps"

Working as a psychologist in the prison system, and in the Army can teach you a thing or two about how humans cope with crisis and respond to high stress situations, especially ones they cant control. As part of our profile series, What I learned, we talk to EY Oceania Markets Leader Jenelle McMaster about why her early career is as relevant now as ever. Read the full profile here.

"There was an inmate at Parramatta who had been a long-term inmate and was really respected and liked by officers and inmates.  He was top of the chain, would sweep the floor of all the offices, that sort of stuff - a really steady pair of hands, and a bit of a “go to” for everybody.

When we were in the process of changing jails, he completely flipped out. It was so uncharacteristic of him. I sat down and said, what’s going on for you? He said, ‘I just don’t want to go, I won’t go’.  I didn’t understand why, I thought it was all upside for him, I couldn’t see anything negative. It was down the road, brand new, great facilities, bigger cells.

He couldn’t articulate the problem, but he was extremely agitated and upset. So I asked him to give me one example of what was freaking him out, and he said: “it’s the taps”. In the old jail he had taps where you turn the handle, and the new facility had taps where you lift the lever. I looked at him as if he was insane. But it was at that point I realised it’s not about the taps.

Stress will play out in something like – in this case, the taps because it’s the only thing you can grip on to as an example, but it’s representative of something very different.

What he was freaking out about but didn’t have the words for, was a loss of familiarity, routine and control.  A loss of the “world” as he knew it. He knew his place in the current jail, he knew the system, he relished the power of being the go-to point and now he was the same as everybody else, just figuring out this new space, not knowing the answers."

7 April 2020 - 6:30am

DIY Spare Parts? Is onshoring the answer to broken supply chains?

Toilet rolls. Bleach. Now, it's flour and packet mix cakes being stripped off supermarket shelves. Thanks to COVID, we're all getting a look at supply chain disruption up close and personal.

For many of our clients, though, supply chain disruption is part and parcel of daily business. From protests interrupting copper supply to large events like earthquakes halting car production, the linkages that deliver our goods require constant management. But the unthinkable geographic scale and pace of the COVID-19 crisis is starting to threaten the capacity and viability of many organisations. And questions are being asked about reimagining local production to improve supply chain resilience.

Nev Power, the handpicked leader of the head of the National COVID-19 Coordination Commission, sees a silver lining in the crisis. He told the AFR that disrupted supply chains represented an opportunity for rekindling Australian manufacturing.

As EY Oceania Partner and supply chain expert, Nathan Roost outlines here, he expects there will be a trend in many countries to bring back more local production. But it needs to be done intelligently and with an eye to future capabilities.

No-one knows for sure whether supply chains will simply weather the shock and return to normal or whether advances in localising production will happen in time for companies to see them as a feasible alternative. If onshoring and near-shoring is to be a long-term solution, the availability of and capabilities in technology such as advanced manufacturing and robotics, will be crucial.

In the interim, Roost says organisations are looking at whether 3D metal printers might work to print critical parts as a short-term solution. Manufacturing at a scale any larger than that, however, will have a much different ROI.

“As a small and relatively expensive market globally, we will need to think carefully about what we bring back,” says Roost, “There might be nation-critical parts in defence, some chemicals or critical spares for power and utility companies that we start to manufacture ourselves.”

“I think there will be a structural change in the next few years to develop local production capability,” he says. “But it will take time and investment and effort to develop supply chains, manufacturing and distribution centres closer to home.” 

6 April 2020 - 6:30am

Managing your people: What happens when the adrenaline stops?

Some of our most popular posts have been about how to manage workforces, from the personal and economic perspective. Clients are commonly asking:

  • what happens in the event there is a rapid recovery and they've stood people down, and whether standing someone down is the same as temination; 
  • whether it's worth applying for JobKeeper if you're not sure you're eligible, and what's going on with superannuation; 
  • key markers and considerations for workforce performance and behaviour in a Work From Home situation; and 
  • questions around how best to manage the leadership teams managing the crisis response. 

To that end, we've brought workforce specialists Sonia Sharp and Kate Hillman (who is on EY Oceania's own crisis response team), employment tax specialist Kylie Rusten, and EY Oceania Chief Economist Jo Masters together for a webcast today (registration link here), to work through some of those issues. 

Our People Advisory Service team has also released a Practical Guide to protecting your people operations, which includes the below crib chart.  

As for when the adrenaline stops? Psychologist and EY Executive Consultant Jono Nicholas explains that there is likely to be three primary phases that organisations will experience with their people, precis below: 

Right now: We - society - are in the change phase. Part of that will feel like the same stages as grieving, and that grief is for the end of what we know and can control and how we operate. People have a high amount of energy which is going in to making the adjustments we need to, to work from home, organise children and family, adjust to new behaviour patterns etc. This is the adaption phase and will last for another month or so. 

Reality kicking in: This phase will see energy ebbing away as the novelty of adjusting to so many new processes and ways of living wears off and reality kicks in. There will be real grief about real redundancies in the broader workforce, and real fatalities in larger numbers. For organisations looking to help their people through this very difficult stage, it becomes a time to introduce online tools to help people focus This could include online learning, or resilience training. But, the challenge is to not introduce this too early in order for it to be effective when it needs to be effective. 

Recovery and renewed optimism: When recovery comes there will be a huge amount of work to do, but people will be depleted. The previous two phases will have been quite hard hitting, so organisations need to plan for how they will keep workforces motivated and engaged, as well as ensure that those who have been working throughout the crisis aren't burnt out.

4 April 2020 - 7:30am

Are we leaving our kids unprecedented debt levels? Jo Masters Explains

Australia is going in to debt to cope with the economic ramifications of the this health crisis. It might look like an eyewatering amount, but we've been here before. Sort of. 

Preliminary estimates suggest the government will need to borrow $400 billion to cover the two stimulus packages and the $130bn JobKeeper package, and that doesn’t include what will need to come out of state and territory coffers. Australia currently has one of the lowest national debt levels in the world, so we are in a good place to be able to do this. At the moment, net Federal Government debt is just shy of 20 per cent. Once we add the $400bn of debt, it will take debt to about $1 trillion, or around 50 per cent of GDP.

But, whilst this debt level seems eye-watering and quite confronting, we also want to leave our children with an economy that is functioning and has enough economic fabric for there to be jobs and for economic opportunity for our children.

There is a lot of talk of this current crisis being unprecedented. It’s not comparable because by definition all crises are different, but it’s not true to say we haven’t had this degree of government support before. Even if we do a superficial comparison with the past three big economic crises for Australia, we find the expected debt to GDP ratio is not unprecedented. 

Read Jo's full post for a comparison with the GFC, WWII and the Great Recession; what options we have for getting Australia out of debt; and when we have to choose. 

3 April 2020 - 8am

Don't confuse a crisis response with a business continuity plan

Talking with clients, we are hearing that organisations are conscious of a need to prepare for the recovery period. But for many, the shock to the economy means they are still in survival mode. In light of that, we thought this worth revisiting, in case you missed it on our launch day:

We know that organisations and boards that respond to the current crisis calmly and with measures that are based on evidence and careful consideration of the underlying health of their business, stand a greater chance of emerging intact
Campbell Jackson
EY APAC Leader, Claims & Disputes, Forensic & Integrity Services

In a rapidly evolving situation such as COVID-19, there’s a clear delineation that businesses need to make between their crisis responses and their business continuity. 

Our EY APAC Leader, Claims & Dispute, Forensic & Integrity Services, Campbell Jackson, says that the best thing companies can do is to take a step back and apply a risk and opportunity lens to the situation. Each business will find strengths and weaknesses in the scenario. They then need to test where their risks and opportunities lie in three key areas: finance and cashflow; operations; and communications and reputation. 

Businesses then need to interrogate each of those areas, carefully model the scenarios and determine what measures need to be taken in the short and medium-long term.

“Remember: There is no playbook. A crisis is unique. And your response to the crisis is often more scrutinised than the event itself.” 

You can access the rest of Campbell's insights here

2 April 2020 - 6:30am

It's Business Time: tax measures are bringing relief

The New Zealand Tax Team has pulled together an overview of key government relief measures here, with a focus on wage subsidies and specific tax-related measures. The round-up includes:

  • Financial reporting impacts of building depreciation
  • Customs and indirect tax
  • Privacy law
  • Corporate and contractual matters; and
  • Estate and succession planning

You can also see what other countries, including Australia are doing here, with our EY Global COVID-19 Stimulus Tracker.

And, as well as tax our broader New Zealand team has put together a comprehensive crib sheet of what companies need to consider as they work through the logistics of economic lockdown. While survival depends on a slew of factors - the set out how to prioritise your people for a strong and responsive workforce when the recovery comes, engaging boards, and questions around customer and supplier interactions, tech, and financial frameworks.

1 April 2020 - 1:00pm

BREAKING: JobKeeper wage subsidy tax update - eligibility clarification 

Treasury has released clarification of the JobKeeper program by introducing revised impairment-measurement rules. The initial announcement indicated the impairment-measurement would be based on a comparison with 12 months ago. That has been changed to a flexible measurement including capacity for the ATO to determine additional rules. There is also a slight rewording about which employers are eligible.

"We are very pleased with the change which follows feedback from EY to Treasury that the originally described eligibility rules left many gaps," EY Oceania Tax Policy Leader Alf Capito said. The Government noted at the Monday release of the policy, that it was working through the details of the policy, which will require various elements, as above, to be articulated for the draft legislation, ahead of Parliament being recalled this month. This will likely see further updates to the Fact Sheets released by Treasury. 

The most significant of the edits ([removed words in italics], new wording in bold), relating to updated eligibility rule, is as follows:

“Employers will be eligible for the subsidy if:

  • their business has a turnover of less than $1 billion and their turnover [will be reduced] has fallen by more than 30 per cent [relative to a comparable period a year ago] (of at least a month); or 
  • their business has a turnover of $1 billion or more and their turnover [will be reducedhas fallen by more than 50 per cent [relative to a comparable period a year ago] (of at least a month); and
  • the business is not subject to the Major Bank Levy.”

It now also adds:

"To establish that a business has faced the requisite fall in turnover, most businesses would be expected to establish that their turnover has fallen in the relevant month or three months (depending on the natural activity statement reporting period of that business) relative to their turnover a year earlier.  

Where a business was not in operation a year earlier, or where their turnover a year earlier was not representative of their usual or average turnover, (e.g. because there was a large interim acquisition, they were newly established or their turnover is typically highly variable), the Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of COVID-19. 

The Tax Commissioner will also have discretion to set out alternative tests that would establish eligibility in specific circumstances (e.g. eligibility may be established as soon as a business ceases or significantly curtails its operations). There will be some tolerance where employers, in good faith, estimate a greater than 30 per cent fall in turnover but actually experience a slightly smaller fall."

The updated fact sheets are on the Treasury website here

1 April 2020 - 6:30am

Can you imagine lockdown without power or water?

As most of us adjust to the new reality of life in lockdown, it’s worth thinking about the things we might be taking for granted, such as water and power. For the utilities industry, COVID-19 has brought profound operational, customer, stakeholder and employee challenges. Our EY Lead Partner, Oceania Power and Utilities, Matt Rennie, has outlined here some of those questions that utilities companies need to address, especially as they navigate the first 30 days of an entirely new world.

Some of those questions, he asks include:

  • Where will the customer volume spikes be and how will they evolve?
  • How will customer and employee behaviours and expectations change over a prolonged period of stress?
  • How will we reliably identify those customers in need and target those experiencing financial strain?
  • What will be the sustained impact on workforce availability and productivity?
  • Will there be an adverse impact on channels, tools, infrastructure and data protection protocols?

Rennie believes that “responsiveness needs to start with ‘command centre’ mindsets with senior task-force governance. Under each of the scenarios for COVID-19 – whether early recovery, extended intervention, or under the third scenario of a later resurgence – the first three months for those running utilities companies are daily tests of prioritisation, consideration and measure.”

What should we be doing now?

In these critical first 12 weeks, Rennie says that the questions faced by utilities are principally based on urgent and arising tactical issues:

  • How do we run our operations with a largely distributed and remote workforce?
  • How do we proactively serve our customers facing immediate financial hardship?
  • What interim policies are required to protect reliability, safety, security, and employee well-being?
  • How do we prioritise other inflight projects and priorities?

Rennie details first order priorities including employment issues, management and operational issues, customer issues, and supplier and business partner issues. “Through all of this first phase, utilities need to pay particular care to stakeholders. This means actively engaging with suppliers and business partners in what will need to be a streamlined supply chain, and rapidly available inventory and logistics support.”

“Successfully moving through these times allows a focus on more strategic and less tactical functions and changes in end-to-end operations to improve weak points exposed during lock-down. Before long, we will be asking how we maintain momentum in our digital and decentralised journey, and what did we learn?”

31 March 2020 - 6:30am

Job seeker or Job keeper: Australia's new wage subsidy plan 

Eligible businesses can expect help in paying up to six million employees, with the Federal Government guaranteeing $1500 per person, per fortnight, between now and the end of September. 

We asked some of our Australian team for their initial observations, based on the information to hand at launch. You can read the full story here

EY Chief Economist Jo Masters:  “Being stood down and paid some income, as opposed to losing your job, implies there is a job on the other side, that there will be a job ready and waiting rather than having to hunt and compete for one, which in turn helps with confidence levels.”

EY workforce specialist Matt Lovegrove: "What it might do is make employers reconsider stand downs and focus on re-training their employees for the 'new normal', effectively subsidising the reskilling of their people for the 'Next' and 'Beyond' horizons. That would be a win for all - individual businesses, industries and the nation as a whole.”

EY empolyment tax specialist Frank Klasic: "The employer just gets a subsidy from the Federal Government, so other on-costs such as payroll tax and WorkCover may also need to be budgeted for by employers unless those specific on-costs are legislated by the States to exclude this payment, which is unlikely."

EY Oceania Tax Policy Leader Alf Capito: "The eligibility rules require careful attention, and we expect the ATO to do integrity checks on employer eligibility."

New Zealand

New Zealand launched its own 12-week wage subsidy scheme two weeks ago, but was forced to amend the program after confusion about how much of the subsidy had to be paid through to employees. Unlike Australia, the New Zealand program is not administered through its Tax Office although its roll out is instructive for Australia. NZ Private Client Team leader Darren White says he saw 95 per cent of his clients sign up immediately.

“Right from the get go we were receiving quite genuine enquiries from clients who were perplexed about whether they were obliged to pay the full subsidy through to employees, particularly where some employees were ordinarily earning less than the subsidy amount on a weekly basis.

“They also wanted to know if they were they able to use any funds they received that was beyond that employee’s wage, to help other employees who would normally get more." 

30 March 2020 - 6:30am

Act fast and be sure about where your funding is coming from

Enforced lockdowns are wreaking havoc on near term cash flow. But it’s one thing to say, ‘be sure about where your funding is coming from’, and another thing altogether to know where to start. Especially when fast decision making may be the difference between coming out on top or not.

The ultimate scale and ambit of the COVID-19 pandemic is more difficult to predict than was the case with the Global Financial Crisis. That’s not to say companies can't find lessons from that experience, not just about who survived, but how.  

According to EY Partners Jason Lowe and Sebastian Paphitis, the longer this crisis takes, the tougher debt market conditions will become and the more limited the options for business will be, even with the Federal  Government’s support of the lending markets. “We expect coming increases in the cost of debt and possible credit rationing,” Lowe, who helped establish EY’s Capital and Debt Advisory team says.

EY M&A Partner Duncan Hogg, who spent more than two decades in investment banks, says that while the GFC can be considered a slow burn compared to current events, it's the  immediacy of the impact of COVID-19 on a company’s near-term prospects that is playing out in the equity markets, although increased volatility doesn’t mean there’s not cash available for companies with good fundamentals.

They responded on today’s webinar, (you watch the replay here), about how they’re seeing the market - and clients - respond. 

Their top lessons to be heeded from the GFC, (detailed in full here) are:

  1. Act fast. If you don’t already, ensure that certainty of funding is at the forefront of capital management strategies.
  2. Money is available. Australian super funds are still sitting on large pools of capital that needs a home. $100bn was raised from equity markets during the GFC, showing shareholders will support companies they believe have strong fundamentals.
  3. Don’t get caught behind if you want to draw down liquidity lines. Companies didn’t focus on rapid moves to do this in the GFC, but should now.
  4. Listed and private companies each have equity options available. The key is assessing the options based on a balance of timing, and fairness to all shareholders. PE firms are also sitting on significant dry powder, some will wait for the volatility to stabilise slightly, others are already offering equity injections, convertible notes or alternative debt structures.  
  5. If you wait too long, you risk having to discount to get the deal away, and you could face subdued investor appetite if a number of companies pull the trigger around the same time. 

27 March 2020 - 1:30pm

'What I learned' - Ruth Owen on her experience in the GFC

Organisations really need to deal with the here and now, but always look for things that could move your business forward that you thought was going to take you a lot longer.

Amid all the uncertainty, it’s good to turn to those who have been through previous periods of crisis periods before. We’re turning to some of our EY people who have experienced the ups and downs, to see what they did to emerge intact and stronger. 

For Ruth Owen, the crisis came a week after becoming Deputy CEO and Chief Operating Officer for the UK’s Jobcentre Plus (equivalent to Australia’s Centrelink). She knew right away that things would be anything but normal.  Read her full account. 

“I started in November 2008 and I’d barely got my feet under the desk when we saw pictures of Lehman Brothers workers walking out of their New York offices with their boxes,” the EY Oceania Human Services lead partner says. 

“When I started, we were almost at an all-time low in terms of people who were unemployed and claiming benefits – around half a million. Within about six months, that number had doubled.” 

“One crucial lesson is that the role of the leader in crisis mode, compared to managers, is to steady the organisation then get on and turn the new way of working into business as usual as quickly as possible, because from a workforce point of view, just dealing with the anxiety of a crisis can eat up all their energy and you never get any work done or help any customers.” 

“I also think that organisations need to talk about finding opportunities in a crisis. Obviously, you really need to deal with the here and now, but always look for things that could move your business forward that you thought was going to take you a lot longer.” 

26 March 2020 - 6:25am

Have you got your work laptop in isolation? 

Protecting your secure documents and environment is as much about how you communicate with your people, as it is about the tech capabilities you have.  Covid-19 has triggered a ripple effect of anxiety on a global scale. It means people are hungry for information, and more prone to falling prey to malware and ransomware attacks masquerading as legitimate news and information.

Here's what we're being asked: 


EY Asia-Pacific Cyber Security Leader Richard Watson says many organisations, even at the top end of town, are unprepared for remote working at scale in this new environment, meaning seemingly small things such as updating policy and procedures for the new normal, can be overlooked. He works through some of the top issues, here

The last thing you need is data going home with your employees if they are forced to be home based to comply with isolation requirements. How securely they treat that information and their devices when they end up at home, comes back to how well you’ve helped them understand the importance of your cyber protocols. 

25 March 2020 - 7:00am

Team singing? Pet stories? How the world of remote working is the new normal

As organisations rapidly shift their workforce from office blocks to suburban living areas and spare bedrooms, having the right tech infrastructure is just one piece of the puzzle. Maintaining the wellbeing of your employees is just as important, as we outline here.

Taking ourselves as an example, EY implemented mandatory work from home arrangements in mid-March and have deployed cluster-based models and extended use of Microsoft Teams. In some projects, we have extreme teaming where the commute time is used to connect on a daily basis. There have also been shared team singing and other light-hearted initiatives, including round-ups of how ill-behaved various pets have been. We know that this connectivity is really important, especially during periods of self-isolation.

The disruption to the workforce is also a time to look at your organisation with fresh eyes. What skills will be needed for the 'new normal'?

“A key to future success is now protecting your best, critical people,” says EY Oceania Partner Matt Lovegrove. “This may be counterintuitive, but there is a window and a time here to consider how you will adjust some roles, the critical roles, in terms of rewarding remuneration and how you will measure performance of all your employees in the future.”

24 March 2020 - 6:30am

Need to shift your workforce to a virtual office in the next fortnight? It is possible. 

As the prospect of stronger lock-down provisions loom in the fight to flatten the curve of COVID-19, private and govenment organisations are starting to consider how they can continue to provide critical services consistently and securely, as we detail in full here

“This is rapidly evolving to being not just about the tech, but about the models of work. How do you work in a virtual world? How do you maintain service continuity and productivity in a virtual world? And how do you meet the anxiousness of staff around the changes?”, EY’s Government Digital and Technology Leader Andrew Garner says.

  • Does everyone have a laptop or a desktop at home that can be remotely connected?
  • Have you mapped what your critical services are and who performs them?
  • What happens if those critical service staff, eg payment processing staff, cant be in the office?
  • Do you have core software that doesnt have to be on the VPN, eg email?
  • How much spillover capacity do you have for your licenses and can you increase these quickly?

“Almost every organisation has the ability to connect virtually to key systems and processes," Garner says. "The risk is if an organisation is faced with having to move their entire workforce virtually, can they scale it up quickly?"  

In mid-March, EY moved its workforce of more than 8,000 to remote working, with a 24 hour dry run to test the capability of the VPN and network systems. "The question wasn't whether we had the technology capability, it was what would happen to the system when 6000 people logged on simultaneously," EY Oceania IT Leader Chris Huey, who oversees the remote work capabilities, says.

He implemented practical steps to reduce the burden of having so many people remotely connected, including changing the idle period timeout on the VPN from eight hours to two hours, and increasing the licence for the EY remote connect software. 

"The biggest delay is not so much getting the licence, it’s getting priority with the vendors to get the increase, because everyone around the world is asking for the same thing."   

      23 March 2020 - 7:00 am

      Government support packages and conserving cash in a rapid downturn: live panel discussion today

      Prime Minister Scott Morrison has announced the second stimulus package in less than a week, bringing the total Federal Government support to just under $85 billion, or $189 bn including the RBA measures (about 10 per cent of GDP). New provisions to alleviate cashflow issues for small and medium sized businesses include an expansion of relief on wage bills through the tax system as well as the introduction of the Coronavirus SME Guarantee Scheme, which will see the Government provide a guarantee on some lending. Credit to SMEs will also be supported by the RBA’s term funding facility and the measures announced by the banks around supporting interest payments.

      "While the economy is still likely to suffer a recession, the co-ordinated policy response is aimed at cushioning the impact as much as possible," EY Chief Economist Jo Masters said on Sunday. "Pushing the stimulus spending into the economy as quickly as possible must be a focus." 

      Directors have also been granted temporary relief from personal liability for insolvent trading. Safe Harbour is another pre-existing option for directors to trigger, which provides protection from civil liabilities relating to insolvent trading, as we detail here

      The broader insolvency measures will provide greater flexibility to company directors to remain in control of their companies and to execute on their plans, EY Oceania Head of Restructuring Services Adam Nikitins says. 

      "We are mindful of the possible unintended consequences of these relief measures, mainly the impact on credit markets, the possible shift in credit risk from the company to its supply chain and the possibility of a material debt overhang in six month’s time, when the temporary relief measures are currently due to be lifted," Nikitins says, but stresses that times of unprecedented challenges make a strong and decisive response necessary. 

      Live panel discussion: Click here to watch the replay, which is available on demand.  

      Adam and Jo will be joining Growth Markets Leader Justin Howse and supply Chain and Operations Leader Wayne Boulton to discuss this week's announcements from the RBA and Federal Government, and how they will impact organisations looking to conserve cash in a rapid downturn. 

      21 March 2020 - 8:30am

      Workforce is the number one concern, but cash flow and liquidity is the number one priority

      Conserving cash and shoring up liquidity is critical to getting through the next few weeks and months. Survival is the ultimate objective. While fearmongering is not helpful, organisations should be investigating what crisis measures are available and which ones to activate.

      Adam Nikitins, EY Oceania Head of Restructuring Services, says time is the real threat in these situations, so organisations need to exercise common sense and take stock of their downside risks, liquidity runway and options around capital raising.

      “Most people won’t be able to demonstrate whether their business can make it through a crisis or not because they haven’t prepared for it. But catastrophising doesn’t help.

      Plan, don't panic. Make informed decisions and show strong leadership – don’t let ‘perfect’ get in the way of ‘good’
      Adam Nikitins
      EY Oceania Turnaround & Restructuring Strategy Leader

      "Employees are the number one concern, liquidity should be the number one priority. To recover strongly from this crisis you have to make it through to the other side.

      "Contingency plans need to be practical, capabile of execution and contain board pre-approved conditions, so if triggers are hit,  plans can be quickly put in place. In acute circumstances, directors are rightly concerned about their own exposures – so they should determine whether safe harbour is available to them.

      "The only way you can get certainty around liquidity is by testing it with scenario analysis. Scenarios need to focus on financial and operational vulnerabilities, be assumptions based and quickly be able to flex assumptions and scenarios.  The environment is rapidly changing and boards together with their management teams need to be able to react at pace.

      "Early, clear, genuine communication with stakeholders is critical as part of any mitigation plan. Too frequently organisations turn inwards in a crisis. But no-one likes surprises, so clients who hold stakeholders at arms length more often have more difficulties than those who are proactive, open and clear with their asks.

            20 March 2020 - 3:30pm

            Five ways to move towards continuity and business resilience, fast

            Our APAC team have put together a list of critical ideas to help companies be predictive and proactive in their current decision-making. Some of these priorities are based on perspectives and experiences from the regions where COVID-19 first impacted.

            It includes steps leaders can take to not only react to severe business shocks now but also reshape their business and plan for recovery. "Organisations that operate with transparency and open communication have inherent advantages when events require quick actions to react and reshape," Christopher Mack EY Asia-Pacific Partner and EY Japan Restructuring Leader says. 

            The five key points include: prioritising people safety and continuous engagement; reshaping strategy for business continuity; communicating with relevant stakeholders; maximising the use of government support policies; and building resilience in preparation for the new normal.

            You'll find the full article here

            19 March 2020 - 10:49am

            Don't confuse a crisis response with a business continuity plan

            We know that organisations and boards that respond to the current crisis calmly and with measures that are based on evidence and careful consideration of the underlying health of their business, stand a greater chance of emerging intact
            Campbell Jackson
            EY APAC Leader, Claims & Disputes, Forensic & Integrity Services

            In a rapidly evolving situation such as COVID-19, there’s a clear delineation that businesses need to make between their crisis responses and their business continuity. 

            Our EY APAC Leader, Claims & Dispute, Forensic & Integrity Services, Campbell Jackson, says that the best thing companies can do is to take a step back and apply a risk and opportunity lens to the situation. Each business will find strengths and weaknesses in the scenario. They then need to test where their risks and opportunities lie in three key areas: finance and cashflow; operations; and communications and reputation. 

            Businesses then need to interrogate each of those areas, carefully model the scenarios and determine what measures need to be taken in the short and medium-long term.

            “Remember: There is no playbook. A crisis is unique. And your response to the crisis is often more scrutinised than the event itself.” 

            You can access the rest of Campbell's insights here

            19 March 2020 - 5:00pm

            Jo Masters on the RBA rate cut, QE and the new economic framework for COVID-19

            EY Oceania Chief Economist Jo Masters spoke to ABC television today about what the RBA announcement means and why it’s more useful to think about how developments flow through to the real economy, rather than trying to model and predict numbers around what the pandemic will do to the global economy.

            Watch Jo Masters' update below, or click here for her full analysis with charts.  

              17 March 2020 - 8:00am

              Want to know why this pandemic isnt like any other crisis?

              We've put together this table highlighting the differences between business disruptions caused by natural, human-made, technological or operation failures, to those caused by pandemics. Organisations need to expand beyond traditional resilience planning strategies. Click here for the full PDF.

              16 March 2020 - 2:24pm

              Organisations that weathered previous pandemics and financial crisis were able to quickly answer and act on four issues:

              1. How will a sudden economic slowdown impact your cashflow? Manage high value and high risk recievables on a case by case basis, use supply chain financing to either accelerate cash from customers or manage your supplier payments,  pay suppliers on the due date rather than early and delay purchases to take adavantage of payment terms
              2. When will you run out of critical materials, finished goods or spare parts? Define your business rules to ration constrained inventory
              3. Reduce, defer or eliminate costs – but be careful to not permanently destroy capability or capacity
              4. Are you dependent on a supplier or customer that may not be able to survive a sudden economic slow-down? Talk to your CFO about agreeing early payments to at-risk or critical suppliers. Remember to check for aggregate exposure to one business across different subsidiaries, use cash on delivery or seven day terms where necessary. Crucially manage your risk but remember too that customers may decide to take their business elsewhere


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                By EY Oceania

                Multidisciplinary professional services organization

                Related topics COVID-19