The purpose of this report is to analyse the problems that can be faced by the business. The organisation selected is The Spot at The Entrance, which is a small and cool restaurant in NSW and known for serving authentic food to the people. Covid phase has been tough for the restaurant like other industries as the business of this small restaurant has been hit tremendously. The business of the restaurant has been ruined due to massive lockdowns across Australia and people staying indoors to stop the infection spreading. Besides this, people have got very choosy about their food after the Covid phase as they need healthy food items.
Why is the Government considering action? (Problem analysis)
Government needs to act for the businesses like the Spot at the Entrance due to the massive business loss faced by them during the covid-19 phase. The key problem the business of The Spot at The Entrance faces right now is lack of capital in hand so that effective decisions can be taken. Due to covid, the business of the restaurant has been shut down for almost 1.5 years. This has led to lack of capital with the business owners of the restaurant. The business right now has pressures on them such as paying taxes, paying rent for the restaurant, paying wages to the staff etc. There has been no relief provided to the restaurant for ensuring that the small businesses like The Spot at The Entrance can sustain. Therefore, it is mandatory for the government to provide some relief to the small businesses like The Spot at The Entrance so that they can get a waiver on their EMIs and taxes. This can help the business sustain for long-time and also get enough time to get back on track.
Which outcomes is the Government aiming to achieve? (Objectives for action)
The efforts by the Government to provide relief to the small business owners can encourage them to work for the growth of the economy. Small business in the Australian economy is the most dynamic and exciting sector (Lim, Nguyen, Robinson, 2020). However, this sector is underreported in the media and also ignored by the governments when setting policies. This has been a key problem for businesses like The Spot at The Entrance as they have faced a difficult time managing it. However, governments in Australia can achieve a lot for the economic benefit of the country once they support small businesses in an effective way.
What are the possible different courses of action that could be taken? (Identify feasible options)
There can be different strategies or courses of action that should be taken by the Government. Some of the strategies with respect to the business of The Spot at The Entrance are listed below.
- Government should make efforts to provide financial assistance to the business of The Spot at the Entrance. For instance, they can provide cash flow support for the micro-businesses in NSW whose business was impacted by the covid-19. These businesses should get help for their salaries & wages, utilities and rent, financial or legal advice, marketing and perishable goods. This can ensure that the business can cater to its daily financial needs and get back its operations.
- Another effort which the Government can take is to provide tax relief to the business. For instance, there can be tax deferral for the business and new arrangements can be made for all businesses. Government can let the payroll tax customers defer their tax payments. Businesses can even defer their payments for some months if they have been feeling low paying the expenses. Customers will have an option of paying outstanding liability in full or taking up the support payment process. This can ensure that the business of the restaurant can run smoothly without any burden on the owners to pay taxes.
- Governments can offer credit facilities or loan products to the small businesses at low rate of interest and liberalising the eligibility norms. This can help the businesses to get surplus amount upfront and cater to their expenses. The government can defer the EMIs of existing loans and even new loans so that when the business gets back on track, it can then repay it. This will be a huge financial relief for the businesses.
These options can help in providing a lot of support to the small businesses like the proposed one to cope with their post-covid problems.
What are the expected impacts (benefits and costs) of options and what is the preferred option? (Impact analysis)
These options are likely to motivate the small businesses like The Spot at the Entrance to run smoothly and seek assistance from the Government when they need it. These steps can help in the economic upliftment of the country. After the covid phase, the economy of Australia has been hit. Reports in 2020 suggested that the Reserve Bank of Australia moved rapidly and cut down the target rate twice in March and reduced the cash rate down from 0.75 percent to a record low of 0.25 per cent (Lim, Nguyen, Robinson, 2020). However, after the pandemic, the government has tried to introduce many measures for supporting economic activity. These steps introduced for the support of at the Spot at the Entrance can be useful for the small businesses to get back on track and contribute towards increasing the cash rate which is running down already.
The most preferred option is to provide tax rebates/relief to these businesses so that they do not feel burdened. Tax payments can be deferred for them until their businesses come back on track and they are able to manage the operations effectively. This can help in ensuring that they have enough capital with them.
What are the characteristics of the preferred option, including small business and competition impacts? (Summarise the preferred option)
As far as the preferred option is concerned, the focus should be on providing tax relief to the business. The tax payments for the businesses can be deferred and new arrangements should be made for getting financial assistance to these small businesses. In this, the Government will allow for deferment of the tax payments for the payroll tax customers (Business.gov.au, 2020). Businesses can manage it for some months if they are unable to pay their taxes. For this, customers get an option for outstanding liability in full. This will allow the small business of the restaurant to operate effectively. Some of the features of the preferred option are as follows.
- To get tax deferment so that there is no burden of paying taxes
- To get waiver or deferment option on the EMIs of the existing loans and get a facility to repay it later
- Submitting financial statements of the business to the Government later for analysis.
How will the preferred option be put into place? (Implementation plan)
For the preferred option to be made in place, the Government of Australia needs to introduce this new measure after analysing all factors influencing the business of small organisations. After they have analysed, they can manage all the factors in an appropriate way. Government can implement this in phases so that only the eligible and deserving businesses can get benefits. This option should be open for the small businesses that have adhered to all the regulations and fall in the category of small business as per Australian standards.
When (and how) will the Government evaluate the effectiveness of the preferred option in meeting the objectives? (Evaluation strategy)
The Government should introduce an effective evaluation strategy for ensuring that the options they have provided to the small businesses are able to manage it in an effective manner. Tax deferment and waiver is only applicable for the businesses that are in urgent need of financial assistance and adhere to the guidelines of the measure. For this, the Government needs to review the proposal of the business beforehand so that benefits/financial assistance can be provided. After a month of providing the benefit, the Government must ask the businesses to submit their financial reports so that it can be analysed if the financial assistance provided is able to benefit the small business or not. The improvement in the financial condition of the businesses will be an indication that the preferred option is useful for coping with the problem faced by the business.
What are the impacts of regulation?
In the case of The Spot at the Entrance, Government can opt for the option discussed in the report. Due to this, there is no need to introduce any regulation for the business. However, it is believed that regulations can have influence on society irrespective of the fact if the regulation is financial or not. In long term, regulation help in improving the transparency and removing market failures. Regulation can help in enhancing the economic efficiency. However, there can be negative consequences also like developing substantial compliance costs and unintended problems for the business. This can help in ensuring that everything can be managed well by the businesses and any constraints can be removed.
Business.gov.au., (2020). Covid-19 tax relief measures. https://business.gov.au/grants-and-programs/COVID19-Tax-Relief-Measures-NSW. Accessed on 18/9/2021.
Lim, G, Nguyen, V, Robinson, T. (2020). The Australian Economy in 2020–21: The COVID-19 Pandemic and Prospects for Economic Recovery. https://onlinelibrary.wiley.com/doi/10.1111/1467-8462.12405 . Accessed on 18/9/2021.