By Virginia Ginnane, Marketing Content Specialist, Thomson Reuters
“What does it all mean?” asked IPA’s Vicki Stylianou, in a rare intersection of philosophy with accounting.
When the IPA Group Executive, Advocacy & Technical posed this question in her webinar for the International Council for Small Business recently, Stylianou was not asking about the meaning of life – but what the impact of the COVID-19 measures will be on our economy and society when the pandemic is over.
With handouts of $320 billion (plus $12.8 billion from the states) by the federal government that scarcely a year ago was promising the nation that by now we’d be ‘back in black’, you know the applecart has been well and truly upended. And as more things change, the more things will no longer stay the same.
Lessons from the Global Financial Crisis
Although these unparalleled measures have plunged us into unforeseen debt, Stylianou is upbeat.
“We’re in a better position than most other economies, because even in the worst-case scenario we may end up having debt of 50% GDP – whereas other countries are already starting with 80%. So, we’re in a much better position. We’re quite lucky in that sense.”
Is it possible that the handout was too big? “No one can really answer that. What we learnt from the GFC was ‘Go big, go hard, go households’. We needed a big enough stimulus package to put us in a good enough position for recovery.
“It’s hard to predict what would have happened if we went smaller and the health crisis was worse than it has been for us in Australia.” Perhaps giving people some level of security may have allowed them to ride out the isolation period more safely.
Importantly, Stylianou explains that her research shows that if the stimulus package, particularly the JobKeeper measure, had not been so sizeable then unemployment may have been 12-17%, whereas it’s now forecast to be 8-10%.
So how does all this change affect practitioners at ground level?
“A lot of accountants like the ones who work in practice advising clients and the tax agents have been completely inundated because most of their clients are wanting to know if they are eligible for the stimulus measures.”
Further, due to the pressure on their clients whose businesses have been adversely affected by the pandemic, clients are not always in a position to pay, some accountants are saying they’re not invoicing their clients.
“So, this is compounding the financial stress on accountants which in turn is impacting on their mental health,” laments Stylianou.
Challenges of working remotely
Accountants working from home? When was this on anyone’s agenda? Stylianou explains that this unforeseen predicament has created obvious challenges around connectivity, document completion, staff supervision and risks to security.
A big concern that is hard to resolve is around the confidentiality of client documents. “There’s been a considerable spike in cyber crime so if you’ve got staff working remotely, you’ve got to make sure they are set up so that client records are kept very confidential and secure – because any weak links might be exploited by the cybercriminals,” warns Stylianou.
But there’s a twist. For all the talk of cyber crime what needs more focus is the risk to the physical security of practices, unattended during the pandemic. “Physical criminal activity still exists and places are still being broken into. Even having an alarm set up that goes back to base to a security firm could help.”
Shift in areas of advice
A further impact of the pandemic on practitioners has been extending the scope of BAS Agents and Registered Tax Agents.
BAS Agents are now allowed to advise on two particular measures, including the cash boost, a change that, though contentious is welcomed by the IPA. “Because they deal with payroll it’s quite a natural fit for them,” she says.
Giving relief to Registered Tax Agents to advise on early access to superannuation has also been contentious with some elements in the financial planning sector.
But the IPA is right behind this move, that they lobbied hard for in April with CPA Australia, CA ANZ, the Financial Planning Association of Australia and the SMSF Association. “The five of us have worked together really well in getting that over the line,” she explained.
A bit of a surprise that it happened so quickly? “One thing about COVID-19 is that timelines can be really condensed, and things can be accelerated that would otherwise have taken years to happen!
“It’s amazing – the ability of the government to cut red tape. Their ‘removal of regulatory roadblocks’ has been amazing. We’re hoping that the government can see that some of this red tape genuinely is not needed.”
So, is this a window into the future, some guide to what it all means? “We don’t know what the ‘new normal’ will look like but the world won’t be the same.” That’s for sure.
Vicki Stylianou is IPA Group Executive, Advocacy & Technical and a member of the board of the International Council for Small Business.
Watch her webinar, Toughest year of our lives: An Australian response to COVID-19 here