Join Hafta-Ichi to Research the article “‘I don’t know how we’ll survive’: city cafes, still deserted, brace for the end of jobkeeper | Australian economy”
Amanda Ward is pottering about behind a glass cabinet filled with the most eye-watering hunks of slow-cooked meats, which are ready to be sliced and folded into crusty fresh bread.
It’s just before midday, and you might expect a pulse of activity ahead of the lunch rush for a cafe at the base of a 22-storey tower in central Melbourne. But things are quiet, and Ward and her staff know it.
“So we’re underneath 121, which is all government offices,” Ward tells the Guardian from an outside table of the Meating House on Exhibition Street. “And right now there’s nobody in there.”
Things have picked up since last year, when the Meating House first re-emerged from a lockdown , and Ward found herself selling about 50 coffees a day, compared with the more than 650 they’d get through before the pandemic.
But just as things were improving, if only slightly, now there is a new hurdle. The jobkeeper wage subsidy that has propped up nearly a million Australian businesses over the past 12 months is coming to an end.
The $90bn program has provided a wage subsidy to 3.6 million workers, paid directly to businesses who could demonstrate a decline in turnover. Controversially, some of those businesses have gone on to turn a profit.
The scheme has tapered down since it was introduced, but from 28 March it will disappear completely.
Ward is receiving jobkeeper, her only wage at the moment, with the cafe’s takings going to her other two staff members.
“If we don’t increase our takings, I might have to let them go,” she says.
In parliament this week, the treasurer, Josh Frydenberg insisted it was time to the end jobkeeper program. It was always meant to be “temporary”, he said. And 2.7 million people had now “graduated off jobkeeper”.
Frydenberg said there were economic risks to keeping the program going.
“It prevents an efficient allocation of workers to other roles, and it can prop up some unsustainable businesses,” he told parliament, citing advice from the Treasury.
Frydenberg has otherwise couched the reality of the end of the scheme – that businesses will shut and people will lose their jobs – in fairly coded language.
He has said the next few weeks might be “bumpy”. When asked whether the government had done modelling on the number of jobs that will go, he noted the Reserve Bank still expects the unemployment rate to come down over the course of the year.
He was aided on Thursday when the jobless rate fell to 5.8%, news that surprised most economists and buoyed the government.
Like the travel industry, which has been singled out for additional support post-jobkeeper, the difficulties facing Melbourne CBD cafes like Ward’s are out of her control.
Ward is adamant the offices that call 121 Exhibition Street home – including three government departments and Australia Post – are nowhere near the 75% capacity now allowed under Victoria’s Covid restrictions.
“This week, we’ve had a passing trade, as they’ve come in to empty their desks,” Ward says. “But they still don’t have a date when they’re coming back to work. Because they’re coming back to shared desks.
“Hopefully next week, we’ll be busy. But that’s been the whole thing from January.”
Across the road from the Meating House, Jackie and Darren Silverman’s hole-in-the-wall coffee shop, Black Velvet Espresso, is also feeling the pinch.
The Silvermans are lucky because their business is a wholesaler. It also means they have a clear sense that cafes like theirs, in Melbourne’s CBD, are in their own predicament.
“The suburban cafes that we wholesale to have gone great guns, a lot of them are busier than they’ve ever been, which is absolutely fantastic,” says Jackie Silverman.
“But the CBD streets are still nowhere near pre-Covid. In fact, we’re very lucky if we’d be up to 40 to 50%.”
The Silvermans have lost their staff to those busier suburban cafes and so the couple are now back behind the coffee machine for the first time in years. They are also receiving jobkeeper.
“We do a lot of modelling with our figures,” Jackie says. “It really remains to be seen how we’re going to go.”
In December, the most recent data released by the ATO showed 1.5 million people were still receiving the jobkeeper subsidy.
No one knows how many of those people will lose their jobs when the package ends, but one estimate, from labour market economist Prof Jeff Borland, puts the figure at between 125,000 to 250,000 people.
Another, from the Commonwealth Bank, said up to 110,000 people could be laid off. A more gloomy outlook from Small Business Australia suggested 488,000 people would lose their jobs, while nearly 100,000 businesses would close permanently.
Just looking at the hospitality industry, the Restaurant and Catering Association has estimated about 10% of its 48,000 restaurants, cafes and caterers that were in business pre-pandemic would close, as jobkeeper ending and landlord protections expire.
Will Murray, the owner-operator of Cathedral Coffee, which is tucked away in an art deco arcade near Melbourne’s Flinders Street station, says his biggest costs are rent and wages.
Murray and one of his five staff members have been receiving jobkeeper. “I’ve still not really come to the realisation I’m gonna have to be coughing up all the wages now,” he said. “You know, it’s kind of scary.
“I would not want to let any staff down, so it probably just means taking on a lot more hours myself just to try and cover the costs.”
Ward, Murray and Silverman all say their big hope now is that office capacity in Melbourne’s CBD will increase to 100% soon.
Even then, there are questions about what the cultural change ushered in during the pandemic might mean for the city’s CBD coffee scene. “A lot of workers have no intention of coming back, or maybe once a week, once a fortnight, and that’s not going to sustain city businesses,” Silverman says, relaying conversations she’s had with customers.
While Murray’s cafe benefits from proximity to Flinders Street station and the trendy vintage stores in the Cathedral arcade, he says the businesses is hurting without the steady stream of customers that once began from 7.30am.
“From 7.30 to nine, it’s still pretty quiet,” Murray says. “From like nine onwards, you get people coming in, but I think the big thing we’re missing is office workers.”
Silverman says a lot of cafes are “just hanging on”. “They’ll be making decisions at the start of April”.
“[It depends] on if the landlords can help out still, because that’s all we’ve got left with jobkeeper gone. If rents go back up to full rent without foot traffic, we’re in a good deal of trouble.”
Sitting in one of the outdoor tables, Ward thinks back to before the pandemic.
“They’d be queuing out the door, with the coffee machine outside,” she says. “It’s just sad. Really sad.
“Unless they come back, I don’t know how we’ll survive … This is our livelihood, our investment. We took on the build.
“We don’t want to lose it, you know. But is it worth it if you’re not making any money?”
Source: The Guardian
Keyword: ‘I don’t know how we’ll survive’: city cafes, still deserted, brace for the end of jobkeeper | Australian economy