One million Australians to lose their jobs by November

The coronavirus pandemic and subsequent economic shutdown will see more than 1 million Australians lose their jobs by November, new analysis suggests.

Figures released by the Bankwest Curtin Economics Centre on Tuesday reveal Australia’s unemployment rate will rocket from 5.1 per cent past the 1992 high of 11.1 per cent as quickly as August before hitting 12.7 per cent in May 2021, the highest level since current unemployment reporting began in 1978.

People line up at Centrelink in Perth this week.Credit:Sharon Smith.

That means by November, 1 million will be out of work, on top of the existing 700,000 unemployed Australians. State by state New South Wales would be the hardest hit with more than 350,000 job losses followed by Victoria with 277,000.

The figures were derived by drilling down to impacts at nearly a job-by-job basis.

BCEC principal research fellow Rebecca Cassells admitted they took a more conservative approach than other projections but said worse losses were likely. Minister for Government Services Stuart Robert claimed "hundreds of thousands, maybe a million" people lost their jobs on Monday night alone as virus directives ramped up.

Professor Cassells said the COVID-19 fight could cost nearly 450,000 jobs in hospitality, entertainment, tourism and personal services by August 2021 while second-round impacts would be felt more broadly.

“We can expect to see a downturn in retail sales (excluding supermarkets) over the coming weeks,” she said.

“Households will start tightening their pockets and look to reduce spending in other areas, anticipating further job losses or reduced hours and income … this will have a flow-on effect to other sectors.”

After hospitality, BCEC predicted arts and recreation, construction and transport would be next hardest-hit sectors, with more than 100,000 job losses each over the next 18 months.

The social-isolation-driven shutdown of businesses was already straining government welfare services, which are struggling to process requests for boosted financial support payments.

Across the country lines of newly unemployed have snaked around bricks and mortar Centrelinks since Monday while Mr Robert said 2.8 million people accessed the website on Wednesday alone.

Professor Cassells said the government’s $550 weekly boost to jobseeker and student assistance payments was a reasonable safety net for workers over the next six months, but for many, it would still mean significant drops in income.

“The most important response by the government now is to take action to reduce activities that will increase the spread of the virus. This will necessarily see demand fall. And we need demand to fall to protect lives in the short-term,” she said.

The ASX is currently awash with companies revoking guidance estimates for the 2019-20 financial year and retailers announcing they were shutting stores.

On Tuesday, listed jewellery giant Michael Hill announced it was shutting its stores due to the pandemic, followed on Wednesday by Accent Group, the retailer behind brands such as The Athlete’s Foot and Hype DC.

Professor Cassells said businesses would inevitably fail thanks to a collapse in investment and consumer confidence and the only way to stage a decent recovery was the right kind of stimulus and, more importantly, an end to the virus.

“When we’re at the point where we feel comfortable we have the virus under control that is the time to really come in hard with a real fiscal stimulus package with infrastructure projects,” she said.

“I think that is what the government will already be planning to do but it is really dependent on how quickly they can get the virus under control.

“It will take something like getting a vaccine or some sort of medication that is going to really reduce the risk of death that people will feel like they can put their heads back up."

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OneVue posts $27 million loss as Sargon debt bites

Superannuation platform provider OneVue has been forced to write down the value of debts owed to it by troubled fintech Sargon Capital by $26 million to $3.9 million, with the company posting an after tax loss of $27.1 million for the first half of 2020.

OneVue chief executive Connie McKeage said on an investor call the past 15 months of chasing Sargon for an outstanding deferred payment worth $31 million was "the most challenging period we have experienced to date" as a company and thanked industry peers and competitors for contacting her directly to offer support during the period.

OneVue chief executive Connie McKeage said it had been a trying year for the company. Credit:Sasha Woolley

"It is appreciated," she said.

OneVue is a superannuation and funds management administration business which sold its Diversa Trustee services brand to cloud trustee fintech Sargon Capital last year.

Sargon Capital has faced unknowns in 2020 after receivers at McGrathNicol appointed to its overall holding company in January and voluntary administrators at Ernst and Young were then called in to other non-operating entities.

OneVue was still owed $31 million from Sargon and called in its own receivers at PwC, who took control over shares in Sequoia Financial and the Madison Financial services business.

Receivers have since sold the Sequoia shares for $4.4 million, which is now in OneVue's bank account.

On Wednesday, OneVue updated investors that while it was still exercising its legal rights to uncover the full debt, it had written down the recoverable value to $3.8 million, and written down the $26 million difference.

That fact weighed on its balance sheet for the half, with the company posting an after-tax loss of $27 million, compared with a $3.2 million loss last year.

The business said despite the tough conditions, the business had increased its earning margins and the rest of operations were showing strong growth potential.

OneVue's revenue for the half dropped 1 per cent to $24.3 million, which was due largely to lower interest rates, management said.

Earnings before interest, tax, depreciation and amortisation were up 48 per cent to $3.4 million.

Sargon Capital was contacted for comment both directly and through administrators at EY.

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