March 24, 2021

What's Going to Happen When COVID Support Ends

What's Going to Happen When COVID Support Ends

Industries hardest hit by COVID are those that have been directly affected by government-mandated restrictions – namely, close contact industries - including retail, airlines and tourism, gyms and health clubs, and of course, leisure and hospitality. Secondarily affected industries which have still been allowed to operate (many of which have received COVID-19 financial assistance), nonetheless experienced strong declines.

When COVID-19 vaccines become widely available (expected rollout from February to October 2021), it is hoped that we can go back to normal (albeit, a “new normal” with limited COVID-19 financial support/help/relief). However, there is less certainty as to what will happen as the Australian Government and Industry turn in the temporary economic stimulus measures that were introduced in a bid to prevent a COVID-19 financial crisis. Here we shall assess what the future might look like as each of these temporary measures are wrapped up. 


The Jobkeeper scheme has provided a much-needed lifeline for both businesses and employees throughout the pandemic, and since its inception, it was announced as a temporary measure to prevent a COVID-19 financial crisis. A reduction in COVID support payments was rolled out in September 2020, and January 2021 and the subsidy is forecast to end on 28th March 2021.

As the Government attempts to wean the economy off support arrangements, the big question in everyone’s minds is whether we are headed for a cliff? For many of those relying on the Jobkeeper subsidy, a reduction in payments has also translated to a reduction in hours. It is uncertain whether provisions will be extended beyond this point, though it is speculated that industry-specific support might be established Jobkeeper’s place.

For those already living week-to-week, those without an emergency fund, or those experiencing a lockdown, the prospect of finding work or generating an income under such tough circumstances is daunting – especially when unemployment is set to peak at 7.5% in 2021.


Yet another means of COVID-19 financial assistance enacted by the Australian Government in response to COVID, was the relaxation of hardship provisions to enable the early release of up to $20,000 in superannuation funds per person ($10,000 in the 2019-2020 financial year, and $10,000 in the 2020-2021 financial year). Whilst the scheme which closed on 31 December 2020 has thrown a lifeline to those who may have been struggling to make ends meet, people under the age of 40 have been twice as likely to have accessed their super – and the long-term consequences are costly.

Superannuation is an investment, designed to accrue wealth over the long term thanks to the power of compounding interest! Given that $20K today could be worth hundreds of thousands of dollars more by the time one retires, the reality is that younger people who have made a super withdrawal during COVID could be worse-off in the long run. Cashing out your super during an economic decline (when the value of shares is down) adds further insult to injury.

Whether or not superannuation provisions will be extended by the government is again uncertain, however, given the serious and costly financial implications, it is strongly recommended that you look into all of your options before making a super withdrawal. Before you make a hasty decision, talk to your accountant or a financial advisor.

Mortgage Support

The climax of COVID’s economic impact on lending peaked in May 2020, with a deferral rate of approximately 10% of loans in Australia. Thankfully, that number has dropped to 2.3% as at November 2020 – however, this still represents considerable financial stress for those customers whose circumstances have not improved. It is unknown how this vulnerable cohort will fare long-term, especially as they come under pressure by the banks to pay back substantial lumps sums (possibly plus interest) as loan deferrals start wrapping up.

For those facing such a stressful scenario, it can be tempting to take out other loans to cover the backlog of your mortgage repayment, but if you aren’t careful this can lead to a debt-spiral. Before borrowing more, it is recommended to negotiate with your bank to assess other hardship options, extend the length of your loan or increase your monthly repayments whilst keeping the original loan term. If you are communicating with your lender and your requests are being rejected on potentially unreasonable grounds, you may be able to seek assistance from the Australian Financial Complaints Authority or the Australian Financial Rights Legal Centre.


Australian Bankruptcy Law also saw temporary changes put in place to protect debtors during the pandemic. Such COVID-19 Financial Assistance included an increase in the minimum threshold for creditors to apply for bankruptcy from $5k to $20K and an increase in the timeframe for debtors to respond to bankruptcy notices from 21 days up to 6 months.

However, as of 1st January 2021, the temporary changes ceased. Currently, the minimum amount of debt that can result in bankruptcy is now $10K (whether debtors petition or sequestration order) and the bankruptcy notice response time is now 21 days. 

If you have been struggling with debt throughout the COVID crisis and you don’t know how you are going to pay once temporary protections finally cease, it’s time to start assessing your options. If you aren’t sure where to start, our team of credit counsellors will be able to assess your current financial circumstances and help point you in the right direction to getting out of debt and getting back on track with your finances.

When it comes to unmanageable debt, the worst thing you can do is stick your head in the sand and hope that the problem will go away – it won’t! Leaving unpaid amounts to accumulate interest when your income simply doesn’t cover it is one of the hallmarks of spiralling debt. Nobody could have anticipated just how devastating COVID has been, and unfortunately, we all struggle with our finances from time to time. Like thousands of Australians, if you have been significantly financially impacted by COVID, just remember – you aren’t alone! Before the protections end is the best time to get a handle on the situation – start looking into your options and contact our debt negotiators on 1300 003 328 - before it’s too late!

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