The opposition have asked about the increase in small business insolvencies. They are saying that small business has been abandoned by the government.

But the Reserve Bank looked into this issue and found it had more to do with the winding back of pandemic era support measures. During the pandemic insolvencies were exceptionally low. The recent increase in insolvencies on a cumulative basis remain slightly below the pre-pandemic trend.

Basically, policies during the pandemic supported businesses and meant that very few of them went insolvent. Far less than you would expect during a recession, but even much less than would be expected in normal economic times. Some of the businesses that were protected by these policies would have gone insolvent with or without the pandemic. The support measures only delayed the inevitable.

Now that the support measures have been wound back, we’re seeing a catch up in insolvencies