Labor locked into vicious circle
WITH a federal election next year, it seems a vote for Labor will sound the death knell for already-struggling North Queensland small businesses.
Unions lost a court challenge last year to stop penalty rates being cut, which was good news for small businesses, but the minimum wage has increased to about $700 a week – not bad for sweeping floors or washing dishes but a massive headache for employers and a major deterrent to hiring more staff.
With a Labor federal government, there will be more leeway for unions to enact their anti-business agendas.
The argument for boosting the minimum wage and penalty rates is that people struggle to make ends meet. The other one trotted out is: “You shouldn’t be in business if you can’t afford to pay workers better.”
Unions and many average people don’t seem to realise, or they choose not to agree, that business owners need to make ends meet too.
Legal fellow at the Institute of Public Affairs think tank, Aaron Lane, said the current rules don’t take into account location and cash flow.
“The Exchange Hotel in Mossman is required to pay the same minimum wages as a pub in inner Sydney,” he said.
“This is despite massive differences in costs of living for the worker who may be willing to work for less in order to secure a job and differences in the revenue and capacity to pay on the employer’s part.”
Take the example of a burger joint in a town of 1000 people.
Jack sells an average 100 burgers a week. His income is pretty much set in stone based on population.
Any increase in costs – such as a mandated wage rise – is going to have a huge impact because he can’t increase his customer base.
To keep paying the mortgage, himself, and his staff, Jack has to cut costs and/or put prices up.
Customers notice the drop in quality and jump in prices, so they stop coming. Throw in crippling power costs – set by greedy, lazy state gov- ernments – plus food licensing costs, high taxes and unfairly high insurance premiums in the North, and Jack can see his dreams falling apart.
He cuts back the hours for his staff and closes on Sundays.
With no ability to boost sales, Jack goes bankrupt, so he’s out of work and so are the people he employed.
To use a real-life example, a smalltown publican I spoke to recently had to lay off his Sunday barmaid because he could no longer afford her after the latest minimum-wage hike.
There’s only so much beer and food he can sell in a town of 1000 people. So a young woman has gone from having a job with some form of penalty rate to having no job.
Business owners take all the risks and should take the most reward, but this is unpalatable to unions who know nothing except greed.
Take the strikes at Brisbane’s XXXX Brewery. Permanent workers are paid an average $100,000$130,000 a year, they work just 35 hours a week and they each get 70 cartons a year plus the ability to earn cash bonuses.
But still unions are demanding more “security of employment”.
Australia’s high cost of living is a big driver of high wages. Our minimum wage is the third-highest in the developed world and businesses groan under added government regulation and high taxes.
The IPA says the proposed Adani coal mine has spent seven years jumping through regulatory hoops, including preparing a 22,000-page environmental impact statement.
The IPA also points to self-serve supermarket check-outs as a job-killing result of a high minimum wage.
Governments have a huge role to play in reducing costs of living by cutting how much they levy in taxes, stamp duty, fuel and alcohol excise, power prices, tolls, fines and car, boat and trailer registration. (About $18 of the cost of a bottle of rum is tax.)
But they refuse to cut charges and cut spending, leaving people struggling to keep the wolves from the door.
Labor leader Bill Shorten tweeted that the only way to protect penalty rates is to vote Labor, so the case of the country pub will become more common under a Labor government.
If “Unbelieva-Bill” does get in, he should at least look at location factors to help businesses in North Queensland structure wages to a more manageable level.