Is Labor targeting small-businesses?

Ross Greenwood speaks to Australian Chamber of Commerce and Industry CEO James Pearson as Opposition leader Bill Shorten vowed to reverse penalty rate cuts which came into effect this financial year, if he wins the next election, as well as repeal tax cuts for corporations of less than $50 million

Introduction: Is Labor targeting small-businesses?

Ross Greenwood: Coming up very shortly, we’ll go through some of the things that actually do start from today like, say for example, the tax free or the tax threshold has moved from $87,000 to $90,000. After which you’ll start paying tax at 32.5%. That’s a tax saving. Also for low and middle income earners, there is a tax offset worth $530 but you don’t get that until you put in your tax return at July next year. Also, a lower corporate rate of tax at 27.5% that’s going to now be extended to companies that have a turnover of less than 50 million dollars, but do remember that Bill Shorten says he will repeal this if he comes to power.

He also says he will repeal something else it started from today and that was remembering that the whole issue of the penalty rates, first Sunday for workers in fast foods, retail, hospital and pharmacy, there’s going to be cut as of today. The new minimum hourly wage is going to be $18.93 up from $18.29. Other bits and pieces from today and that is childcare. Remember also that a household with total annual income of less than $186,958 will no longer face a cap on the amount of rebate paid to them each year. For those earning more than this, the annual cap will lift from $7,500 to just over $10,000 per child.

Why on earth, I guess, we pay people who earn more than $200,000 subsidies to send their kids to childcare? I didn’t still don’t quite understand that but that is something that we are doing from today. Somebody who might be able to help me shed a little bit of light on this is the chief executive of the Australian Chamber of Commerce and Industry, James Pearson who is on the line. Hello, James. How are you?

Interview with: James Pearson, CEO, ACCI

James Pearson: Good evening, Ross.

Ross Greenwood: Just take me through a few bits and pieces, say for example, the government or rather the Labor Party says if they win power and we know that the polls are tightening up, say that they would not only repeal the whole issue of the penalty rates, but on top of that would then repeal some of those tax cuts for corporations with turnovers of less than 50 million dollars. They bring it all the way back to 20 million dollars or maybe 10 million dollars depending on who you talk to. From your point of view and a lot of businesses are smaller businesses that are members of your organization, what does this mean?

James Pearson: It’s a double whammy, Ross. It’s a double whammy because a lot of the businesses that pay award wages and might be looking to open on Sunday and bank penalty rates, if penalty rates are forced up by a Labor government and at the same time the tax that these small and medium sized and family businesses are paying isn’t reduced again as this current plan and is currently the law, then that’s a double whammy because their costs are going to go up and they’re not going to get the advantage of that tax cut.

Look in a world where increasingly retail in particular Australians are choosing to buy on the line that they’re choosing to buy from overseas as well as domestically. It’s actually pulling down Aussie businesses. The beneficiaries will be businesses large and small overseas who are more than willing to step in and take the market from Australia.

Ross Greenwood: Okay, let’s pick up a little bit of Bill Shorten over the weekend. He was in friendly company, there’s no doubt in they are in Sydney. This is when he pledged all sorts of spending for infrastructure around Sydney to stop bottlenecks and so forth but he also said and promised again that he would repeal any sort of changes to penalty rights.

Bill Shorten: I rededicated labor to Australia’s oldest workplace promise. A fair day’s pay for a fair day’s work and it is why I am proud to pledge that in the first 100 days of a Labor government, a new Labor government, we will reverse these cuts to penalty rates and protect take home pay.

[applause]

Ross Greenwood: Only thing is, James, as I look at these are the Fair Work Commission that instituted this, made this decision, it is a Labor Party creation that was created during a period of time when Bill Shorten was a– I kept saying these but people just keep on pretending. He pretends it didn’t happen.

James Pearson: If the Fair Work Commission operates as an independent pay, you’re absolutely right. It was set up by the Labor government of which Bill Shorten was a leading member. What’s happening now is that the opposition in the union movement are actually trying to blame all of this on business when it’s actually being delivered after a couple of years of intensive research and scrutiny and thousands and thousands of pages of evidence and testimony by the independent umpire, the Fair Work Commission. They made a balanced decision that’s how they described it as phased in gradual reductions to penalty rates on Sundays, no other day of the week.

They come in over four years, no one is saying that they should be abolished. It’s accepted generally that we will pay people more for working on Sundays, but it’s also being accepted by the independent umpire, the Fair Work Commission, Labor’s creation, as you say, that if we want to get young people employed, if we want to see shops opening not closing on Sunday and being able to actually take a bit of a break themselves and hire someone else to do their job, then this is what we need to do.

Ross Greenwood: Okay. James, you’ve talked to a lot of businesses in our community. What do you think the state of businesses, because what argument could be made about what the stock market a 10 and a half year highs. We have profits coming through the door of companies, large and small right now, they’re paying more company tax to the government than they have for almost a decade. That would seem as business is in relatively good health. We keep on hearing the business needs tax cuts to keep them competitive, all that type of thing. If business is in relatively good health right now, why do they need tax cuts? It’s a question a reasonable person should at least ask.

James Pearson: Fair enough question to ask and, look, the bulk of the businesses that we represent in this Chamber of Commerce and Industries aren’t the bigger end of town. Some of them are, but the bulk of them are small and medium family enterprises. I’d go down a high street and have a look at how retailers, for example, are doing, that over half of the small business operators in Australia are actually taking home $50,000 a year or so that have invested the average wage. While some industries and some companies and good luck to them are doing well and that’s important because that means they’re hiring people, they’re providing people with good jobs, they’re creating wealth and all of those millions of Australians with super funds who’ve got money invested in it are doing better.

That’s a great story and long may it continue, but look for a lot of businesses, Ross, it’s not such a good story. That’s why I say it’s a double whammy. Labor wants to take away the rest of the tax cut that’s already in the law and labor wants to actually put into law, not being done before, penalty rates for people which means that there could be arise as much as 14% after the middle of next year of their pay people would have to be given on Sundays without any compensation in terms of being able to sell products or services for more. Small businesses, cafes and the like they just can’t whack up the price of a cup of coffee to cover a steep increase in what they have to pay.

They’ll basically have to suck up the cost somewhere else. The way they usually suck it up is the owners of the business pay themselves less, they’ll work longer hours, they’ll let go or won’t hire their extra young person who is looking for a job. What I’m saying is the Labor Party is pretty simple. You want to do you want to provide increased pay for people who’ve already got a job at the risk of some people losing their job and a whole lot of other people never even getting a job in the first place.

Make no mistake, there are winners and there are losers. What Labor is saying that they want to focus on the winners and not the losers. What worries me and the people I represent is that a lot of young people across our country, they get there start in small business, they get there start working at weekends, working on Sundays. Are we saying to them basically, “Well, you’re just going to have to take your chances because it’s more important to put people’s pay up even though it can’t necessarily be afforded by small business. Too bad if you miss out on a job mate someone else will do well.” I don’t think that’s the way most Australians want to see it work.

Ross Greenwood: There you go, James Pearson is the chief executive of the Australian Chamber of Commerce and Industry and he’s pointing that view pretty firmly that this is not the answer. That you do want lower taxes, you do want to make certain the penalty rates are reasonable over weekends. Now just thinking about this yesterday was the very first Sunday that people would have actually had the new regime for penalty rates for workers in fast food, retail, hospital and pharmacy. Now if you run a business, tell me what happened yesterday.

Did the workers still turn up? Did you have trouble finding workers because the penalty rates weren’t as great? Did they blow up about the fact? If you’re a worker and you’re starting to pay back, again give me a call. Did it actually make a difference anywhere around the place? Or did life just go on? Give us a call on 131873. We’ll take your calls very shortly. James Pearson, I appreciate your time on the program.

James Pearson: Thank you. Ross.

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Image source: 2GB

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