Latest news with #LukeAchterstraat
Sky News AU
7 days ago
- Business
- Sky News AU
COSBOA warns 'higher wages without higher productivity is a disaster waiting to happen' after FWC approves pay bump
Australia's peak body for small businesses has warned 'higher wages without higher productivity is a disaster waiting to happen' after the Fair Work Commission approved a 3.5 per cent wage increase. The commission's expert panel revealed that the national minimum wage will increase by $0.84 per hour, to $24.94 per hour, from July 1. This will lift the weekly full-time wage to $947.95, or $49,294 annually—an overall increase of $1,666 per year for full-time workers. The Council of Small Business Organisations Australia (COSBOA) CEO Luke Achterstraat said the recent wage bump comes at odds with the nation's lagging productivity. 'We have repeatedly warned that higher wages without higher productivity is a disaster waiting to happen,' Mr Achterstraat said in a statement. 'To ensure that our children don't endure a lower standard of living than us, we need to boost productivity – our workplace settings have a direct impact on this outcome. 'We need to see less complexity, more certainty and a user-friendly approach that encourages small businesses to hire, grow and reward staff.' Australia's productivity, which is based on 20-year average annual growth rates, was 0.9 per cent in the 2023 financial year. The rate was between 1.7 and 1.8 per cent for much of the 2000s and 2010s and the slump indicates a downturn in the nation's GDP compared to the number of hours Australians worked. The Australian Chamber of Commerce and Industries CEO Andrew McKellar said low levels of profitability, poor productivity and stagnant business investment mean employers would struggle with this wage bump. "For those smallest businesses in the economy, particularly those in areas like retail, hospitality, restaurants and cafes, this will be a very difficult increase for them to take on," Mr McKellar told reporters on Tuesday. Employer groups had argued for a more modest increase of 2.6 per cent, in line with the current inflation rate. The Australian Council of Trade Unions (ACTU) had called for a 4.5 per cent increase to lift the minimum wage to $25.18 per hour. ACTU secretary Sally McManus supported the 3.5 per cent bump and stressed a wage increase was beneficial to small businesses in the long run. 'The very worst thing for small businesses is if workers' wages are going backwards. It means they have to cut back,' Ms McManus told reporters on Tuesday. 'The very first place they cut back on is things that they can afford to. So, that's the little bit extra. It might be the coffee, it might be the sandwich, it might be a beer at the pub. 'You can't cut out your rent. You can't cut out your bills. So it's in the interest, actually, of small business that their customers have more money in their pocket.' The Australian Services Union, which also pushed for a 4.5 per cent increase, said the hike was particularly critical after soaring post-pandemic inflation ate into real wages. 'Essential workers shouldn't be forced to choose between rent, food and staying warm,' ASU national secretary Emeline Gaske said. 'The 3.5 per cent increase is welcome, but it's only a start. After years of cost of living increases, workers need and deserve long-term wage growth to get ahead.' The Albanese government, which did not nominate a specific figure in its submission, urged the commission to deliver a real wage rise above inflation. Employment and Workplace Relations Minister Amanda Rishworth said that the decision was a "win" for workers. 'I welcome the Fair Work Commission's decision to increase the National Minimum Wage and award wages,' she said on Tuesday after the announcement. 'Our government believes that workers should get ahead with an economically sustainable real wage increase. 'A real wage increase provides further relief to our lowest paid workers who continue to face cost-of-living pressures.'
Perth Now
27-04-2025
- Business
- Perth Now
Businesses decry glaring omission from election debate
They're called the "engine room of the economy", employing more than five million Australians, and they may have a big sway on the federal election result. Chasing the votes of small business owners, the major parties have offered a slew of promises, from tax incentives to energy relief, but operators are largely unimpressed. Businesses face the toughest operating conditions in living memory, and what's on offer is merely "tinkering around the edges", says Luke Achterstraat, chief executive of the Council of Small Business Organisations Australia. A noxious trifecta of rising costs, falling discretionary spending and increased regulatory complexity have smashed business, especially in construction, retail and hospitality, Mr Achterstraat says. "You put that all together, and it results in not just those insolvency levels, but also some small businesses voluntarily closing down because they have had a gutful and find it very difficult to remain profitable," he tells AAP. James Thorpe is the owner of Odd Culture Group, a Sydney-based hospitality team which boasts the likes of heritage boozer the Old Fitz and late-night music hub the Duke of Enmore in its stable. "Our spend per head across the group went down dramatically 1.5-2 years ago when interest rates started going up really quickly," Mr Thorpe says. Meanwhile, the cost of doing business has shot up. Rising rents, wages, electricity prices and alcohol excises have taken a chunk out of profit margins. Labor has offered energy rebates and a freeze on the draught beer excise, while the coalition is promising more gas to lower baseline energy prices. Largely absent from the campaign conversation has been how to address skyrocketing insurance premiums, which Mr Thorpe says have doubled or tripled for some operators. "A lot of it comes from the fact that insurance underwriters seem to have an old view of what we call vibrancy now," he says, with late-night venues unreasonably assigned higher risk characteristics. Fewer underwriters in the late night space means less competition for public liability and industrial special risks insurance, compounding the cost. In a statement, the Insurance Council of Australia said there were several underlying drivers behind the rise in public liability insurance premiums. These include an insurer's access to capital and reinsurance as well as settings that govern a business's legal responsibilities, for example, if a patron is injured on their premises. The council called for a review of civil liability settings to ensure there was a "stable and competitive public liability insurance market where businesses are able to access the insurance they need". Rising premiums have barely rated a mention during the campaign, other than Opposition Leader Peter Dutton's threat in February to break up insurance companies that abused their market power. But he was contradicted by shadow treasurer Angus Taylor, who said divestiture powers would be limited to supermarkets and hardware. Mr Taylor says the coalition would help small businesses by providing tax incentives, such as a $2000 rebate for tech upgrades, a tax holiday for start-ups and tax deductions on work lunches. Both parties have promised to extend the instant asset write-off but the coalition will go further, making it permanent and increasing the threshold from $20,000 to $30,000. Tax incentives are welcome but they will be of no benefit to the many businesses who don't make a profit. There's little on offer that tackles the underlying issues, Mr Thorpe says. Hospitality businesses are particularly burdened by a labyrinthine regulatory system, comprising reams of red tape across federal, state and local jurisdictions. Food and beverage services, along with the construction industry, account for more than 40 per cent of recent monthly insolvencies, says CreditorWatch chief economist Ivan Colhoun. Mr Taylor points to record insolvency numbers - more than 29,000 this term - to back his claim that Labor has been the worst government for small businesses. Mr Colhoun says this claim is misleading. A more accurate metric is the rate of insolvencies, given the rise in businesses operating in the economy. Treasurer Jim Chalmers pointed out 850,000 new businesses were created in the same period. "On average, new business investment has grown 4.6 per cent under us, compared to going backwards 1.3 per cent under our predecessors," Dr Chalmers said in a debate with Mr Taylor. As a proportion of businesses, insolvencies are lower than the historical average at 0.036 per cent. During the Howard government, the rate tended to bounce around between 0.04 and 0.05 per cent. Insolvencies have moderated since the start of the year as interest rates began heading down and consumer confidence recovered. But the threat of an economic slowdown driven by Donald Trump's trade war worries retail operator Sharee Potter. As a discretionary purchase store, Little Cactus - her fashion boutique in Melbourne's eastern suburbs - is especially vulnerable to a drop in disposable income. "I just think the government could do a lot more to support small business," she says. "I've had to let more of my staff go and so it has flow-on effects for the community." Complexities around pay and super regulations add to retailers' difficulties. Penalty rates have forced Ms Potter to stop operating on Sundays, she says. "I took Easter off this year, which I haven't done in 10 years, and normally I'd pay for staff to do Easter Saturday but it just wasn't going to be worthwhile this year. "So I just closed for five days and took the break for my mental health, but that doesn't help your bottom line." Employer groups have scolded Labor's promise to enshrine penalty rates in law, tying the hands of the independent umpire the Fair Work Commission and stymieing attempts to simplify the system. "It's very short sighted by the government to politicise penalty rates on the cusp of the election," Mr Achterstraat says. "I think it's quite cynical." The coalition says it would wind back some of Labor's workplace changes, such as reverting the definition of casual workers and repealing the right to disconnect. But it won't touch more contentious issues like multi-employer bargaining, having largely steered clear from fights over industrial relations since WorkChoices brought down John Howard in 2007. Mr Achterstraat acknowledges positive moves from both parties to address over-regulation but his number-one desire is to cut the small business income tax rate from 25 per cent to 20 per cent. "That would capture a lot of entities and allow them to keep more of their profit, reinvest that and also boost their cash flow."
Yahoo
28-03-2025
- Business
- Yahoo
Major ATO tax debt change for all Aussies: 'Devastating impact'
Aussies will be hit with bigger penalties from the Australian Taxation Office (ATO) if they fail to pay their tax debts on time. The interest applied on overdue tax debts will no longer be tax deductible from July 1, 2025, after laws passed parliament this week. Legislation to remove tax deductibility for both the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) was passed by the Senate on Thursday. The change is expected to boost tax revenue by $500 million in 2026 and 2027. Hive Wise founder Hripsime Demirdjian told Yahoo Finance the change would not be tax-beneficial for individuals and small businesses. RELATED ATO warning for small businesses as $20,000 tax break scrapped in federal budget Centrelink blow for millions on JobSeeker, Age Pension as federal budget denies cash boost Aussie couple on $330,000 reveal 'trap' that saw them in $151,000 debt: 'Isn't talked about' 'The reason why this measure was introduced is because the ATO has more than $50 billion in collectable tax debt,' she said. 'This change is being enacted in an effort to encourage the payment of tax debt on time, as the cost of debt will increase.' The ATO applies the GIC when a tax debt hasn't been paid by the due date, this includes where a tax return has been lodged late. The SIC applies when an incorrect self-assessment leads to a shortfall in tax paid. The ATO applies the SIC is applied to the shortfall amount. The GIC rate is currently 11.17 per cent per annum, while the SIC is lower at 7.17 per cent per annum. Both charges apply on a daily compounding basis and were tax-deductible. The government first announced the change in December 2023 and said it would encourage tax compliance and benefit taxpayers who were already doing the right thing. "Removing these deductions will enhance incentives for all entities to correctly self-assess their tax liabilities and pay on time, and level the playing field for individuals and businesses who already do so,' the government said in the 2023-24 Mid-Year Economic and Fiscal Outlook (MYEFO). The Council of Small Business Organisations Australia (COSBOA) has criticised the move and said it would impact small businesses the most. 'The overwhelming majority of small businesses are doing the right thing and seek to pay their tax on time and pay it correctly,' COSBOA CEO Luke Achterstraat said. 'Targeted measures to deal with high-debt accounts would be more appropriate and equitable to encourage voluntary compliance across the tax system.' CPA Australia also argued against the change, noting it could have a 'devastating impact' on small businesses already dealing with high interest rates and inflation. 'For tax-paying small companies, the non-deductibility of GIC effectively raises the penalty rate by 25 per cent,' CPA Australia tax lead Jenny Wong said. 'For sole traders, it potentially increases the penalty rate by up to 47 per cent depending on their marginal tax rate.'
