Politics

Bill Shorten’s minimum wage increase plan will put small operators “out of business”: Kate Carnell

Emma Koehn /

Australian Federal Opposition Leader Bill Shorten delivers the 2016-17 Federal Budget Reply speech in the House of Representatives at Parliament House in Canberra, Thursday, May 5, 2016. (AAP Image/Sam Mooy) NO ARCHIVING

The nation’s small business ombudsman has hit out at Opposition Leader Bill Shorten’s proposal for Australia to consider increasing the minimum wage to a “living wage”, saying it will “put a lot of people out of business”.

Shorten took to the lectern at the National Press Club on Tuesday, outlining several elements of Labor’s economic plan, including a commitment to restore cuts to penalty rates if the Labor Party was to secure government at the next election.

He also took aim at the nation’s definition of a “minimum wage”, saying the current levels of weekly pay enshrined in Australian employment awards do not reflect the needs of people in the face of the “contemporary cost of living”.

“Our goal should be a real, living wage, effectively raising the living wage for all Australians,” he said.

The current minimum wage is $640.90 a week, after increasing by 3.3% last year, when the Fair Work Commission (FWC) decided to set a new standard that was close to double CPI.

But the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell is critical of Shorten’s speech, and says the idea of increasing the minimum wage when the FWC already has the power to set wages “just looks a little bit popularist”.

The reality is that a living wage, in a perfect world, is absolutely wonderful. But if you said to small businesses that you are going to have to pay in excess of $100 more for all of your employees, what it would mean is that small businesses actually wouldn’t be able to employ people,” Carnell tells SmartCompany

“If Bill’s policy is that small businesses should be paying people $100 more a week, then that would put a lot of small businesses out of business.”

The Australian Council of Trade Unions has advocated for establishing a national minimum wage at 60% of the country’s median wage, which could amount to an increase in the minimum wage to $852 a week, reports Fairfax. 

While Shorten has not outlined exactly how Labor would determine or enshrine a living wage, Carnell says his speech yesterday indicates a Labor government would seek to overrule the Fair Work Commission on wage decisions by setting a level.

“The minimum wage is not set by politicians, nor should it be … but that is sort of what he [Shorten] said. There’s no way to get that outcome [of an increase in the minimum wage] without it being political,” she says.

The challenge for smaller operators when it comes to wages talk is that while bigger corporates have their own enterprise bargaining agreements (EBAs), most SMEs employ staff based of minimum wages contained in awards, says Carnell.

A significant increase here could remove their ability to employ more staff, Carnell says. She believes policies on wages should start with how to boost productivity, rather than salaries

You could get big pay increases if you could trade them off against productivity, but if you go wages first, you mess up profitability,” she says.  

In his speech, Shorten also reiterated his long-held objection to the Coalition’s corporate tax cut plan. He wants to limit a cut to the corporate tax rate only to businesses with annual turnover of $2 million or less.

However, the exact details of Labor’s tax plan, including whether existing tax cuts will be reversed, will only be revealed after the May budget, Shorten said yesterday.

Finance Minister Mathias Cormann had demanded Shorten reveal whether he plans to reverse the cuts to the company tax rate for companies with turnovers of up to $50 million, which were passed last April.

However, Shorten said yesterday the policy position would be finalised after the budget.

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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  • Michael61

    Australia has a real productivity porblem. If you are on production line you are forced to work at set rate.

    When you are not I can tell you what you get an employer is mind blowing.

    I have can do a job in time X and for the last 6 years after a forced move I have not found anyone who comes close to me doing certain jobs and I am not a qualified tradesperson. How do you move forward when get is a lot of medicore people. There are a few stars here, but not many. Plus we are not well rounded.

    A person i know said they could do a type of job in time Y and where they used to work some people took 3 Y in time. he said he could manage to cover them.

    If you sacked people for their slowness you could have Fairwork hassling you. You would have to waste so much time and resources to try and help them through, and many just never will.

    If many people had to pay by the hour for people , who work like they do they would scream. So why should employers not be able to do something.

    Its why we have a hassle growing business. Many work for themselves and put 1-2 people on and they hardly make anymore. You want to grow a business and it would blow your mind how many people you need to just get a job done.

    I know so many SME’s who think most people they emplpy cannot really do what they have said they can in the resume and interview in the end, and we are the ones getting ripped off.

    That’s come down yo national attitude, what we have not done in education ( the employer is the final payer for that). Employee’s want it all laid out when they walk in, we are not as rule good system builders, and staff here need a lot of supervising

    We are making ourselves so much expensive every day in this nation, and we are not efficient like Germany

    Plus our public service at all levels is crewing us. How much in the last 2 decades have they outsourced many functions, but did the cost of the public service go down or the numbers. Half the stuff we privatize as well takes decades to stop working if like like the public service.

    This country when it crashes one day , the crash will be spectacular.

  • Michael Ratner

    It’s now getting serious.
    Kate Carnell’s reply covers also the realistic outcomes and funny enough Bill Shorten is not wrong ….. hard to imagine how families can come out on one only single minimum wage.
    If only we could press Control Alt Delete and with the benefit of hindsight do a modern cash flow to make things better. you know … politicians make responsible requests and statements without realizing that it’s double entry bookkeeping at it’s basic.

    We need a modern day equivalent of an open disclosure and inquiry – sort of like Freedom of Information laws where public info is available without obstacles in the way.
    Those in charge ARE WASTING. Everyone wastes except in these instances it’s more a R exercise where certain people appear to be doing something but nothings happening.

    Royal Commissions, Fair Work, Franchise Compliance, Government Grants for possible exports, entrepreneur immigration visas, obscene banking growth based on shareholder value, legal costs…. hell the list goes on…..
    We are told to tighten our belts…. why tell us that, the powers that be are tightening them for us and where are the results.

    The way it’s going we don’t have to worry about being invaded. Not necessary …. The Chinese can do it without a shot being fired.
    Foreign Aid. defence budgets, world stage committees, politicians air travel – hell all sound a good idea but we’re going backwards.

    As for immigration, not sure what the benefits are…
    1. More people.
    2. Bigger welfare bill.
    3 Bigger security concerns.

    Is there anything including this discourse between the opposition and the government in power that is really doing anything to …. as Trump would say, ” Make Australia Great again”.

    Come on – TIME TO GET REAL.

  • Rohan Baker

    The Royal Commission into union corruption showed Bill Shorten had sold out workers with secret payments totalling $25000 from Chiquita. Funds received helped to put him into office. What about the $100,000 Eastlink Thiess-John Holland deal that was done up under his stint as AWU secretary. Or the election campaign officer that wasn’t disclosed as being paid for by UniBuild for some other dodgy dealings?

    None of this benefited the AWU constituents but it sure as hell benefited Bill Shorten..

  • Brian Crawford

    If companies are that close to being unable to pay their current wages then maybe they should preempt their cash flow problems and shut up shop early.
    If you can’t afford dirt cheap wages then something is wrong with your business model.

  • Brian Crawford

    If companies are that close to being unable to pay their current wages then maybe they should preempt their cash flow problems and shut up shop early.
    If you can’t afford dirt cheap wages then something is wrong with your business model.

  • Ray Borradale

    How many times to do we have to hear this argument when there is a positive impact on consumer spending, increased tax revenue and the economy generally. I am afraid Kate is selling trickle down and that sales pitch has long been sliced, diced and flushed as historically and operationally CEO don’t trickle from their pockets or shareholders. One only has to read business news year in year out to grasp that.