Rents not Wages hurting small business

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Letter to the Editor
Australian Financial Review
29/01/2015

Those urging cuts to penalty rates and minimum wages for working people remind me of the blind guides, in the biblical proverb, who strain at a gnat and yet would swallow a camel. Your story “Mates’ rates help Rosy’s cafe survive Australia Day penalty” (AFRJanuary 27) demonstrates much solicitude about the rate of wages for labour, yet barely a whisper about the enormous rental charges faced by business, which are glossed over as being a “fixed cost”. Far from being fixed, commercial and industrial rents (fuelled by rising land prices) have been easily outstripping wages growth for many years.

Yet, does anybody seriously think that a cut to labour’s reward would not quickly be absorbed through yet another increase to commercial and industrial rents? Instead of having another industrial relations war, it is in everyone’s best interest for government to adopt policies that reduce land prices and hence dampen exorbitant rental charges. The application of Land Value Taxation in lieu of burdensome taxes like Payroll Tax and the GST would boost general prosperity, take the profits from idle land speculation and justly re-direct them into the pockets of workers, and genuine entrepreneurs alike.

Ronald E Johnson
Association for Good Government, ACT Branch
Canberra, ACT

2 Comments

  1. Ned13-02-2015

    if commercial site rents were a “Fixed cost” as in a long term lease then it gives Employers no leg to stand on to argue for lower wages or cut penalties rates because they lock in a lower rent long term against the upward rent inflation bubble of house and rent prices only ever go up until pop. Im amazed at the stupidly and greed of Australian employers who steal a fair wage that deprives spending in the real economy and organise a begrudging low wage that withers retail spending, while commercial rents are huge “dead money” in their own terms. But they are addicted to their lavish site status.They have much to answer for when the economy finally falls over latter this year with the petrodollar and U.S housing market with the nasty derivatives and speculative bonds market. Suck it up Aussie Employer. Oie.. Oie.. Oie

  2. THEO15-02-2015

    Seriously? The hypocritical nerve to lay the blame elsewhere except onto themselves. They happily voted for the same political parties that allowed all this to happen. They have no one else to blame but themselves. They have no support, respect and sympathy from me and probably most Australians.

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