Rents not Wages hurting small business
Letter to the Editor
Australian Financial Review
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