The Morrison government justifies its horror about the idea of the minimum wage keeping up with inflation by lamenting that it would lead to the death of small business.
What they neglect to mention is that over 60% of small businesses don’t employ anyone and a further 30% have between 1 and 4 employees.
The minimum wage is currently $40,286 a year. A 5.1% wage rise would increase that to $42,341 but, as Michael Pascoe points out, once tax is taken out, their take home pay only increases by 4.6% from $35,284 to $36,908.
Business would have to come up with an extra (tax deductible) $5.63 a day, of which $4.45 would go to a minimum wage employee to help cope with the soaring cost of living.
A business with 4 employees would have to come up with an extra (tax deductible) $157.64 a week.
So, to sum up, the 60% of non-employing small businesses wouldn’t be affected at all. The 30% who employ 1-4 people would have to come up with less than $40 per employee per week which they could then further reduce by claiming it as a tax-deductible business expense.
As for being inflationary, this paltry wage rise would go nowhere near covering the increased cost of petrol, electricity and food. And any small business that cannot absorb that small outlay wasn’t viable in the first place.
Now to the promise that “A re-elected Coalition government would help create 400,000 new small businesses by 2027.”
The government refused to specify if this was a net increase but, either way, it’s nothing special.
In 2020-21, the ABS reported that there were 365,480 entries as new businesses. With 277,674 exits, this meant an annual increase of 87,806 in the number of businesses.
It’s a bit like their promise “to create 1.3 million new jobs over the next five years.”
The labour force is projected to grow by 1.5 million over that time.
Let’s be clear – a Coalition government will never support employees regardless of the economic case for doing so. As with everything, they claim credit for things that happen in spite of them, not because of them, and wash their hands of any responsibility to do anything meaningful to address the plight of the working poor.
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