Shorten’s policies shrink small businesses

 

What would your local shopping centre look like if a third of the shops suddenly shut their doors because they couldn’t afford to pay their workers? And where would your children get their first work experience if the after-school and weekend jobs in your local convenience store, pizza bar or coffee shop dried up?

The inevitable consequence of the instant pay rise Bill Shorten has promised Australia’s lowest paid workers is that our most vulnerable small and family businesses that are already struggling would go to the wall.

Tying Australia’s minimum wage to 60 per cent of the median wage could lead to the closure of about a million small businesses that have battled to survive in recent years, creating economic havoc and costing hundreds of thousands of jobs.

Mr Shorten’s reckless promise is a headline-grabbing grand gesture that simply channels the ACTU’s Sally McManus without doing any economic modelling.

As Minister for Small and Family Business, I love the enterprising spirit of our 3.2 million small businesses, Australia’s economic backbone. They work hard to make their own luck, build a business and better lives for themselves and the people they work with. Having worked in my family business, I understand the optimism of small business owners, and their daily struggle to survive.

Despite making no profit in 2015-16, more than a million small business operators paid $39.5 billion in wages just to keep the doors open, believing things will get better, and they are. Against a 6.5 per cent fall in profits over the five years to 2016, workers’ wages continued to grow by 13.7 per cent in the same period. Profits only returned to strong growth in the past 12 months.

The proposal also undermines the independent umpire Bill Shorten helped set up. Just last year the Fair Work Commission rejected a union proposal strikingly similar to what Mr Shorten is now floating. In considering minimum wage adjustments each year, the commission balances lowpaid workers’ needs with the effects on job creation and participation.

Australia already has the second highest minimum wage in the OECD. Last year’s 3.3 per cent rise was the largest increase since 2011. It was a considered decision, not just a populist number pulled out of the air.

Our small businesses provide Australians with 4.7 million jobs and generate $378 billion in outputs. The fallout from Bill Shorten’s scheme doesn’t bear thinking about.

In contrast, the Turnbull government is delivering for these same people working in small businesses.

Unlike Labor, we are backing jobs growth, including by cutting taxes for the sector that employs half Australia’s workforce. Employment has surged, with 403,000 new jobs in the past year, 75 per cent of them full-time.

In swallowing the ACTU proposal, Bill Shorten shows he’d risk this economic framework and undermine additional safeguards for workers.

By contrast, we will continue to deliver sustainable outcomes for small businesses and Australian workers.

In truth, Bill Shorten is not offering more money. The unanswered question is whether you or your children will have jobs in the future. His supposed light in the distance is not the end of the tunnel — it’s a locomotive heading for an economic train wreck.

This opinion piece was first published in the Daily Telegraph on Friday 16 February 2018.