Labor’s budget packages to help small business have been labelled “smoke and mirrors” which won’t rein in rising produce and energy prices.
Treasurer Jim Chalmers presented his plan to the nation on Tuesday night to repair the Federal budget and get the cost of living under control, and for small business owners in the hospitality industry this includes supporting wages for minimum wage earners.
But for Berj and Jackie Yardemian, who run a pizza shop in Sydney’s North Shore, the budget didn’t provide answers to the labour shortages and staggered increases in the price of produce and operational costs that have hit their business over the past few years.
“It’s a lot of smoke and mirrors, covering it up. To me, it’s a lot of rubbish and it’s not going to help us one bit. It’s not going to help the country, the country is gonna suffer in the next one to two years. Energy prices are going to hurt,” he said.
“I couldn’t see too much with regards to benefits for small business people, it’s more addressing individuals, like tax cuts coming in next year and paid parental leave.”
You’ll find more businesses closing, you know, it’ll be just dreadful out there.
Berj blames rising energy prices as a major pressure on their business.
“You know, how long can we wait to see how far energy prices are gonna go up and up and up? You’ll find more businesses closing, you know, it’ll be just dreadful out there,” he said
Attempts to offset operational costs have proved challenging for the couple who currently rent their business space. They’ve looked into installing solar panels on the roof of their building, however they proved to be too expensive.
“For us to get solar, our landlord wants to spend $20,000 and fix the neighbours roof because they are joined. We would love to put solar on the roof but we can’t do it,” says Jackie.
The government is committing $62.6 million for small and medium sized businesses to improve their energy efficiency and reducing energy use, however energy prices are set to increase by 20 to 30 per cent over the next few years. Energy costs – particularly from gas – are set to rise due to the sanctions on Russia for invading Ukraine. Switching to renewable energy will minimise the impacts of these shortages.
Berj does not believe this package will help much.
UTS industry professor and chief economist Tim Harcourt labelled this budget one ‘for the true believers’ of the Labor party. Targeting wages, productivity and housing are common for Labor budgets, but Professor Harcourt said it was still ‘restrained’.
“Labor don’t want to be tarred with the big spending label and so are being reasonably conservative,” he said
“The fall of Lizz Truss has spooked treasurers around the world, and they won’t be reckless with their budgets.”
A challenge for family businesses like the Yardemian’s is the capacity to balance family life and business needs. The Labor government has allocated $531.6 million for an equal 26 weeks of parental leave. However, Professor Harcourt believes the expanded parental leave might not be as effective as it could be.
I bought a case of rocket for probably $12 at the markets, it only lasted 24 hours so I was down at the local vegetable shop paying $24 a kilo for it all week. People don’t see that as a cost.
“It’s a question of costings and the capacity of employers and employees to take it up,” he said.
“The experience in most countries has been that fathers don’t take it up as much as offered, especially with cost of living pressure and workplace stresses.”
Energy prices aren’t the only cost of living pressure businesses are under. Jackie also pointed out the rising cost of produce impacting her business.
“Not necessarily vegetables, it’s the cost of all other ingredients. A box of cheese now has gone up by 30-40 per cent. For a box of cheese, which is one of our major ingredients! It’s very hard to pass that cost onto the customer because you’ve got competition,” she said.
Jackie picking mint. Ensuring her produce remains fresh is a major cost for her business.
The Government has released a plan to improve agricultural stability with $2.4 billion allocated to increase annual output to $100 billion by 2030, in an effort to bring the cost of these products down. The package involves increased funding for biosecurity measures, water stability and upping the amount of land used for farming.
Jackie does not believe this will help her business significantly.
“The rain has affected the quality of produce. I bought a case of rocket for probably $12 at the markets, it only lasted 24 hours so I was down at the local vegetable shop paying $24 a kilo for it all week. People don’t see that as a cost,” she said.
Professor Harcourt described the agriculture package as ‘presentation’ as price rises have been due to natural disasters rather than water stability. The money may be better used in the disaster relief package.
“Murray Watt has been quite an activist Agricultural Minister. They’re showing rural communities they care and that they are thinking about them in terms of floods and biosecurity,” he said.
Photos by Ryan Lum.
