The threat of job cuts is a smokescreen

Grumpy says:

08:43am | 14/01/11

Businesses dont pay GST, they just hold it and account for it. the consumers pays it. Theese business are just doing exactly what theyre arguing the consumer is doing that will cost jobs…but they will pay import taxes and stuff because they buy so much. their argument is a joke.

Garth says:

08:52am | 14/01/11

It is actually we consumers who pay GST.  Retailers merely collect it and pass it on to the Government.  It is strange you spend your whole post disputing “facts” then make such an elementary error yourself.

Jay Stephens says:

10:03am | 14/01/11

“just because somebody is protecting their own interests doesn’t mean they’re argument is not correct.”
No - but it makes it likely their argument applies only to the patch they’re protecting. In this case, as the OP says, more jobs might well be created outside the taxed sector - so the country, the infrastructure and the community will all benefit, far outweighing a reduction in profits in an already profitable part of an industry which employs 1% of Australians.

Lisa H. says:

11:47pm | 15/01/11

Actually running a business means a lot of balls in the air at once.
IRL GST becomes just another tax that must be managed as part of cash flow.
It is easy to say that GST is some magic, separate part of a business cash flow, but just saying that does not make it so.
If there is a business down turn, it is likely a small business will run down their holdings to pay their PAYG and take home wage liabilities. Which is why the tax office publicised their ‘generous’ BAS honeymoons during the GFC.  Tax bills, because they are so high and so frequent, can really push business to the walll.

Reg says:

03:36pm | 16/01/11

I have no idea how frequently businesses have to make a return of GST to the government, but for the period they retain it they are using taxpayer funds to prop up their businesses. Not too bad, a 10% windfall on all sales for a limited period. Any sort of increased GST would obviously be most welcome.

Lisa H. says:

04:56pm | 16/01/11

Reg, in your special world, bank loan repayments and all other necessary expenses would be divvied up before the first customer has walked through the door.
However, any one who has ever run a business knows until sufficient customers walk through the door to pay the collective expenses, your theory on tax bills vs other types of expenses remains just that - a theory.

Daylight robbery says:

05:14pm | 16/01/11

“but for the period they retain it they are using taxpayer funds to prop up their businesses. Not too bad, a 10% windfall on all sales for a limited period. “

The problem with this is that when there is no work or one day a week in a softer market small business owners make the tragic error of withdrawing and using the GST to feed their children.

I also believe the debted small business pay 17% interest till they approach the ATO regarding the failure of paying their GST.

There is a lot of small business in the GST trap.  I believe 50% of NZ tradesmen went broke when the GST was introduced there.

There is no escaping this debt for small business not a PTY LTD?  Not even bankruptcy?

Reg says:

11:05pm | 16/01/11

No doubt you know better than I Lisa H, but funds deposited in an LOC account prior to payment to the government, still off-set interest charges on that account and represent an income derived from taxpayer funds.

Naturally, no customers, no income or GST to invest. Ta.

MarK says:

08:54am | 14/01/11

Problem is the cost of the new jobs created is ridiculously high.

Go ask Spain.

Jim says:

11:59am | 14/01/11

I applaud the way you think Alex, but the one attempt this government has made on green jobs failed miserably after the massive fanfare it was launched with. Not only did the concept fail, it cost the tax payers millions to clean up the mess left behind (Green Loans)

dobbieb says:

09:03am | 15/01/11

Here’s a cat among the pigeons. Cut the 17.5% annual leave allowance and reduce annual leave to three weeks. NO sick leave without doctors certificate, That should help employers find some more jobs.
In NSW change the reponisinility to the person who caused it, either the employee who was careless or the emploer who provided unsafe conditions. Get rid of the unfair dismissal laws to small business, 20 employees or less. With all this gone small businesss will again be able to employ people.

Reg says:

07:11am | 17/01/11

Too sensible Grumpy. Then there are those who would claim we’re only being emotional and should accept that this is a different market environment, or some such other dismissal. Notice the traditional misery being displayed by Brother MarK above. Yur gotta larf!

Nate says:

11:00am | 14/01/11

You obviously haven’t seen a lot of checkout operators these days. They’re basically dull, lifeless machines themselves!

marley says:

12:56pm | 14/01/11

Recently got back from a trip to Canada, where self-serve checkouts are all the go.  And you know what, I liked it.  No waiting in queues, because there were lots of the little monsters.  About as fast as a manned check-out, and more engaging - the machine was more personable than some of the check out people I’ve encountered,  and actually asked questions - like, do you want another bag?  Do you have a loyalty card?  Will you pay by cash or credit card or bankcard? 

And of course the machines don’t get overtime, penalty rates, vacation pay, or any entitlements except an occasional meeting with a technician. 

Another thing you see a lot there, but not here (at least not in my neck of the woods) is automated petrol pumps. Put in your credit card, pump your petrol, get a receipt and away you go.  Faster, and of course it means the station can be open at all hours with no attendants, and no risk.

Old Cobber says:

02:32pm | 14/01/11

A healthy.unemployment figure, say,6-7% would stimulate competion and cut down on the mediocracy and sloth in the service sector. As a result of promotional incentives and convenience, Itook up Woolies Everyday/qantas pay pass Mastercardand always prepay so no interestshould be incurred.
Despite widespread advertising around 70%  of staff are not aware of /cannot process this simple offer. ON 13/1/11 Woolworths groceries,Liquor and Big W Atb Karrinup[wa] same result!  i am tired of training these employees!! Rebuttals include—“We cannot discuss due to Privacey Policy “We are only told on a need to know basis”  “I must of missed it at Staff meeting” etc,etc   Contact is virtually impossible with theCo—Runarounds, Email us etc the cover up.

Whilst I’ m at it 2 blokes wearing CSR shirts and I.D Called for 50 minutes to inspect insulation as perDept CCⅇ Canberra. Dicital photos taken of Vents, a/c outlets., powerboard with lecture on procedures.    Outcome ?  Unable to complete due toA/Cduct lying across Manhole, all recorded on hand held P/C.  IKID YOU NOT !!!  when asked “Whats next” One says “Eeh lud Gumint be in touch”  Fair Dinkum!And they reckon Bob Katters mad.

Reg says:

03:46pm | 16/01/11

Old Cobber, are you a mate of Bob Katter? You sure talk like him.

This is really only a test to see if the moderator has been automated because your stumbling words got by. Maybe they’re all pissed for the week-end.

Tubesteak says:

11:14am | 14/01/11

It has been proven by a Harvard University study that pirating had little to no effect on sales.

Basically, the people pirating the content would never have bought it in the first place.

Paradoxically, the assumption that a pirate won’t pay for something was also shown to be false. I have bought things I’ve pirated and I have also pirated things I would never have bought.

The RSPT came about as a request from the mining sector during the Henry Review. It became unpopular when Labor sought to levy it at a lower rate. However, mining’s claimed contribution to our economy is overstated. They only contribute about 7%. Moreover, having a lot of unskilled or semi-skilled people earning 6 figures isn’t doing our economy any favours as it is driving inflation and wage rates in other sectors.

The brakes should be applied to the mining sector before the Dutch Disease really sets in and we lose the potential of the money that could be used to benefit us (it’s our resources after all) before it is sent to foreign shareholders.

Harold says:

12:01pm | 14/01/11

“The main problem, as I see it, with piracy is that it discourages production of content, at least professional production.”

After ten years of “rampant” piracy, the entertainment industry is still raking in the profits. There does not appear to have been any dent in the level of professional production (although one can always debate the quality).

AdamC says:

12:03pm | 14/01/11

Tubesteak, I haven’t heard of this Harvard study but I think you would agree that, if people take piracy to its logical conclusion, then content production will cease to be a viable business. Thus far, you are correct that piracy has not got to the point of threatening content production. However, that can easily change. It is also, of course, quite a naughty activity anyway.

And I wasn’t trying to debate the merits of RSPT. I was just saying that the criticisms of it were more sophisticated and valid than the author suggested.

Tubesteak says:

03:51pm | 14/01/11

But that’s the point. Even taken to your logical conclusion it’s not borne out by the facts. Piraters still buy content. There is very little in lost sales.

Like I said, (and this was shown by the Harvard research) I’ve bought stuff I’ve pirated and I’ve pirated stuff I will never buy so it was never a lost sale in the first place.

Chris L says:

08:07pm | 14/01/11

In accordance with Tubesteak, I’ll buy a movie/album/game if I’ve experienced it (pirate) and liked it. I’ve done it plenty of times and plan to continue. If the quality is good people will buy it. If they produce crap they can’t blame the pirates if it doesn’t sell.

TheRealDave says:

09:55am | 14/01/11

Because he’s counting up all the electrical goods he’s about to sell at ripoff prices courtesy of all the insurance companies in Queensland that can’t get out of the multitude of insurance claims they are about to get hit with…..

Stephen Fitzpatrick says:

11:04am | 14/01/11

Quick little googleing brings up a report that JB Hi fi profits “rose 26 per cent to $118.7 million for the year to June 30, on sales revenue of $2.7 billion—just shy of its targeted $2.8bn.”

So no mate, JB Hi fi is doing just fine, unlike your argument.

In fact, I’m not sure what your argument is, the same amp in Hardly Normal would still be made in China, but you would pay $2000 for it. But wait, you wouldn’t, becuase you only have $1000. In fact you would only have $500, because you spent the other have on the sneakers. From South Africa.

I find it hard to cry for Mr Billionare when Officeworks will match any internet price and their staff don’t work on commission so they’re up front about the products. It’s called being competitive.

Tubesteak says:

12:25pm | 14/01/11

The question you should be asking then is why are Australian retailers so expensive?

They’re both selling foreign made goods.

Rent?
Well then let’s make more space available for more buildings to increase supple
Hadly Normal own all their land and buildings anyway

Labour costs?
No. Paying someone $15 per hour is not a significant cost to warrant being 500% more expensive

The reason has to be somewhere.

Did somebody say “gouging”?

Mr GG says:

01:00pm | 14/01/11

how about Aussie retailers give Aussie manufacturers a chance to compete….Opps too late they already put them all out of business by importing their stock from overseas. And who cares about the minimum wage job for high schoolers at JB HiFi may be we’d be better creating Jobs that actually pay decent wages, but that would reduce the retailers profits so they export the goods instead. If you have a skilled job and the company can employ some one cheaper from overseas they do, I have had jobs out sourced by companies wanting more profit (I work in IT) And now your telling us we shouldn’t out source our spending because the same buggers that did it to our jobs will lose money!?!?!?!
And I buy online from Australian Companies and still get 30-70% cheaper than in stores, So the money is staying in Australia and I am NOT getting ripped off by the Likes of Gerry.

Here is a better Idea make a Usury Law, 10% profit maximum, since we are all paying to keep these useless obsolete businesses going they should have restrictions on Profit. Or If we are staying capitalist they can reduce their CEO and Executive payments so they are competitive because as long as they are getting over 7 figures Forget giving them Charity.

Ben C says:

11:05am | 14/01/11

Two points kerrie:

1. Never, ever use the words “hard working” to describe politicians.

2. Why does the Labor Party want to win governments, both state and federal, and make Liberal/National Party politicians unemployed? I’d argue that Labor, through the union influence, would make people work half as hard for twice the pay, which would mean less profits fo businesses, which would potentially lead to higher unemployment due to businesses not earning enough to support their workers…

Jim says:

11:56am | 14/01/11

I’m by no means a fan of Gerry Harvey and what he’s trying to do Dave, but to blame the downfall of Australian manufacturing on retail is misleading. There is a reason retailers started buying overseas - Aussie manufacturers just couldn’t compete after years of union driven excesses and reduced output.

Ultimately it’s the consumer to blame if you follow your logic…but when retail prices on overseas goods are half the cost price of Australian made goods it’s a no brainer isn’t it?

A Dose of Reality says:

12:02pm | 14/01/11

Exactly.  The Wallmart principle.  Buy something outstandingly cheaper (and inferior), raise the markup to a point still below the previous cost to improve the % profit per dollar spent.  Then reap further rewards as the inferior product needs to be bought again more regularly due to build quality deficiencies (thus increasing $ turnover).

Jim says:

12:08pm | 14/01/11

As usual St Michael, long winded, self gratifying and condescending. Apart from that you’re a good read.

The ‘pittance’ the artist gets from the record companies has been around since The Beatles though…it will never change. What defines a good artist from the trashy hip hop we get these days is the touring and live performances. A good artist is able to fill stadiums - that’s where they make their money.

Apart from enjoying a good book, I know absolutely zilch about the publishing side of things…but wouldn’t the fact that you can walk into any book store and see books that were first publish 30+ years ago mean that a good, steady flow of money to the author exists? (Unlike records I mean, which are usually only the shelves for a few months)

St. Michael says:

03:04pm | 14/01/11

@ Jim: I do aim to please.   The longwindedness, self-gratification, and condescension are just added bonuses.

Books that have gone through multiple reprints (resulting in a 30+ year shelf life) do indicate the book is one of quality, at least.  It means they’re other than a “flash in the pan” and that they speak to more than just the first generation of readers who comes across it.

But I don’t think it necessarily translates to a good, steady flow of income to the author - they’re notoriously underpaid for the work they do, and publishing companies tend to hold back royalty payments “until the Eagle screams” as Stephen King once called it.  Stephen King and J.K. Rowling are the exceptions, not the rule, of authors.  And even Stephen King has toyed with self-distribution and self-publishing in recent years.

Let me put it mathematically: if you’ve got a good book that you’re pretty sure is going to sell, and it does sell for 30 years plus, what proportion of the book’s selling price would you prefer coming into your hands:

(1) the full $24.95 asking price minus the (say) $3.00 per book it costs you to print and distribute it yourself, with the money coming in on each and every sale of each book, or

(2) $24.95 minus the $20.00 or so that the publisher and distributor keep for themselves, said amounts only arriving occasionally when the publisher can be bothered to forward the royalties to you? Bookstores and publishers treat their customers well, but they treat their suppliers and authors abysmally.

Fair call: most self-published books probably aren’t written well enough to sell thousands of copies.  But, and it is a contrarian point of view, a self-published book isn’t meant to be a “bestseller”.  A “bestseller” chokes a small self-publisher’s distribution chain.  Rather, a well-written self-published, self-distributed book is meant to provide the constant steady stream of income that you notice from the books which have been in the stores for 30 years or more.

Reference link for more discussion on the subject, admittedly from John T Reed: http://www.johntreed.com/Wal-Mart.html.  He’s got other pages on the issues at the website, but I won’t refer them direct here.

Mr GG says:

01:13pm | 14/01/11

why do we need retailers?? why do they have a right to make a profit when they no longer provide a service as we can get it from China ourselves. Retailers are redundant and like most people that find their job redundant because of technology (typist, mail room clerks, manufacturers, labourers, checkout chicks{retailers already did it themselves to their staff}) they had to go get new ones. Its called progress and for the reason you stated it would be more efficient in this country to cut out the middle man since it is unprofitable and just do it our selves since technology has made the retailer obsolete, the only purpose of a physical store is for a ‘hands on’ Viewing but the manufactures should be paying for that since they want to convince me to by their product and not the competitors. Sorry the World is Changing and Retailers are Obsolete and should go Extinct in favour of a more efficient system. More jobs get created but now in Logistics or technical support which pays better anyway.

Markus says:

02:36pm | 14/01/11

All the unemployed retailers could go get jobs in the courier/postal companies that will experience increased demand if more people order things online to be delivered to their front door.

Problem solved.

Reg says:

07:27am | 17/01/11

It sure makes one wonder what Kodak is up to these days. No doubt they saw the writing on the wall and now make something like woollen goods, chemicals and dog-food.

St. Michael says:

03:13pm | 14/01/11

This one I do agree with you on.  What you tax, you discourage.  And above a certain level of tax the government actually hurts its own finances, it doesn’t increase them.

For example, if you raise an income tax rate too high, people stop working or defraud the taxation system.  Net loss to tax revenue, since that number of people are not paying tax at all.  Similarly, if you raise royalties and/or taxes too high, companies simply say “Where’s the incentive for us to even be in this game at all?”  Overdoing tax is quite literally cutting your own nose off to spite your face.

Matt says:

03:59pm | 14/01/11

The simplistic rationalisation of earnings = good for humanity is proposterous in various scenarios. Think of a drug dealer for example. Or should we suppose that insurers should avoid paying out legitimate insurance claims because it is ‘better for humanity’? The real world complicates the fantastic capitalist theory very quickly.

The tax on the mining sector was an attempt to keep Some of the profits from mining in our country. Yes we have a lot of workers getting paid here and that is earning us a lot of money now, but I don’t think people realise how much of these companies are actually owned overseas and how much more they could have been earning Australia.

Rio Tinto, for example, is only 13% Australian owned. It’s 9% Chinese Government owned. Yes please make sure the 87% of foreign investors get their dividend with as little tax as possible?!? After all, think of all the jobs today!

See below for more details:
http://www.maynereport.com/articles/2007/07/17-2040-8377.html

The mining boom is Australians in a rush to make as much as we can today. We couldn’t dig it all up at once by ourselves, so we sold it off to overseas governments and investors. We cheer at how smart we are as we work for them, even though they are making so much more profits from our own resources. Ultimately, when the rocks go, we’ll have nothing left afterwards. And since we’re digging it up so fast and putting so many workers into one basket that is quickly running out of fruit, the jobs will only disappear all the quicker when we run out.

Higher taxes wouldn’t have made the mines unprofitable or unviable. At very worst it would have made many of the mines unviable for a few years. As the world continues to run out of resources, the price of metals will only continue to increase and increase, and eventually every rock and bit of ore in the world will be financially viable and dug up - regardless of the tax rate.

Were we smarter about it and unified and acting like a halfway rational country we would have been mining it slowly ourselves over the next 50-60 years whilst prices continue to rise and rise and rise. Were we not in such a rush to make as much as we could tomorrow we would have retained ownership in our own country, and reaped the benefits for a long long time. Sadly, we think for ourselves and let our children be damned. It’s the Australian way.

Anyone want to flip another property today?

St. Michael says:

06:45pm | 14/01/11

@ Matt: I don’t much like it, either, but your argument has, respectfully, three apparent oversights:

(1) The notion that tax is imposed for social equity reasons;
(2)  The fallacy that the tax is the only factor influencing whether to do business here or elsewhere;
(3) The ownership of the miners.

Taxes conceptually aren’t put on for social reasons.  They are put on to add to government coffers; nothing more.  Even taxes supposedly designed to “put money back into a particular problem’, like alcopops, or cigarettes, are not sequestered for that purpose, it all goes into one big pot which does various things like pay pollies their fat gold cards on retirement.  If there is conduct you want to stop completely, you legislate for it.  You don’t tax it.  Tax has the *economic* effect of discouraging further earnings in the field taxed, but that’s not the intent.  Governments always want to tax just enough so they don’t discourage financial activity, so they very carefully raise and lower tax rates until they find a burden that most people will live with.  Thus the staged income tax system.  There isn’t a set of different tax rates for humanitarian reasons, it’s there because above a certain rate more people will stop working or defraud the system than contribute to it.

(2) Possibly a higher tax rate on its own would not drive out Rio et. al.; obviously a lot of their investment is sunk into Australia and they’d have to start again elsewhere.  But let’s not forget that Australia’s not the only country willing to open its hills and valleys for mining.  We’re in competition with most of the Third World on that.

The one thing that’s kept Australia ahead of African countries, for example, is that Australia has a relatively stable government and corruption’s low.  Thus there’s no out-of-pocket expenses for private secrurity or bribing local officials.  But rest assured that somewhere the mining company will have done a brutal cost-benefit analysis, comparing the cost of paying a higher tax rate against the cost of paying for private security and running its operations there.  If the cost of doing business in Africa drops beneath that of Australia—see you later, Australia.  And when we do come back after you’re forced to drop your tax rates to compete, you’ll bend over again and take us willingly, because without mining you have no real economy at all.

(3) Just a question, but how many of the mining companies to be affected by the tax are foreign-owned? You’ve posted up statistics for Rio—which is only one of the “Big Three” of BHP, Rio, and XStrata.  These are large multinationals, so of course they’ll be foreign owned, but what about every other mining company? Could it be most of them are Australian-owned?

Remember Rio et. al. originally agreed to the mining tax.  Why wouldn’t they? They have massively larger resources than any small Australian miner, and the more expenses on the small miners there are, the less or less effective competition there is in Australia for mining rights.

TheRealDave says:

09:24pm | 14/01/11

Yes, there will be a huge rush away from Oz if the big mining companies can only make $10 billion PROFIT a year rather than $12 billion they currently make (as an example plucked form my arse) ..... thats the propaganda the Mining Companies are throwing around. They make it sound like they are being taxed out of existence and it would make it not worthwhile to bother mining here - UTTER BOLLOCKS.

At the end of the day, even after the ‘super profits’ tax they are STILL going to make BILLIONS.

Roll on putting one on the banks as well.

Richard says:

03:26pm | 15/01/11

Don’t be daft Matt, we have the law for that very reason: to protect the vulnerable and to enforce contracts; if drug-dealing is against the law, if not honouring a legitimate contract is against the law, then it has no place in our society and should be opposed. You have tried to simplify the complex message which took about 300 words to explain into a stupid formula and you have failed.

As for your whining about the big 3 mining companies being partly owned by foreign interests, so what? I am not xenophobic, not in anyway, even though I get accused of being so on these forums every week, but I’m not. I believe in the health, wealth and well-being of all humanity, not just the handful who happen to live in Australia.

And how stupid are you to say that we should be slowing down production. You obviously have no accurate concept of how economics works. By our children’s generation, there will be whole new ways of creating wealth in this country that don’t rely on mining, but only if we keep moving forward and progressing and fast and efficiently as we can.

Therealdave, you are sounding suspiciously like one of those people I wrote about initially who thinks making profits is evil, or at the very least, morally ambiguous. It is my belief that making profits is an extremely moral and ethically correct activity, and that no taxes should be levied on “super profits” over and above the rate of corporate tax that every company has to pay to ensure good governance, rule of law, enforceable contracts, independent courts etc.