Business Finance Update - May 23
Here are four important stories to be across:
Minimum wage debate
Unemployment stays at 3.5%
ATO wants to support business
How to get leaner and greener
Read more below.
The Fair Work Commission is all but certain to increase minimum and award wages on 1 July – the only question is by how much. The Australian Council of Trade Unions (ACTU) has called for a 7% increase, which would be slightly above the latest inflation reading of 6.8%. “This increase is vital to help working people keep their heads above water. It is simply about survival for the lowest-paid workers in our country,” ACTU secretary Sally McManus said. Australian Industry Group (Ai Group), which represents employers, also supports an increase, although it said it would not nominate a specific number until it saw what measures the federal government unveiled in its next budget, on 9 May. Ai Group chief executive Innes Willox said the wage decision “must strike a fair balance” that reflected “the particular pressures that are bearing on low-paid workers in lower-income households” and "the circumstances of employers also struggling with cost pressures". Treasurer Jim Chalmers also declined to nominate a specific increase, but “recommended the Fair Work Commission ensures the real wages of Australia’s low‑paid workers do not go backwards”.
Australia’s unemployment rate has now had a ‘3’ in front of it for 13 consecutive months. Since February 2022, unemployment has ranged between 3.4% and 3.9%. In March 2023, it held steady at 3.5% for the second consecutive month, according to the Australian Bureau of Statistics. Sometimes, the unemployment rate falls because people stop looking for work – an individual is no longer classified as unemployed if they give up on finding a job. However, in this case, the opposite has occurred: the share of adults who either have a job or are actively looking for one rose from 66.5% in February 2022 to 66.7% in March 2023. So a higher percentage of adults are in the labour market, which is good news for employers who are struggling to find staff. The main reason the Reserve Bank has aggressively increased the cash rate since May 2022 has been to reduce inflation by cooling the economy. Normally, that would trigger higher unemployment. But since the rate hikes started, the unemployment rate has fallen by 0.4 percentage points. Want to expand? Call me for a loan
A senior official from the Australian Taxation Office (ATO) has told businesses that formal disputes and litigation are not the only ways they can resolve arguments with the ATO. ATO second commissioner Kirsten Fish, in a speech delivered earlier this month, said there were multiple review points provided in the law and multiple ways to resolve tax problems. “If a process or decision is unclear or not able to be understood – a conversation and more information or reasons from the decision maker [within the ATO] is the preferable path, and escalation to their manager if concerns remain,” she said. “If a concern or issue is with the process or how something was handled, a complaint can be made and investigated by the ATO. If it can’t be resolved, the IGTO [tax ombudsman] is a further avenue.” Ms Fish said that if businesses were unable to pay their tax debts, the ATO could consider payment arrangements – including, in limited circumstances, reducing the debt. In the case of audits, if businesses disagreed with the ATO's findings, they could request an independent review before their tax assessment was amended by the ATO, she added.
If you want to make your business more sustainable, a range of lenders, including the big four banks, could potentially help you finance the transition. Lenders are increasingly offering ‘green’ loans to businesses that want to invest in electric vehicles, solar technology and more energy-efficient systems. These loans are very similar to traditional loans, but often have more generous borrowing terms, including lower interest rates. There are three big benefits to embracing more energy-efficient products and technologies:
You lower your running costs
You reduce your carbon footprint
You send a positive message to staff, suppliers and customers
If your vehicles and machinery are getting old, it might make sense to replace them with greener alternatives, especially if lenders are willing to support you. As your broker, I can help you finance any sustainable investments your business wants to make. Reach out if you need a green loan