Warning, small business to be hit by “triple whammy” of increased costs on July 1

Small business will be slammed by three cost increases in the new financial year: An increase in the minimum wage, another 0.25% rise in superannuation contributions and an increase in penalty rates for many retailers, according to the Australian Chamber of Commerce and Industry.

The Australian Council of Trade Unions is before the Fair Work Commission today lobbying for a $30 per week award wage rise across the small business economy, and ACCI is characterising the push as a raid on the payrolls of hard-working small employers.

ACCI is proposing a rise of no more than $5.80 per week, a position which it says is consistent with last weeks “alarming” budget forecast.

David Turnbull, director of communication at ACCI, told SmartCompany an award wage rise would weaken business viability, reduce profitability and cost jobs.

“If the union claim gets up and there is an increase of that magnitude, it will come at the same time as an increase to the superannuation guarantee and increasing costs under modern awards that continue to be phased in,” Turnbull says.

“We’re referring to it as a triple-whammy, at a time when businesses are under significant strain you can see why we would be concerned.”

ACCI is calling for a specific superannuation wage offset and says without this the increase to the superannuation guarantee will hit hard.

Small business will also be impacted by the next round of rate increases with casual loading going up 24% and penalty rates increasing from July 1.

Peter Strong, executive director of the Council of Small Business Australia, told SmartCompany “without a doubt” the increases would all hit small business.

“What is difficult for small business is passing costs on, which is proving more difficult the way landlords work and the way the big supermarkets like Coles and Woolworths work,” Strong says.

“The government often says if there is an increase in costs pass it on to the customer and that is easy to say, but in the past decade that is more and more difficult as the big supermarkets won’t let small businesses put up prices.”

Strong says businesses will also be hit by the administrative costs of implementing the increased costs on July 1.

“The other problem that confronts us is red tape, every small business has to dive into their software and change the super contribution, it’s not like a pay rise, super is more difficult,” he says.

The FWC’s annual review of the minimum wage concludes today.