Chamber of Commerce CEO Glen Hingley on increase to minimum wage

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Episode Transcript

Speaker 1 (00:00):
We spoke about this yesterday. It follows a Fair Work
Commission decision to lift award wages by four point seventy
five percent and the minimum wage by six percent. Now,
the Northern Territory Chamber of Commerce and Industry say that
the increases, combined with higher superannuation obligations and upcoming payday
super changers, it's going to put further pressure on business

(00:22):
cash flow. Now, joining us on the line to talk
more about this situation is the Chamber's chief executive, Glenn Hengley.
Good morning to you, Glenn, Katie, good morning to you.
Lovely to have you on the show now, Glenn. The
Fair Work Commission says these wage increases are about helping
workers keep up with the cost of living. But why
do you feel as though this decision maybe goes a

(00:44):
bit too far?

Speaker 2 (00:46):
Well, ifirsonally, may I say for all the workers who know,
we don't regrets the workers getting that pay rise. Times
are tough. Cost of living is really difficult if you
if you've got a mortgage, you're inst rate to going up,
You're dealing with inflation, you're dealing with higher interest rates.
But if we think about it from a business perspective,
especially the small and medium sized enterprises. You know, when

(01:08):
interest rates goes up, it goes up on their house
and on their business. Fuel costs have not only been
there getting to and from their business, but all the
inputs into their business rising with this inflation, so the
cost of goods they're buying in is increasing. And then
adds that now these disappointing outcomes by the Fair Work Commission,

(01:30):
where businesses are already struggling with high inflation, high fuel costs,
and the right rises as you know I've just mentioned,
it makes it really difficult for some of these businesses
to maintain those margins. And what we found in our
research with our businesses around the territory, with the since
the end the start of March, many of them are

(01:52):
still absorbing these fuel increases in their businesses and they're
not passing that on to their margins have already been squeezed.
So now with this coming on top of it, cash
flow is tight. Add to that, when we came in,
when we came out of the web balance sheet to
a very low already cash flow was tight. Increased fuel costs,

(02:12):
increase inflation, increase interest rates, now increase minimum wages and
now we've got to pay payday, so but on the
same day as payday. We've known this as coming for
a while, but we're warning businesses they've got to be
very careful with their cash flow now. They've got to
be very careful because for some businesses could potentially be
a tipping point.

Speaker 1 (02:34):
What yeah, I mean, I was going to say, how
much pressure do you think that you know for some
of these businesses that they're already under Like, how how
big an impact could this have.

Speaker 2 (02:45):
For many businesses? And if we think about some of
the small retail businesses, cafes and restaurants, of their their
costs are in their paylole and then for their cost
of goods, this minimum wage increases those costs of goods
for everything that's been transported in carry on. So I
think it potentially has a real cost and it gets
to a point of businesses having to question why am

(03:09):
I doing this if I'm not able to pay myself
that alone pay my expenses. So it is going to
have enormous pressure on businesses. We've had an outreach from
a lot of businesses saying we are gravely concerned. We
want to keep our staff, we want to we don't
want to have make the hard decisions to let people go.

(03:30):
But in effect, that's what interest rates are designed to do.
When inflation is increasing. They want to take money out
of the economy. And one of the other measurements is unemployment.
They're designed to create an increase in unemployment. Sadly, and
now that we're putting more money into the economy, this
is a vicious little cycle that we're moving into. And

(03:51):
when we think about what the federal government in their
last term was, it was all about fighting inflation while
keeping an eye on productivity. This term were supposed to
be keeping any working on in productivity while keeping an
eye on inflation. Productivity now has completely delinked with where
they're going. And it's just tough for businesses to turn

(04:11):
a dollar to pay themselves that alone, to pay their
responsibilities and keep their stuff that they fought so hard
and they love and they're part of that family. And
if they could pay them more, they would be. But
in many occasions they're not able to Glenn.

Speaker 1 (04:27):
I mean, you said, they're like, it's well, it sort
of sounds like it's unfortunately, you know, the perfect storm.
I don't know that that's the right word, But it's
just sort of this storm that's brewing for a lot
of businesses. Are there particular industries in the Northern Territory
that you think it going to be hardest hit.

Speaker 2 (04:46):
I think perfect storm is the perfect analogy for what
we're talking about here, Katie. It's a perfect storm of
economic pressures. My concern is with businesses this year that
have a dependent on the visitor economy, whether that's a
frontline tourists come into my business, or I serve businesses
that are in tourism. I think that's one area of

(05:07):
our business. Because rising fuel costs, both from a drive
market and an aviation market, we're already seeing forward bookings
decline right across the territory, right across Northern Australia. We're
not Robinson Crusoe on this one, and so I think
any businesses that was already seeking after effectively hibernating through
the wet to come out hasn't had that bounce back.

(05:29):
So this is a vulnerable time for those businesses. Retail
businesses that have been doing it really tough, it's vulnerable
for them as well. If you've got a good government
contract and you're delivering that you're doing okay. I think
there are some other businesses in our economy that are

(05:49):
still going well, and they're connected to aspects like our
mineral sector, our energy sector, defense sector, you know, those
three big pillars. Those businesses there, they're really important and
it's really important that we are able doing everything we
can to grow those parts. But the vulnerability is around

(06:11):
that discretionary income. Am I going to have the avocado
and toast with my coffee and we're just going to
have coffee because the cost of the avocado and toast
now is increasing to a point where I can't afford that.
And then once that gets into a situation where the
customers aren't spending we're looking at our staff going sorry, guys,

(06:31):
I don't have the work. Yeah.

Speaker 1 (06:32):
Well, and this is a tough part. And that's that's
the situation that you know that we could potentially end
up in. Is there anything that you'd like to see
the government, you know, whether you're talking territory or federally
do to help businesses manage these rising costs and still
ensure that you know that obviously workers are paid fairly,
but is there anything that could be done well?

Speaker 2 (06:55):
I think one of the things is that we're seeing
more At a federal level, we're still seeing a lot
of money get pumped into the economy, which is increasing
the inflight, the pressure on inflation to go up. Inflation
goes up, the Reserve Bank says we're going to put
up interest rates, and the whole cycle begins, and then
there's going to be more round a pressure to increase
payroll and businesses are just caught and bound and being

(07:17):
squeezed in the middle of this. So I think being
careful about where we are pump priming the economy. At
a federal level, that's something that I've literally just jumped
off an economic committee meeting with the Australian Chamber of
Commerce and Industry. We're doing a round table this morning
and that's a big focus at a national level. At
a local level, I think regulation the leavers of government

(07:40):
where we can be making it easier for business. So
the Yes Business Report was released late last year following
the red Tape Task Force that was put in place
by the incoming government then, which is looking at those
things that make it easier for businesses to do business
without reducing the necessary government or compliant But we were

(08:02):
a number of things that were identified in that report
that would improve productivity, make it easier for businesses to
make decisions to do business and to forge your head,
and to increase their profitability so they can employ more
people and they can pay better. But once we've got
all this level of regulation around so much of doing business,

(08:22):
whether that's Northern Territory government, whether that's local government or
federal government, we're a big proponent for we've got to
constantly look at what regulation can we reduce that's unnecessary anymore,
and look at what we've got and goa why are
we doing this? Why are we penalizing businesses? And an

(08:43):
example of that, but not related to this current situation,
is the capital gains tax impost on businesses and what
that means forward. That's for a conversation another day. But
there's another example of just making it harder.

Speaker 1 (08:55):
Oh, it just seems like everything's sort of you know,
like there's a lot going on at the moment is
making it more difficult for businesses. And you're right, Glenn,
we'll have to save that for another day. Mate. I
always appreciate your time, thank you very much for having
a chat with us. And I guess you know, I
would encourage everybody to get out there, support your local
businesses where.

Speaker 2 (09:14):
And when you can, and if you're a business that
is feeling in trouble, ye please reach out.

Speaker 1 (09:21):
Yeah Glenn, really good to speak to you. I'll talk
to you again soon.

Speaker 2 (09:25):
Thanks Katy, thank you,