REF: Proposed public holidays Victoria ( Proposed response to the RIS )

As an organisation that has active members in both metropolitan and regional areas and representing a sector with over 15,000 direct employees we feel it is necessary to contribute to the analysis of the regulatory impact statement (RIS) and would like to confirm that we do not support the creation of additional public holidays.

The RIS provides ample reasons for our position in this matter, in particular:

  1. The loss of economic productivity.
  2. The increases in costs to employers particularly those that are actively involved in retail.
  3. The lack of significant economic benefit to the state whether the business is metropolitan and regionally based.

While these are significant components to build a case against the creation of the additional public holidays some further comments that pertain to the merchant sector we feel must also be considered.

  1. The significance of the trading days. Members with a strong consumer retail capability to their business report that their strongest retail days are Fridays and Saturdays. An increase in the number of public holidays reduces the viability of the businesses:
  2. Increase in staffing costs will see many businesses not open on the designated public holidays.
  3. Reduces the number of effective trading days in the month of Easter which is already compromised by a large number of public holidays already, at a time when a lot of renovation work is done by the average consumer.
  4. Due to the costs associated with staffing, this allows large retail chains to gain a competitive advantage over independent family owned businesses (which form the back bone of the industry sector). In creating the additional public holidays the Government is indirectly advocating its support for large corporate and retail entities to the detriment of the largest number of employers in the state.
  1. Lack of cost recovery: With the changes in the market place the consumers expect the services to be open on their days of leisure and will not accept increased prices for products. Business models are changing and flexibility to meet consumer demands means it is imperative the retailer be flexible. Increasing costs that are not recoverable reinforces the need to stay closed on public holidays.
  2. Loss of profitability: The RIS understates the impact to the retail businesses in both metropolitan and regional areas and by increasing the number of public holidays increases the loss off viable trading days for the merchants in particular. By declaring Easter Sunday a public holiday along with Easter Saturday, and increasing the public holidays by two effectively reduces the number of profitable trading days significantly. As the RIS points out, Fridays and weekends are significant to the home and hardware trading sectors. Increasing costs to the 450 small to medium sized businesses represented in the merchant sector in Victoria alone, is a significant impact that the RIS has not accounted for.
  3. Value to the employee. Whilst it is often reported that the employee will gain an increase to their respective wage package, this is a reflection of an antiquated view of the employer/employee dynamic. Many employees in the businesses we represent, rarely value the incentive of extra earnings due to the negative impact on their overall taxation position. The current restrictions around public holidays and renumeration around these events limits the opportunity to consider options including time in lieu to accrual with personal leave. The TMA welcomes the opportunity to explore a number of different options that provides benefits to the employee whilst adding to the profitability and competiveness of businesses.

As the RIS points out:

´Smaller businesses are more likely to be negatively impacted by additional public holidays. This is because for many small businesses, wage costs form a greater proportion of overall operating costs, meaning penalty rates amplify the costs of opening their doors by a greater amount than it does for larger firms for which staffing costs form a smaller proportion of overall operating costs. Put simply, it is likely to be harder for smaller businesses to absorb the costs of additional wages than it is for larger businesses. “

We can only support this statement.

The retail space in Australia is undergoing a significant change and businesses must remain competitive against domestic and international competitors. The international businesses do not have the cost and labour structures confronting Australian businesses. While the independent family owned businesses do maintain a reliable competitive advantage with a strong service and quality business strategy; consumers are sensitive to the cost / value ratio. With high mandated costs in Australia in comparison to the international providers it is becoming increasingly difficult for small independent businesses to maintain a viable business model.

For instance, while the addition of 2 public holidays is viewed as “within international standards for public holidays” what is often forgotten is that Australia, along with New Zealand is one of the very few countries to offer long service leave to employees. This entitlement is a significant cost to employers, along with the public holiday obligations that none of the international competitors have to confront. If we are serious about growing and developing opportunities for the independent retail sector we must begin to realise that the competitive environment is not just based in Australia but is now determined by strong international forces.

Adding extra public holidays for pure political expediency does little to advance the economic situation of businesses and importantly the local community. If Victoria is serious about being an economic powerhouse, rather than providing rules that inhibit growth, we would value the ability to offer incentives to employees that help build commitment to the customer, the community and the environment.

Timber Merchants Association, PO Box 97, Blackburn, Victoria, 3130 ABN 87 146 765 827