With the exception of Andrew Forrest and some of his mining buddies, few CEOs want to get embroiled in a political campaign just days before a tightly contested federal election. Little wonder, then, that Wesfarmers boss Richard Goyder was cautious today.
With the exception of Andrew Forrest and some of his junior mining buddies, few CEOs want to get embroiled in a political campaign just days before a tightly contested federal election.
So it was no wonder that Wesfarmers chief Richard Goyder was today choosing his words carefully when it came to the release of the Perth-based conglomerate’s full-year results and questions around how much Tony Abbott’s parental leave levy would impact on supermarket prices.
As the head of Australia's biggest retail group and the nation's largest private employer, it is hard for Mr Goyder to avoid the issue, especially as he has previously been outspoken on government policy and was particularly critical of Labor’s first effort to create a resources tax.
Today he was cautious as he batted away Labor’s suggestion that the tax Mr Abbott plans to impose on big companies to pay for parental leave would have any significant impact on prices in Coles or any other of Wesfarmers many retail operations.
“I think that is a tenuous argument to make,” Mr Goyder said, adding quickly that he didn’t plan to get into a political stoush at this point in time.
In fact, as a big employer, he thought there were also potential benefits for the company.
He also pointed out that Wesfarmers own effective rate varied considerably from year to year without changing the prices on supermarket shelves.
In the financial year ending June 30 2009, Wesfarmers effective tax rate was 23.7 per cent. This financial year just past it was 29.3 per cent.
Instead of hitting prices, he proffered, tax rates had more impact on shareholders and the investment decisions they would make.
In April, Mr Abbott announced a temporary levy 1.7 per cent levy on businesses with a taxable income of more than $5 million to meet the $3 billion cost of a scheme in which the government would match the income of women taking up to six month’s parental leave, up to a salary level of $150,000 per annum.
In the current election campaign he has revised that levy down to 1.5 per cent which, for big business, nets off against his plan to lower company tax rates by the same degree to 28.5 per cent.
But just as Labor have warned Mr Abott's levy would hit supermarket prices, so have junior miners been advertising that everyone in the community will get 'whacked' by the government's proposed mining tax. That has included warnings that it could flow on to supermarket shelves.
Mr Goyder said that the parental leave tax could not be compared to the mining tax which had a different impact on investment. As an aside, he also played down the proposed mining resources rent tax’s impact on Wesfarmers coal operations due to the high royalty already paid.
However, others in the retail game have linked the mining tax to the potential for rising prices on the supermarket shelves.
The United Retail Federation, which claims to be the peak body representing independent small business retail operators, has warned that the MRRT on coal would flow through to electricity prices and ultimately impact at the checkout.
“Make no mistake, the current Gillard mining tax model will add to the grocery bills of every single Australian household at every supermarket check-out across the country,” said URF president Scott Driscoll in a statement last month.
“This mining tax will drive up the cost of coal extraction, which will immediately send our electricity price spiralling out of control, adding cost blow outs at every single point along the food supply chain in Australia.”
The URF and the National Association of Retail Grocers of Australia, which represents about 4,500 members including IGA and Metcash, have both joined the Association of Mining and Exploration Companies to condemn the Labor government’s proposed mining tax.
