Aussie couple sacrifice Christmas pay checks as small business owners suffer amid rising costs

An Aussie couple was forced to sacrifice their pay checks over Christmas for the first time as many small business owners struggle to stay afloat amid soaring costs.

Self-employed small business owners are paying themselves less at the same time inflation has smashed their buying power, resulting in an 18 per cent collapse in real income since Labor took office.

The decline comes as food prices, energy, insurance, rent and wage increases have fuelled a surge in hospitality businesses shuttering, with closures hitting a record high of 9.3 per cent in the year to February, according to CreditorWatch.

Casting small businesses as the “engine room” of Australia’s economy, the Coalition will seek to make the sector’s struggles — which also includes a faltering local construction industry — a key issue of the upcoming federal election campaign.

Income from self-employment, meaning the wage or in-kind services a small-business owner pays themselves, has declined 9.6 per cent since June 2022, according to Coalition analysis of National Accounts and Australian Bureau of Statistics figures.

Over the same period the consumer price index has increased by 11 per cent, which the Opposition says has left these self-employed business owners about 18.2 per cent worse off than three years ago.

Sydney couple Scott and Elise Clarke say they are fighting uphill to keep their bakery, Grumpy Donuts, and cafe, Valentina’s, afloat. Picture: Thomas Lisson

The Albanese Government has disputed the analysis, noting labour income does not take into account business profits, which people who are self-employed may draw on as an alternative to a wage.

Council of Small Business Organisations Australia (COSBOA) chief executive Luke Achterstraat said the data reflected the “lived experience” of many self-employed owners reducing their own wages due to higher costs and lower revenue.

“They do this to ultimately keep the lights on,” he said.

“There’s been energy, rent and insurance increases all in double digits, while at the same time it’s impossible for a small business to dramatically increase the price of a cup of coffee.”

Mr Achterstraat said tax relief, and a concerted effort to reduce red and green tape that disproportionately impact smaller businesses that don’t have things like HR and legal assistance in-house was needed to support the sector.

Coalition treasury spokesman Angus Taylor says small businesses are facing an existential crisis. Picture: NewsWire / Nikki Short

Small Business Minister Julie Collins argues the government has announced $640 million in practical supports. Picture: Richard Jupe

Coalition treasury spokesman Angus Taylor and deputy Liberal leader Sussan Ley said small businesses were facing “an existential crisis”.

“Small businesses have been squeezed by rising energy costs, workplace relations complexity, red and green tape and higher taxes and now small business owners are seeing their own incomes fall while the price of everything else rises,” Mr Taylor said.

But Labor has hit back, with Small Business Minister Julie Collins arguing the government has announced $640 million in practical supports, along with protections for franchisees and an extension of the $20,000 instant asset write off.

“If the Liberals really cared about small businesses, they wouldn’t have voted against the supports that Labor has put in place,” she said.

Scott Clarke and Elise Honeybrook had to sacrifice their Christmas paychecks so they could pay suppliers and staff. Picture: Thomas Lisson

Meanwhile, Sydney couple Scott and Elise Clarke say they are fighting uphill to keep their bakery, Grumpy Donuts, and cafe, Valentina’s, afloat amid the “compounding effect” of inflation — particularly butter and milk prices — and rising wages, electricity and rent.

The pair sacrificed their paychecks for the first time over the Christmas period to ensure their suppliers and 35 staff were paid.

“Grumpy Donuts is ten years old this year, and this has been the hardest three years of running a business that we’ve had,” Mr Clarke said.

“The only thing you can really control is your wages bill and your supplies, those are your levers, but even your suppliers are facing rising prices.”

Mr Clarke said whoever formed government after the election must pursue tax relief for small hospitality businesses with turnover less than $5m.

Originally published as Aussie couple sacrifice Christmas pay checks as small business owners suffer amid rising costs