After an election campaign where millions of dollars of funds were promised by the various parties, the rubber will soon be hitting the road to increase our debt and to deliver on these promises. So what does the weekend’s election results mean for business?
Clearly with the Labour party majority, they no longer require other minority party support to get matters across the line, and the minority parties no longer have the same leverage to push their own agendas. This alone will hopefully be a good thing for business and will provide businesses with more certainty.
Labour has however campaigned on a number of measures that will see increased costs for businesses. This is on the back of the business community being battered by the affect that Covid and lockdowns have had on them.
These changes include:
- Raising the minimum wage from $18.90 to $20 (which will likely cause a ripple up effect)
- Increasing paid sick leave from 5 to 10 days a year (something that some good employers already did on a case by case basis)
- Adding an additional public holiday (reducing productive hours for business)
- Increasing the top individual marginal tax rate to 39% (which some commentators believe will not create anywhere near the revenue estimates that have been published and creates some inequities for example between one versus two-person household earners).
As the true effect of Covid begins to bite, these changes will no doubt add further constraints for business and will lead to businesses reviewing expenditure and cutting back where required, or to increase prices.
If you would like to discuss what the new measures will mean for your business and what you need to be considering moving forward, please contact your Hayes Knight advisor.