Australia Roundup: Hundreds of Restaurants Close Rather Than Pay 250% Holiday Rate; Massive Housing Incentive, Still No Buyers

It's time once again to take a look at happenings down under. Restaurants are closing en masse rather than pay double time and a half to stay open on holidays.

Please consider Penalties blamed for taking high-end dining off menu.

The annual survey of the 7500- member Restaurant and Catering Australia reveals a 33 per cent jump since 2011 in the numbers of restaurateurs saying they cannot afford to open on public holidays.

Public holiday penalty rates require employers to pay double time and a half, equating to pay rates of at least $40 an hour.

Robert Marchetti, executive chef of Sydney's Icebergs Dining Room and Bar and North Bondi Italian Food and owner of highly acclaimed restaurants in Sydney and Melbourne, said some of his businesses - including Neild Avenue - would be closed today, while those that opened would be providing a "public service".

"The government are a bunch of monkeys who don't understand business," he said.

"We're not living in the 1960s anymore. Australia has its head stuck up its arse on IR.

Following ACTU Secretary Dave Oliver's Christmas Eve call for the Fair Work Act to be changed to enshrine penalty rates as a minimum entitlement, United Voice liquor and hospitality division Secretary Tara Moriarty said the issue was one the industry raised every public holiday.

"Penalty rates haven't made the sky fall in yet, despite them constantly making suggestions to the contrary," she said.

Shop, Distributive and Allied Employees Association national secretary Joe De Bruyn said the closure of some businesses on public holidays would simply mean more business for the restaurants that stayed open.

"Penalty rates have been part of workers' entitlements for decades," he said.

Unions were awaiting the outcome of a Fair Work Australia hearing on penalty rates. "While the unions put up a very strong case for preserving penalty rates, the employers' case was a pathetic performance," Mr De Bruyn said.

Double-Time and a Half Insanity


You have to love the mentality "the sky is not falling yet" mantra, especially when it clearly is.

Who pays for this absurdity? Consumers in general of course. Business owners and employees of businesses who cannot afford to pay double-time and a half, also get hit hard.
House and Land Incentives

Property Observer notes House-and-land incentive and discounts from $5,000 to $126,000

New housing finance and building approval figures suggest there will be no swift rebound in demand for new housing.

ABS figures.There was a 10.3% fall in home loan commitments for new dwellings and a 0.3% drop in building approvals for new houses in November, according to seasonally adjusted

New home buyers can secure discounts in the thousands and sometimes tens of thousands of dollars on select blocks of lands and new homes in Melbourne, the Gold Coast and Sydney.

There are also generous first-home buyer incentives on offer from NSW, Queensland, Tasmanian and South Australian state governments for those buying or building new homes.

$30,000

Listed residential developer Peet is offering savings of up to $30,000 on “certain lots” in residential communities on the outskirts of Melbourne.

$22,000

Listed developer Devine is offering to pay mortgage repayments for up to a year on behalf of approved purchasers who sign an unconditional contract to purchase a new Devine house and land package before February 28 2013 under its Devine Mortgage Break promotion.

Melbourne builder Carlisle Homes is offering a $30,000 discount off the retail price of double-storey homes and $22,000 off the retail price of single-storey homes in its luxury Affinity and T Range collections. There is currently no end date to this promotion.

$10,000

Up until February 25 2013, Stockland is offering approved purchasers a $10,000 VISA gift card to spend as they wish.

$76,000 - $126,000

Discounts of up to $126,000 are on offer for residential lots in The Highlands community in the Ecovillage, Currumbin Valley on the Gold Coast.

Massive Housing Incentive, Still No Buyers

Macrobusiness reports Developers Go Completely Mad.

Today, Property Observer has provided a comprehensive list of incentives being offered by developers in a bid to lift sales, which are in addition to generous incentives on offer in New South Wales, Queensland, Tasmania and South Australia.

Clearly, such developer incentives are failing to stimulate demand and could actually be precluding the new home market from functioning properly.

Australia’s property development industry appears to be caught in a pincer. If they don’t abandon incentives in favour of transparent land price deductions, financing of new house and land packages will remain problematic and sales will likely continue to struggle. At the same time, reducing the listed price by the same value as the bonuses and incentives being offered could lower their collateral value, potentially triggering the banks to call in more equity from bank-financed developers to bring their loans back to agreed conditions and/or loan terms. Straight price cuts are also more likely to aggrieve recent purchasers that paid higher prices.

How Fast the Collapse?

The housing bubble in Australia has clearly burst. All that remains to be seen is how fast things collapse.

Meanwhile, Australia's unions still cling to an already dead model, oblivious to the fact the boom is over.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.