Retail feels rates pressure

A proposed 3.95 per cent rate increase from the City of Busselton will have “massive repercussions” on the town’s already struggling retail sector, according to members of the business community.

Professionals Busselton principal Brad Fraser and Busselton Chamber of Commerce and Industry chief executive Jo Richards have expressed their concern that businesses will buckle under the additional financial pressure.

Mr Fraser said he was “sick and tired” of commercial landlords being labelled “greedy”, when it was quite the contrary.

He said commercial property owners were not benefiting from owning commercial property due to continually being “belted” by government increases higher than the rate of inflation.

“Everyone talks about how hard it is for retailers and they instantly point to greedy landlords whereas most of our landlords haven’t given rent increases probably in the last three years,” he said.

“The City say rates are only going up 3.95 per cent, only. How does a landlord ever get the opportunity to increase their rent?

“Landlords can’t give a rent increase because they fear tenants will go broke and close shop, leaving the property vacant. Landlords are actually doing their bit to keep the shop full but are forgoing a rent increase, which ultimately is forgoing future value for that owner.”

Ms Richards said she was aware of many landlords who were not increasing rents because of the tough economic times.

“Businesses are really struggling — it is desperate,” she said.

“I’ve been speaking to business owners, successful business owners, and they are saying the only reason they can keep their doors open is because they have a landlord who is willing to negotiate lower rent while we go through this phase.

“When rates go up, it puts the squeeze on everyone, but people with commercial leases are taking a lot of risk to be in our CBD and we need to give them a hand when things are so dire.”

Ms Richards praised the City’s efforts to reinvigorate the town centre (page 3), and said it was a shame the rate increase would come before businesses benefited from the CBD activation plan.

In Perth, the majority of metropolitan councils are also looking to increase rates by more than the Local Government Cost Index.

The index measures inflation of cost pressures on councils and sits at 1.8 per cent.

City of Busselton Mayor Grant Henley said the index only covered base operating costs such as employee costs, construction costs, power and water.

He said it did not factor in improved asset management initiatives, or renewal and capital growth associated with population increases.

“Historically rate increases have been consistent and generally low, without significant spikes. This year we have a deliberate focus on rural roads which require urgent attention,” he said. “Council has worked very hard to deliver a fair and balanced budget and this year’s increase is lower than was forecast in the City’s long-term financial plan.

“What we build for our community, we maintain.

“We do live in a beautiful, well-equipped city, and our investment in infrastructure is required to meet the growth we are experiencing.”

Cr Henley said there was no doubt some retailers were struggling and this appeared to be prevalent across the State. “The City has made every effort to keep the rate increases at the minimum, noting that many of the improvements to town centres and foreshore areas and the City’s strategic events drive have certainly benefited local businesses,” he said.