Saturday, December 1, 2012

Working Smarter: Killing the Golden Goose

In the Northern Territory, where I live, the new Liberal Government has just increased the cost of power, water and sewerage. It's the largest single increase we have ever had.

The government has had to do it, it says, because the previous Labor (socialist) Government under funded the Power and Water Corporation, the Northern Territory's sole utilities supplier, a government entity. According to government spokespersons, the infrastructure was lagging behind as a result of short funding and an injection of funding is necessary for it to survive.

All of us realise that if we want services from governments we have to pay taxes. I don't mind paying reasonable taxes, the key word being "reasonable". With power and water, it's a user-pays system which appeals to me; use a service and pay for it ... and vice versa. However, governments, like any business, must make sure they don't kill the golden goose.

Because there will be flow-on effects on local shop prices, local government house rates etc, some people are saying they will leave the Territory for a less expensive location.

In the United Kingdom the government increased the income tax rate to 50 percent which has resulted in 66 percent of those earning over one million pounds annually, leaving the country. The government's plan to increase income has resulted in a massive drop in income ... they've killed the golden goose.

According to MSN Money, millionaires in all high tax regimes and where there is political instability are leaving in droves. One Belize firm even advertises a "safe, close and English speaking haven"

There is a message here for the private sector too. That is, people are more shopper savvy, they check prices on the Internet. If your prices are too high, you'll kill the golden goose and lose sales.

The other part of that message is that you can't just pass on increased operating costs to your customers. What you need to do is to find ways to reduce your operating costs by operating more efficiently and keep your prices to a reasonable margin. If you do that, you will have a better chance of surviving in an economically challenging environment.

What suggestions can you make for other readers about how they can reduce operating costs? How have you reduced your operating costs?

Robin

1 comment:

  1. Just after I posted this, I recalled how at Bundaberg TAFE College where I worked as head of department, business and computing, I would turn off classroom lights as I walked along corridors. Despite numerous requests to staff to turn off lights when leaving classrooms, it never happened. Our power bill then was around $60,000 AUD annually. Had we had movement sensitive lights installed, we could have saved a large portion of that.

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