Do you know a business that "pockets" all revenues as pure profit and has no business expenses?

The article in daily Telegraph on June 11th about pricing of PBS items by pharmacists contains many questionable if not inaccurate points.

One wonders whether this type of one sided representation keeps certain high profile high spending advertising clients of the Newspaper content or is an attempt to twist and confuse the negotiation process between the Pharmacy Guild and the Government in the coming months. However, getting into a verbal war of words about the inaccuracies in the article is futile and I am certain the Pharmacy Guild will correct the factual errors in the article in their response in due time.

Therefore, as a pharmacist I would like to ask the "Special Investigation Team and their Leader" at Daily Telegraph responsible for the article a different and more light hearted kind of question: Do they have to spend a portion of their salaries to pay taxes? Do they need to cover costs of living such as food, petrol, rent/mortgage, clothing, utility bills etc out of their salaries? Or do they "pocket" all their salaries?

Having asked those questions, any fair minded person should take into account the most basic fact in any business: sales revenues are not directly "pocketed" by the owners of the business and are not "profit"! The intentional use of phrases such as "pocket", "profit" and "rort" is at best regrettable and at worst mischievous.

Therefore, the article fails to mention that pharmacists do not in fact "pocket" or "profit" every cent of the prescriptions they dispense. Like any other business, they have to pay suppliers to buy the stock. (Let Daily Telegraph's so called "Investigative Team" decide at what wholesale prices since their investigators seem to have set the wholesale prices arbitrarily anyway!). Then there are staff wages, rent and outgoings, utility bills, advertising costs, various business loan repayments and leasing of fixtures and fittings etc, and last but not least any remaining money has to be taxed for income tax purposes.

So, let's be fair and remember that pharmacists always have and will continue to provide many free services to their customers on a daily basis. The high level of trust they have always enjoyed in the community is due to the accessibility of their professional advice to their customers and patients at no cost to the patients or taxpayers. Like any other business however, they need to have a business strategy to continue to service their customers, provide their free services, cover their business costs and make a living.

Banks and Small Business

The banks enjoy the Federal Government's Guarantee and yet are unwilling to pass the latest official interest rate cut to their customers. The Reserve Bank has reduced the official interest rates by a total of 4.25% in recent times. Most banks have not fully passed these cuts to their business customers. On top of this, they have tightened the financial reporting requirements from most customers as well as lending criteria. The new compliance requirements are a heavy cost burden to small business clients.
as a result, many viable small business clients are suffering from lack of funding. This is inhibiting their potential growth and expansion.
The late Kerry Packer was right on the spot when he was asked (paraphrasing) what good financial management meant! ....(paraphrasing)..: being able to call your bank manager, tell him to get stuffed!, and still have a good relationship with the bank the nest day!".
Regrettably, for most of us that is only a dream!