Business advocates are hoping for payroll tax reforms, changes to the workers’ compensation system, and elevated small business procurement rates in the 2023-2023 NSW budget, as the state government attempts to patch over funding holes it claims were left by its predecessors.
Treasurer Daniel Mookhey will hand down the state budget on Tuesday, marking NSW Labor’s first budget in more than a decade, and a chance to make good on some of the funding commitments it brought to its March election victory.
Ahead of the budget, advocacy group Business NSW called for a suite of changes it argues would improve the economic and regulatory environment for enterprises battling through turbulent conditions.
The budget represents a chance for the NSW government to tweak payroll tax, the organisation said.
The current tax system is “riddled with complexity and inequity” and “an internationally high tax rate for SMEs”, Business NSW said, reflecting on the state’s 5.45% payroll tax rate.
Lowering it to below 5%, and increasing the threshold from $1.2 million to at least $1.3 million would ease the tax burden on businesses without “punishing businesses who wish to invest in staff,” it said.
NSW should also consider a regional payroll tax rate like the one in Victoria, which offers considerably lower rates to employers based out of the major centres.
Any tweak to payroll tax rates would come on top of Labor’s pre-election commitment to streamline the processing of payroll tax with the Australian Taxation Office, a move to simplify compliance and remove red tape for business.
As insurance liabilities tied to the NSW workers’ compensation scheme are reportedly projected to climb by $2.5 billion in the next five years, Business NSW welcomed Labor’s pre-election pledge to reform the scheme and advocated for those changes to be reflected in the upcoming budget.
“NSW employers, who are the primary funders of the scheme, are being held financially responsible for inefficiencies that lie well outside their control,” the statement read.
Reflecting a different kind of insurance premium pressure, Business NSW also called for the removal of the Emergency Services Levy and stamp duty from insurance premiums, to reduce the likelihood of businesses going without costly but essential coverage.
Ahead of the March election, NSW Labor promised to increase the value of government contracts channeled to small businesses from 12% currently to 30% by the end of the decade.
In its submission, Business NSW said the budget should take steps to increase small business procurement to $10 billion per annum.
“There is an opportunity to help NSW SMEs and startups to not only survive through the current economic headwinds, but to help them thrive,” it said.
Labor has also promised a suite of updates, including the creation of the NSW Business Bureau and a small business charter, to build connections between government and small players in the private sector.
“We encourage the government to ensure that NSW SMEs are able to participate in those procurements and that barriers to participation are eased,” Business NSW said.
The 2023-2024 budget also represents a chance for the state government to support tourism businesses, including small operators, according to the Tourism and Transport Forum.
In its own pre-budget statement, the organisation called for the government to continue Destination NSW funding to prop up the visitor economy.
It also advocated for the creation of a $50 million “smaller scaled state significant event fund”, which the advocacy group said would provide downstream benefits to small businesses.
“These events are important as they attract unique visitors, fill our hotels, pubs, cafes, and restaurants, and largely support the economic ecosystem of NSW,” it said.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
