Private Members' Statements - Payroll Tax and Regional Business

12 November, 2020
Private Members' Statements - Payroll Tax and Regional Business Image


For my private member's statement I will talk about payroll tax in regional New South Wales. Payroll tax and its effects on employment have been brutal, more so for the increasing number of employers and manufacturers across rural and regional New South Wales facing financial pressures after years of drought, bushfires and now COVID-19. The timing of these three events has been unprecedented and ruthless, causing setbacks to businesses such as limited cash flow, profit or reserves. Whilst there is a burst of harvest work at the moment, we have a shortage of temporary labour. The longer term trend has been one of less full-time work in the west of the State. I recall a discussion at a business dinner in Broken Hill where a business owner told me he would like to employ more people but to do so would mean crossing the threshold for payroll tax. That is a perverse outcome and a disincentive to employers in a town desperate to grow its population.

Many members have spoken of their empathy for regional New South Wales during the drought, the bushfires and now COVID. Add that to the lower standards of health and education in the region. I really hope those sentiments are sincere. People in my electorate know that words are cheap when it comes to helping regional New South Wales. Let us demonstrate that we mean it by making a structural change to a tax that would benefit regional areas. Payroll tax has been around in New South Wales since 1971 and its effects on employment and various aspects of business competitiveness have been questioned ever since. I am repeatedly presented evidence that regional and rural businesses need tax cuts. I recently travelled to Inverell with the Hon. Robert Borsak, where we met with General Manager Andrew McDonald, CFO Nigel Blakemore and People Manager Todd Newton from the Bindaree Food Group.

The company employs 900 people and is the largest employer in Inverell. It injects an average of $1.4 million into the local economy through wages each week but pays up to $3 million in payroll tax each year, which acts as the main barrier to expansion. In south-east Queensland, where the company also has operations, there are support measures in place for regional businesses to grow because the Queensland Government wants to attract business and jobs to its regions. However, if employers in regional areas like Bindaree go over the threshold for payroll tax they do not receive meaningful support from the Government. This is a well-established company that does fantastic things for its community but most importantly it is employs local people. We hear a lot from the Government about the need to stimulate jobs growth, so I am declaring that Bindaree is ready, willing and able to employ people. All it needs is for this Government to lift the barriers around getting people into work, which can be achieved by removing payroll tax for regional businesses.

Mines are major employers in many of my communities and in communities throughout the rest of regional New South Wales. With the variation in commodity and resource prices at a time of global economic uncertainty, would we not want those mining companies to be able to retain as many staff as possible? Each job puts money into the local economy. If a worker supports a family, that means kids in local schools and more money being spent in local businesses. For the Government, the removal of payroll tax in regional New South Wales would cost just $1 billion out of the current $87 billion collected statewide. That represents just 1.14 per cent. This saving would allow businesses and communities across regions to recover from a devastating drought and pandemic.

Payroll tax is inefficient and counterproductive and punishes business for employing people. Does that pass the pub test? A zonal taxation approach with a single regional zone encompassing everywhere but Greater Sydney would allow for specific regional tax incentives and concessions for businesses that would sustain employment, assist employers and create economic growth. A zonal taxation system could provide concessions for businesses operating outside metropolitan areas and stamp duty concessions for commercial properties and commercial vehicles in regional New South Wales. This would provide financial incentives for people and businesses to live, work and invest in the regions. The Shooters, Fishers and Farmers Party implores the Government to abolish payroll tax in regional areas and instead introduce a zonal taxation system. Payroll tax is a handbrake on regional economic growth and employment. It is effectively a tax on employing people. The Government should not be creating an environment where business owners have to choose between paying the price for growing their businesses and hiring more employees and maintaining the status quo and stagnating to avoid the tax threshold.

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