Motions

Payroll Tax

Mr COWDREY (Colton) (11:03): I move:

That this house commends the Marshall government for scrapping payroll tax for all small businesses in South Australia, and recognises all involved in small and family businesses for their contribution to our state and economy.

I begin my contribution to the motion today by taking the time to acknowledge all within small and family business within our state in the context of Small Business Week wrapping up early last month. It is something special, particularly given the difficult circumstances that have faced small and family business in our state over the last couple of years, to acknowledge those who every day wake up and take it upon themselves to create their own wealth, to create their own income, to support their own families and to do what they can to employ other South Australians, to invest their time, their capital but also, more important than that, their lives into something that they see as an opportunity to further both themselves and their family.

As I have said in this place before, I have the utmost respect for anybody who enters into small and family business. My father was one of those people before he retired. I have made the point on many occasions that you do not simply walk away from work as you do in other settings where, perhaps, you come in and have an allocated shift or have an allocated time that you are in a workplace.

When you are involved in a small and family business, there is no off switch. There are, essentially, things that need to be done. There are bills that need to be paid. This needs to happen no matter what, and that often involves other family members pitching in and doing bits and pieces. I, myself, remember on weekends sitting there helping dad enter product codes into sales brochures because that was what needed to be done to ensure that his business operated effectively. As we start debating this motion, I think it goes without saying that there is a broad degree, specifically on this side of the house, of respect for everybody in small and family business throughout our state.

I begin the motion today by setting the scene of where we are as a state at the moment. We have the highest unemployment rate in the nation, and the highest inflation rate in the nation. In previous contributions to this house over the last couple of weeks I have read out a list of the many and growing small and family businesses, particularly those in the hospitality industry, that have unfortunately had to shut up shop over the last couple of months. That list is certainly now growing wider than just hospitality, and it seems to be having a new name associated with it each and every couple of days when you flick through The Advertiser to learn that another business unfortunately has not been able to continue.

If we look at where we came from back in 2018, the crux of this motion is to acknowledge the significant change that occurred in the Marshall government's first budget, to acknowledge those views that were put to us so strongly prior to coming to government in 2018. Through that campaign period, and significantly before that to be completely honest, I think everybody on this side of the house anyway had been hearing the calls from small and family business across the state that it was simply becoming too difficult to operate.

Across that period of time we had taxes that had increased, costs that had increased, and it was becoming difficult for small and family business to do what they needed to do in this state. We recognise that, not just for small and family business, but more broadly for households as well. Part of our reform agenda coming into 2018 was to ensure that we did everything that we could to lower and reduce costs to both business and family households, whether that was ESL bills, whether that was SA Water bills, whether that was payroll tax—there were a range of initiatives that were undertaken by the former government to try to ease the cost-of-living pressure, and the cost-of-doing-business pressure for those businesses in South Australia.

That involved the most significant reform to payroll tax in our state for a significant period of time, with the lifting of the payroll tax threshold from what was then $600,000 to $1.5 million, essentially setting aside payroll tax for well over 3,000 businesses in South Australia, so that they would, from that point forward, not be hamstrung by a tax that was stopping their ability to invest in their own businesses and their ability to employ more South Australians. It was also a reform that drove investment in our state and removed, as I said, that handbrake that had been a hamper on business for far too long.

If we move forward now to where we are today, some six or so years later and 2½ years into the life of this Malinauskas government, what we have seen over the last two years in particular has been significant economic pressure. We have obviously dealt with inflation that we have not seen for decades in this state, which has rightfully led to an increase in wages for South Australians, but that does mean an increase in cost of doing business for those who are employing people.

We have also seen significant increases in electricity costs, paying some of the highest electricity bills in the country, and in the world, I think, if we look more broadly. We have seen increases in rent, increases in the cost of stock and things that are put on shelves, and significant increases in tax. What we have seen as a result of the cost and inflation pressures is that the wage bills of South Australian small and family businesses have to increase.

This is the very thing that the Marshall Liberal government stepped in and relieved for small and family businesses in our first hundred days of being in government. If you look at the first budget from the Malinauskas government, and compare the proposed increase of payroll tax in their first budget compared with where we are—I can say today; it will change to some degree tomorrow—effectively $160 million more in payroll tax is the estimate for next financial year, the difference between their first budget and now.

That, of course, has been driven by exactly what I have just outlined: the inflationary pressures and wage increases that have come as a result of that. What does that mean? What does that $180 million mean? It means that South Australian small businesses are now paying more payroll tax than they expected to. As South Australia's Business Chamber indicated, they have seen a significant increase in the number of small businesses that have indicated to them that they are paying payroll tax. Some are paying payroll tax for the first time, as they have ticked over that threshold.

We are back at a point where action needs to be taken, where we have to try to do what we can to relieve that pressure; otherwise, we will see more businesses in South Australia go the way of that growing list that have had to close their doors, that are unable to do business because of the settings and the business environment that is in place here under the Malinauskas Labor government.

What the Liberal Party of South Australia announced last week was our intention to deal with this issue, our intention to listen to the business sector in South Australia, to heed the calls of the South Australian Business Chamber and to increase, should we be elected in 2026, the payroll tax threshold from $1.5 million to $2.1 million, to make us the most competitive state in the country in terms of payroll tax thresholds.

More than that, we have a significant challenge in front of us in terms of skills in this state over the coming decades. The clear issues that we have to deal with have been well articulated on both sides of the house, whether that be creating the level of housing that is necessary to deal with the population growth that is going to come into the state over the coming years or whether that be around the AUKUS agreement and the provision of nuclear-powered submarines, just a few kilometres north-west from here, in the coming years.

A skilled workforce needs to be in place and needs to be prepared, and what better way to incentivise small business around South Australia—and others—to invest in skills than providing a payroll tax exemption for trainees and apprentices, to encourage those businesses that are going to need the skills of the future to start investing in those skills now. We think that is a sensible plan. That is why we have called on this government to pick up the policy ideas that we put on the table last week, but we will see; we will see what action this government takes tomorrow in regard to this space.

We will see whether they will understand and acknowledge the pressure that South Australian businesses are under at the moment and whether they will take a step to finally start to alleviate some of that pressure rather than just pocket the proceeds that South Australian small businesses have had to endure because there is a clear and stark difference in terms of how the inflationary environment has affected both government and business in this state.

Government in an inflationary environment sees more GST revenue come into state coffers, sees additional stamp duties come into state coffers, and sees additional payroll tax come into state coffers. I have used this line many times over the last couple of months but South Australian small business and household pain is quite literally Peter Malinauskas' and this government's gain, but for small and family businesses around South Australia it means there is more and more of the revenue they take coming back to government. It is tax increases by stealth.

As I said, we are committed to undertaking these reforms for the betterment of small and family business in our state, to invest in small and family businesses because we understand and acknowledge that they are the backbone of South Australia's economy. We need them to grow and we need them to be in an environment that is competitive and sensible, that allows them to prosper and that allows them to employ more South Australians into the future. We do not want to see the decimation of small and family business in our state.

It is one thing to create a portfolio, one thing to create a minister responsible for small and family business in South Australia, but if they are not undertaking, fighting, advocating and seeing outcomes that benefit South Australian small businesses, if they do not heed the sensible calls that are coming from the SA Business Chamber around reforms that are well and truly necessary to see the success of South Australian small and family business into the future, then the question remains: what are they there for?

At the end of the day, there is a stark difference between the two sides of this chamber. The Liberal Party understands that small and family businesses are the backbone of our state's economy. We are committed to helping to ease their cost base so that they can grow and prosper and employ more South Australians into the future.

History shows that those opposite will not make the necessary changes and adjustments to the state's tax arrangements. We will sit and wait to see what happens tomorrow. If they do not make the move, if they do not have the backs of small and family business in South Australia, then we will.

Mr ODENWALDER (Elizabeth) (11:18): I move to amend the motion brought by the member for Colton as follows:

Delete the words 'the Marshall government for scrapping payroll tax for all small businesses in South Australia' and insert 'previous governments for reforms to payroll tax in South Australia, especially the previous Labor government's changes, which have saved small business $300 million.

The amended motion will now read:

That this house commends previous governments for reforms to payroll tax in South Australia, especially the previous Labor government's changes, which have saved small business $300 million, and recognises all involved in small and family businesses for their contribution to our state and economy.

Of course, I briefly recognise that we on this side of the house support small business. We always have and we always will. We have a very active small business minister as well as a Treasurer who believe that small business forms a very strong part of our economy.

I have never owned a small business, as some of us have, but I have managed a series of them in the late nineties and early 2000s, but no matter how generous the governments of that time were, there was nothing saving the video rental industry, sadly.

I want to thank the member for Colton for bringing this motion to the house. As I said, I have moved it in an amended form, not because I disagree with the whole basis of the motion but simply to clarify and correct some of the claims made in the original motion.

In the 2017 state budget, it was the previous Labor government, the Weatherill government, which permanently locked in payroll tax relief and extended tax breaks to hundreds of additional businesses. We legislated a payroll tax of 2.5 per cent for businesses with payrolls between $600,000 and $1 million. In addition to making this tax relief permanent, the budget also increased the threshold at which the maximum 4.95 per cent payroll tax kicked in for payrolls of $1.2 million to $1.5 million. These measures, which I reiterate were brought in by the previous Labor government, have saved small businesses in South Australia cumulatively nearly $300 million.

The current payroll tax rate and threshold structure was a 2018-19 budget measure, as the member for Colton has pointed out. It has been effective from 1 January 2019. The changes included an increase in the threshold where a business becomes liable for payroll tax in South Australia from $600,000 to $1.5 million in annual taxable wages.

Importantly, the ABS defines a small business as an organisation that employs less than 20 people. The average salary of a full-time South Australian worker is around $90,000 per year, which for a small business employing 20 people at this rate would equate to a total annual taxable wage of $1.8 million. This means that a small business in this scenario would in fact, if it were employing 19 people, for instance, attract the full rate of payroll tax at 4.95 per cent.

So the member for Colton's claim that the Marshall government scrapped payroll tax for all small businesses, which is the crux of the motion, is entirely unsubstantiated. It is entirely unsubstantiated. This is further proved by the very fact that those opposite continue to argue the need for further reform to the payroll tax regime.

This government is getting on with the work of supporting small business wherever we can. With a contribution of $49 million to South Australia's economy each year and employing 40 per cent of our workforce, small businesses are the lifeblood of our economy and our community. That is why the Malinauskas government is committed to supporting small and family businesses.

We launched the Office for Small and Family Business in 2022 and developed the Small Business Strategy 2023-30, providing a strong foundation and framework to support job creation, build the economy and futureproof this important sector. The government's $122 million Economic Recovery Fund opened on 18 October 2023 to help business and industry to grow secure and well-paid jobs, improve productivity, increase exports and supportive innovative, value-adding technologies in South Australia. The first funding round focused on manufacturing innovation as well as regional tourism infrastructure development, with recipients announced recently. Future rounds will be announced soon.

Financial assistance of $26.3 million has also been offered to 17 South Australian businesses for projects submitted under round 1 of the Economic Recovery Fund. Combined, these projects are worth $219.2 million, providing a major boost to the state's economy.

The government has also partnered with the commonwealth to deliver the energy bill relief plan to help moderate the impact of rising electricity prices on households and small businesses for this financial year. Under the plan, approximately 86,000 small businesses were eligible to receive a rebate of up to $650 on bills relating to their 2023-24 electricity usage.

So I reiterate the central claim of the original motion, that the previous Liberal government scrapped payroll tax for all small businesses in South Australia, simply cannot be substantiated.

I commend the amended motion to the house and, in doing so, I want to personally acknowledge the contribution of everyone involved in our state's small and family businesses.

Mr BATTY (Bragg) (11:23): I rise to support this motion in the form that it was introduced by the member for Colton and I thank the shadow treasurer for bringing this motion before the house because it is an excellent opportunity for us to celebrate small businesses right across South Australia and for us to show small business right across South Australia that it is those of us on this side of the house in the Liberal Party who have your back.

We know that small business is big business for South Australia. There are thousands of small businesses across the state employing thousands more South Australians, adding billions to our GSP every single year. Whether you are a retailer or a restaurateur, whether you are working in real estate or on the farm, whether you are a tradie or an accountant, it is the Liberal Party that has your back. We want to make it easier for people in South Australia to start a small business, we want to make it easier for people in South Australia to thrive in small business. Importantly, at this time we want to make it easier for people in small business in South Australia to survive in their small business.

We know we are in the midst of a cost of doing business crisis at the moment. We see pressure on small businesses right across the board from inflationary pressures, whether it be on wages or insurance or supplies. It is a very real threat.

We see the South Australian Chamber of Commerce most recently, in their Survey of Business Expectations, state that the cost of doing business was the number one concern for small businesses right across the state. Another thing that was listed very highly was a concern with government policy, which is also quite concerning. We know there is increased pressure from red tape from state and federal Labor governments as well.

What we see from those opposite in response to this cost of doing business crisis—and it is a crisis, we cannot open The Advertiser barely a day without seeing another batch of small businesses being forced to close their doors, citing business costs or government policy as the reason for doing so—is them really throwing up their hands into the air, 'Well, we've got a market-based economy. We can't do much about cost of living, we can't do much about the cost of doing business, and anyone who says we can it's all BS.'

That is total nonsense, because what we see now from those opposite is this bizarre amendment from the member for Elizabeth where he is trying rewrite history by removing the credit to the Marshall Liberal government for its significant payroll tax reforms. Every small business in South Australia knows what the Marshall Liberal government did for them in payroll tax reform: a significant increase of that threshold, which meant that small businesses in South Australia did not have to pay payroll tax if their annual payroll was below that $1.5 million threshold.

That was a significant increase from, I think, the previous $600,000 threshold that existed at that time, and benefited thousands of small businesses right across the state that paid millions and millions less in payroll tax each and every year because of what the Marshall Liberal government did.

In this amendment they also go on to try to give credit and talk about previous Labor government changes. It is pretty striking that in this amendment they have to go back and talk about the Weatherill government to find anything, clutch onto anything where they can show their support for small business, because they are totally bereft of any support for small business in this government. Why are we talking about the Weatherill Labor government? Why couldn't they come in here and amend it to talk about the Malinauskas Labor government's policies that support small business? I can tell you why they can't: because there aren't any.

We are in a context now where we have the highest inflation in the country, we have the highest unemployment in the country, we have small business struggling, and a government turning its back and saying, 'We can't do anything about it but, by the way, a decade ago we used to care about small business.' It is total nonsense.

This idea that governments cannot do anything to address the cost of living or the cost of doing business is simply wrong. Governments spend our money, governments take our money, and governments regulate us. When governments spend our money they can make very real changes to the cost of living and the cost of doing business. They can do so in an inflationary way, and I do not think we should underestimate the input state government spending has on inflation—that is something we will be keeping an eye on tomorrow when the budget is released.

They can also do so in direct concession, cost-of-living relief, and they can do so in measures that might improve productivity: for example, R&D and investing in state building infrastructure. These are all things that can actually help small businesses get on with the job of doing small business, whatever their business is, all things that can create an environment where small business can thrive in this state. That is not the context we are currently in.

Governments also take our money, whether it is fees and charges—and we see SA Water fees and charges and we see ESL fees and charges being a lot higher under Labor governments than previous governments—but also tax, which is the primary purpose of this motion. We know tax can burden small business and I will be very interested to see tomorrow what land tax is, what payroll tax is, what stamp duty is and whether it has increased from last year. You are taking more of our money this year because this is a high-taxing Labor government and high-taxing Labor governments do not help the cost of living and do not help the cost of doing business either.

Finally, they regulate our behaviour. We know that red tape can strangle small business. I said in my maiden speech this reflected a lot on my own family's experience in small business. When my father started his small business he did not expect anything from government, but he did not expect them to get in his way either. We should be allowing small business to get on with what it is that they do best, which is running their business. We should not be strangling them with trying to get their head around new IR laws, new environmental or social regulation standards or simply more paperwork and red tape: we should let them get on with what they do best.

This is one of the reasons why I am enormously proud of what the previous Liberal government did with respect to payroll tax, and this motion rightly celebrates it. In my first speech in this place I described payroll tax as a tax on jobs. I described it as unstable, inefficient and inequitable, and that is why those on this side of the house want to reduce it. I am so proud of what the previous Liberal government did in this space which sees now any small business with an annual payroll below $1.5 million paying zero payroll tax. This benefited thousands of small businesses and it gave thousands more small businesses, I might add, the confidence to create more jobs knowing that they were not going to be immediately whacked with more payroll tax.

Ahead of the budget tomorrow we are calling on the government—and we have been for the past week or so—to further reform payroll tax by increasing that threshold from $1.5 million to $2.1 million. I think that is a really important policy, because we have seen rising inflation and we have seen rising wages and the threshold needs to keep up to ensure small business is not being strangled with payroll tax, that tax on jobs.

We are also calling on the government to exempt apprentices and trainees from having to pay payroll tax as part of that threshold, which again will provide an additional incentive for businesses to take on new to industry employees—again, a really important reform that will reduce payroll tax and, importantly, incentivise new jobs in this state. So, at this time of enormously high unemployment—the highest in the nation—of enormously high inflation, we need to really be taking measures that support small business in South Australia. It helps people start a small business, it helps people survive in small business and it helps people thrive in small business and it is only the Liberal Party that will do that. So I commend this motion to the house in the form in which it was introduced by the member for Colton.

Mr TEAGUE (Heysen) (11:32): I move to rise to support the motion moved by the shadow treasurer in its original form, of course, and to congratulate the former Premier Marshall, the former member for Dunstan, who led in the time of the Marshall Liberal government an opening of the horizon to the sunshine that can be let into the South Australian economy if you actually walk the walk on this stuff.

We all know payroll tax is a dirty word and in fact the Premier is on the record as saying so and business councils recognise that. But you have to walk the walk. The Premier is in government, he has a budget coming up this week and we are going to see if he can walk the walk. We see the Premier roll up and sort of sidle up to business and say, 'We've got to be a friend to business as the government in South Australia,' but what does the government have to show for it? Taking another $160 million in payroll tax just over the last year, as the shadow treasurer has said, and showing not the slightest inclination, let alone the values that might drive it, to introduce further reform.

The poor old member for Elizabeth: he hopped up and said, 'Well, we've got to amend this motion' and then wanted to go back and talk about what the Weatherill government did in making changes that might have saved some money for business. Then there is this tortured reference—talk about cherrypicking statistics—to what a small business is, and then: you multiply that by an average, and then you get to whether or not the Marshall government, when it did its groundbreaking reform to reduce payroll tax in a very significant way back in 2018, actually abolished it entirely once and for all for small business.

Two things can be said about that. The first is that of course these things develop over time year on year. But go back to the first point: we have what is well known in this country—there are a variety of different definitions of small business. We have the ATO, not the fly-by-night commentators or anything—they have a fair amount of responsibility in terms of this space—saying for taxation purposes a small business entity is one that has an aggregated turnover of under $10 million. Alright.

Then you have Fair Work Australia, no enemy of the Labor government, that has established a definition of small business that has less than 15 employees, and then we can apply the member for Elizabeth's multiplier, and we would get a great big tick from the member for Elizabeth on that ground for having achieved the abolition of payroll tax for all small business. Then at the end of the list the ABS has this level of 20 employees.

So, okay, give the member for Elizabeth full marks for straining at something that can say, 'Well, hang on. The Marshall Liberal government wasn't that great, and as a result we've got to amend it and somehow praise the Weatherill government for its extraordinary reforming.' Let's be really clear about this: Marshall put his money where his mouth was and led a government where the first thing it did was to remove payroll tax from small business by increasing the threshold right the way up to 1.5, and we join with the business advocates in South Australia, including Business SA, in saying it is high time that went now to 2.1 for exactly the same reasons that the Marshall Liberal government made the groundbreaking change that it did.

We talk about principle and commitment to the reasons why. The reason why payroll tax is a dirty word and why it is an aspiration of any good government policy to reduce it and to remove it—and let's have a debate about where the most meritorious ways of doing that are, sure, and do so responsibly, but the reason why, in principle, payroll tax should be reduced and removed is: what do businesses do when they are armed with a few extra dollars in the business because they are not having to pay it off in taxes? What do they do? Of course, they employ more people, but what else do they do? They know their business best, and they invest. They invest in stock. They invest in better plant and equipment and, tellingly, they invest in research.

When I talk about investment in research, you cannot pass that moment without recognising a true leader in this space. They have now celebrated decade upon decade of successful anniversaries and growth over the journey. It is a business in the southern suburbs of Adelaide that had some humble origins, going back to the middle of last century, REDARC, which, under the stewardship of Anthony and Michele Kittel over, now, more than 25 years of their leadership, has committed itself, as a core part of business, to investing in research ongoing, year on year on year. That has been a key driver of the growth and success of that wonderful South Australia business.

That is precisely what REDARC and other businesses in this state can do if they are freed from the shackles of having to send money to the government, the result of having a payroll over a certain threshold. It is extraordinary, and it is extraordinary to hear the government hopping up and cavilling with the original form of the motion. The government should be saying, 'Yes, absolutely, congratulations to the Marshall Liberal government on removing payroll tax as it did, and we're here to tell you that there's more to come.'

But, no, we do not have that. We have these kinds of weasel words. The member for Elizabeth comes in and says, 'They didn't quite do the whole job; otherwise, they wouldn't be calling for more to be done,' and, 'Remember what we might have done back in the mists of time when things were so bad that we made a few adjustments, and over the journey that has had some cumulative contribution.' If Malinauskas Labor want to contribute to this space, if you want to contribute to improving conditions for business in South Australia, if you are serious about that, then do not engage in weasel words around motions in this place and what you might have done in the mists of time way back in the distant past as a means of chipping what the Marshall Liberal government immediately got on with doing in its time, and come and put your money where your mouth is.

I say to the Premier Malinauskas: walk the walk. Do not roll up to gatherings of business in this state. Do not go around visiting businesses and giving speeches to gatherings of people who are doing the work to drive small business growth in this state and tell them that you sort of agree that payroll tax is not great. Come up and walk the walk and put your money where your mouth is, because anything short of that is really just walking both sides of the street.

We have seen it far too much from this Premier. He really appears to have established this kind of pattern now where you sort of see him coming. It is a little bit like when Muhammad Ali criticised George Foreman when it came to the Rumble in the Jungle. George Foreman could not really be agile enough on his feet, and that is what is coming to tell on the Premier. He is sort of walking both sides of the street, and he is saying to business on the one hand, 'Payroll tax, that is not great,' but he is over here saying, 'No, no, all my values are over here with the unions and with the high-taxing, high-spending Labor government policy. That's what's in our DNA. So what I am doing? I am just sort of drifting along both sides of the street.'

What is at the core of all this is what South Australians can trust is actually going to be applied as a matter of commitment to values and principles. South Australians know that when you have a state Liberal government, as Premier Marshall proved as the first order of business in coming to government, then you are going to see lower payroll taxes. What South Australians know, because they have seen far too much of this, including under former Premier Weatherill and Rann, and it goes back, and now under this current Premier of South Australia, Premier Malinauskas, is that you will not see that from state Labor. You are not going to see money where the mouth is. You are going to hear weasel words, just like we have heard from the government this morning. I commend the motion in its original form.

Mr PATTERSON (Morphett) (11:43): It is a very good opportunity to be here in parliament today to speak to this motion from the member for Colton commending the Marshall government for scrapping payroll taxes for all South Australian small businesses but also recognising all those who are involved in small and family businesses for their contributions to our state and economy. Certainly, I reiterate that congratulations and acknowledge the hard work that all those people do in small and family business.

It comes from firsthand experience as well. I set up a small business with my business partners over 20 years ago now. I built it from the ground up, taking it from an idea, and actually saw it grow and employ staff and bring money into this state. It is a business that dealt with customers not only here in South Australia but also throughout the country and is actually bringing money into the state as well.

Certainly, when we set up the business, we were not thinking, 'What can the government do to help us?' We had an idea, and we knew what we wanted. We wanted to be agile. Certainly what we also did not want was a government getting in the way, a government putting in place bureaucracy, and also a government through their policies adding to the cost structure of the business itself, and that is why it is timely that this motion has been brought into this place by the member for Colton. Right now, small businesses, and businesses in general here in South Australia, are facing a cost of doing business crisis.

We have households dealing with the cost-of-living crisis. Certainly, in the business community, we are seeing them experience the cost of doing business. Costs are escalating across the board as well. Rents are increasing. Businesses that have taken on risk and borrowed money to be able to expand their business or set their business up have been crushed by interest rates. We know household interest rates are high, but commercial interest rates are even higher and have a significant impact.

At the same time, electricity costs are high for businesses. We know that in South Australia, if you are running a business, your electricity bill, as proven through the recent default market offer, is going to be more expensive than a business running in Sydney. It is going to be more expensive than a business running in Melbourne. It is going to be more expensive than a business running in Brisbane, and more expensive than in Perth. You are having to compete, as I said, with a business setting up that is competing nationally. You are having to compete with them. You are paying higher costs here in South Australia. We do not want to see that.

You also have input costs increasing as well, whether that is insurance, stock, food for your restaurants, materials for builders—it has all gone up. South Australian businesses are hurting, and that is being driven by the fact that South Australia has the highest inflation rate in the nation and also the highest unemployment rate. Where that also is a double negative for business is that a lot of their customers are having to deal with these increased costs as well, and threats of unemployment as well. Their customers are cutting back, so not only is your expense line going up but your income line is being impacted as well. We hear this weekly with distressing stories in the newspaper.

In Glenelg, we have seen well-known restaurants that have been in operation for many years closing their doors. We have had Hog's Breath Cafe close, and we have had Nick Cardone with his Cardone's restaurant that has been there for 20 years close down. Today, in the paper, there was another one: My Little Foodery has closed down. That owner cited wages, rent and electricity being at an all-time high, and effectively said that for the last few months he was running the business to keep his staff employed and not actually paying himself a wage. That is what happens with small businesses. They always pay themselves last. What they do not want to do is have to pay the government's exorbitant rates and charges.

In South Australia, we will need to be mindful of that because small businesses are the backbone of our economy. We have over 155,000 small businesses with a massive economic impact estimated to be around $49 billion per year—that is massive—and employing nearly a third of South Australian workers. While you hear these individual stories of small businesses closing down, collectively across the board that has a big impact. We know that costs are high, and we need to be mindful of that.

Payroll tax, as I have said previously, and those others as well, is a tax on jobs. It is a massive disincentive to employing people. Unfortunately, it has been a tax that has been baked into state governments' revenue raising now for a long time, but it certainly needs to be looked at closely on a regular basis. We know that the Henry Tax Review said that payroll tax is one of the most inefficient taxes. It is not based on the profitability of a business. It is more based on the structure of a business and how many employees they have. A lot of service-based businesses, like there are in Morphett, employ a lot of people as a percentage of their expenses of running their business, so payroll tax is certainly an issue.

The member for Colton brings to the attention of this house the good work that the Marshall government did in rectifying some of that. It was one of the first reforms brought in by the former Liberal government where the payroll tax threshold for businesses went from $600,000 to $1.5 million, taking it from one of the lowest thresholds in the nation to, in one fell swoop, the highest threshold of the states in the nation.

It reduced a significant burden for businesses. The estimate, I think, of the number of businesses impacted was around 3,600, and 3,200 of them would no longer be paying payroll tax. It had an estimated impact of around $44 million each year in terms of money that businesses collectively were not having to pay in payroll tax. In turn, they could invest that into growth, and one of the growth engines for businesses is to employ more staff.

Since then, of course, as I said we have had significant inflation. That happened back in 2018. It is now six years hence and we have seen award wage increases, I think, of 2.5 per cent in 2021, 4.6 per cent in 2022 and the highest increase in history of 5.75 per cent in 2023, and just recently another 3.75 per cent increase was announced, starting from 1 July.

Businesses do not mind paying employees for their worth, not at all, but what you can see is that the wages bill, collectively, has gone up. It shows that since 2018 average weekly wages have gone up by at least 20 per cent, because of inflation driving this. That is a real issue. A survey undertaken by the SA Business Chamber in June 2023 found that 38.9 per cent of responders paid payroll tax in 2021 and this had increased to 46.4 per cent by 2022-23.

You can see that more and more businesses, as these wages rise, trip into this threshold. That is why it is a real concern. The governments are collecting big increases in payroll tax revenue. I think the member for Colton mentioned an extra $160 million in payroll tax. It just shows the extent of the burden that business is throwing into the coffers of this government, and yet we hear nothing about what the government wants to do around reducing the burden on small business.

We hear nothing from the small business minister. They just throw their hands up. We have the Premier, who tries to stand next to business people to give the illusion that he is friendly to business, when in fact the proof, the results, show that we have small businesses closing every single week here in South Australia and then no action.

We want to see in this budget the state government broaden the support for small business. One way they can do that, what the South Australian Business Chamber is calling on, is to increase that payroll tax threshold. They are calling for it to be increased from $1.5 million to $2.1 million. If that came through, that would be a massive broad-based support.

You are not picking winners as a government. What the Marshall government did is we provided broad-based payroll tax relief. It allowed businesses in all sectors to benefit from that, not picking what sector we think in the green economy might be the future. It allows all businesses to have a level playing field, to be able to compete against the Eastern States, to be able to compete with international companies. That is what we would like to see in this state budget.

The Hon. D.G. PISONI (Unley) (11:53): I stand to support the motion as it was originally put by the member for Colton. I want to use an interesting analogy, particularly for those who might be Seinfeld fans, about the government's motivation in their amendment. There is a sketch where George Costanza makes the claim that if he puts everything that he has done in his whole life in a single day it looks decent. That is exactly what Labor have done with this amendment.

They were in government for 16 years, and they point to some tiny thing they did in their dying days and say, 'Look, just imagine that we were only in government for that very short period of time and that's what we did.' Whereas the Marshall government, within 100 days of being in office, reduced or removed payroll tax for every small business.

If I use the same ABS figures and the same inflated wage figures for the average small business, the average small business does not pay average salaries of $90,000 per person, because the average small business is not in those areas that are highly paid. Many people are running cafes, they are running small service industries. They do not pay salaries of $50 or $60 an hour, which is what you need, of course, to reach that salary that was mentioned by the member for Elizabeth. Six years ago, when that policy was brought in, $1.5 million had a spending value of nearly $1.9 million today. Exactly the definition that the member for Elizabeth said the Labor Party was accepting in justifying this removal of the reference to the Marshall government in their amendment.

Their own justification for removing this reference to the Marshall government's immediate and rapid response to support small business when it first came into office is flawed because that $1.5 million did represent small business payrolls at the time, just as the $1.8 million that he referred to today does the same thing.

Inflation is an evil thing. We are seeing the impact that is having on businesses here. There has been no threshold increase since that $1.5 million threshold increase by the Marshall government six years ago.

Just last week we saw a 3.7 per cent increase awarded by Fair Work for minimum wage earners; another 3.7 per cent added to the wage costs of businesses in South Australia and, of course, pushing more of them into the threshold where they will now start paying payroll tax through no fault of their own. The only people to blame for their increase in salaries—because there is no benefit to the staff. They are just catching up with the reduction in spending power that Labor's inflation has delivered since they have come into office, both at a state level and a federal level.

The attack on business is amplified by the Albanese government. We know that the tranche of industrial changes coming in on 1 July will remove the exemption for small businesses with 15 employees or fewer from redundancy payments when their businesses were sold or when their businesses had to close down or when they had to make significant changes because of downturns in income because of the economy. The very thing that this Labor government, in Canberra and in South Australia, with its highest unemployment and its highest inflation rate in the nation, is driving for small businesses is for them to have fewer customers and higher costs, which consequently will force redundancies.

I thank The Advertiser for the work it is doing covering the instances of businesses that are currently closing in South Australia. For example, my local butcher in Unley is horrified to learn the details of the Albanese changes to redundancy. He was planning to retire. He might be lucky enough to get a few hundred thousand dollars for selling his business to another butcher, but all of a sudden the price has gone down because the new owner has to take on a new liability that was not there until 1 July this year, and that is redundancy payments. Either he has to make the redundancies in his staff before he sells the business so that liability is not passed on or sell it before 1 July, which he is not ready to do because it does not suit his retirement plans. But the bottom line is it comes out of his retirement plan, the plan he put in place when he started that business 40-odd years ago. It was an attack out of the blue.

Of course, there is another attack on small businesses from the Albanese government, and that is the taxing of unrealised profits, in super funds in particular. It is common practice for small businesses to have their property, their farm, owned by their self-managed super fund. They pay rent to their self-managed super fund and they are providing for their retirement.

Now for the first time ever in the history of the OECD, this Albanese government is taxing unrealised super funds, which means that those people who have unrealised profits who are seeing capital growth in their assets in their super funds annually will have to either borrow money to pay tax or sell down assets to pay tax. It is an extraordinary situation, and it is actually worse than Bill Shorten's promise to remove franking credits. It is worse than that, because it is much more difficult to manage and it is going to destroy many small businesses' retirement plans.

What sort of incentive is there now for these people to employ South Australians, to contribute to the economy, to pay taxes to governments that provide services when such an unfair tax has been brought in by the federal government?

We learned this week the absolute disdain this government has for small business with the way it has not been paying tradies for doing the contracted work that they have been asked to do on Housing Trust public housing. This is housing that is managed by this government. There were disturbing reports that South Australian tradies were not being paid for public housing repairs, with claims that some are owed tens of thousands of dollars and are refusing to undertake more housing work. That is the sort of drastic action that a business person takes when they have given up, when they tell customers, 'I do not want your work anymore. You are not paying me. I do not want your work anymore.' That is where the South Australian government has put themselves: in that same position as the dodgy Trump-type developer. Remember how Donald Trump operates. Donald Trump got away without paying contractors for years, and this is what this government is doing.

Of course, then we have seen that these tradies, who run very small businesses, need to pay their mortgages that have gone up, need to pay the interest on their overdrafts that has gone up, need to pay their staff salaries that have gone up, and it is not just inflation that has increased. Skill shortages have increased costs because there is competitive pressure on those salaries.

So this government's claim that it is a friend of small business is nothing more than a hoax.

Mr PEDERICK (Hammond) (12:03): I rise to speak to the motion by the member for Colton:

That this house commends the Marshall government for scrapping payroll tax for all small businesses in South Australia, and recognises all involved in small and family businesses for their contribution to our state and economy.

Many thousands and thousands of businesses get up every day, run their own business and take all the risk, and then, as well as taking all the risk in managing their family business, they have the costs—and for the costs they have to endure, I take my hat off to them all.

I come from a farming background. We have many thousands of farm operations right across the state. As farming has done over time, it is either get big or get out, and we have quite big entities operating in farming, having to employ quite a few people, notwithstanding the size of equipment that has come on board and the risk that people take just in the agricultural sector in that regard.

I have mentioned it in here before when you have brand-new machinery now—and not everyone operates with new machinery, I get that—topping out at over $1 million per item. At that mark, around that $1 million mark, some above and some slightly below, you will have your tractors, your air seeders, your sprayers, your three main items that you need to operate with, and there is an array of other equipment around that.

Beyond that is the absolute risk of working with the weather. We see quite a tough start to the year. I like to think that because it has been so dry that we will see rain come from now on. We have seen very minimal rain. I mean, we had nine millimetres the other day and people were essentially treating that as the mini break because a lot of crop—and this is the hope that people have—has gone in dry. My property went in dry. Beans were germinating on next to no moisture. It is just amazing.

A lot of farmers, as they do right across the state, start seeding, some from probably mid-April but certainly ANZAC Day is a real trigger to get on with it. I know one property owner who almost sowed their 4,000 or 5,000 acres completely dry. Apart from all the other risks of the input costs, fuel costs, chemical costs, then there is the electricity cost of running your business, and not just running your business; a lot of these people run their businesses from their houses as well and it impacts there as well. Farmers do a great, great job across this state.

Sadly, we have seen in recent days that for too many small businesses, especially in the hospitality industry—in the paper today, My Little Foodery—it has just become too hard. Rent, wages, power: how many times do we hear that that trifecta knocks someone out? And we had the floods about 18 months ago, which were devastating for smaller and larger businesses right up and down the river. Anything we can do to support them to get back on their feet is what we need to do. But, again, as they restart and rebuild, it is the same thing: rent, wages and electricity costs, and all the other operating costs that come in.

With interest rates, we are at a different level to what I operated in, and to what some in here operated in over 30 years ago in farming when we were paying above 20 per cent in interest rates. If you had 20 per cent now, the whole show would fall down. Obviously the amount of money involved was a lot different. You see interest rates move even one quarter of a per cent now, but if you saw them move 1 per cent now in the wrong way, moving up, that would add many, many thousands—tens of thousands of dollars—to many small businesses, and in some cases hundreds of thousands of dollars of debt that needs to be paid. It only needs to move a small amount on a debt and next thing you are paying $12,000 to $15,000 extra a year. This is another thing that has to be absorbed by small and family businesses in how they are operating in this state.

Part of the issue that has impacted a lot of these businesses is COVID, and we still have some people working from home. I think that is having a real impact on some of our smaller operators, some of our coffee shops and our cafes. We have seen the burger shop in North Adelaide that has been there for 73 years—

Mr Batty: The 'Red and White'.

Mr PEDERICK: The 'Red and White', thank you. That is shutting down. This is a tragedy, really, to see these famed eateries that people have frequented over time, to see that after all these years of operations they just fall over.

I want to reflect on what we did in the Marshall Liberal government, and this was all about lowering the cost of doing business in this state. We exempted payroll tax up to $1.5 million, and that increased the threshold from $600,000. It was a significant threshold lift. South Australian businesses that had annual taxable wages above $600,000 but below $1 million had paid a 2.5 per cent payroll tax, and that was reduced to nil under those changes.

Back when we did that the reforms were expected to save about 3,200 firms a combined $157.2 million, while a further 400 businesses with taxable wages between $1.5 million and $1.7  million were expected to benefit from a reduction in payroll tax.

Now, from opposition, just in the last week we called on the Malinauskas Labor government to tackle the skills shortage in this state with payroll tax exemptions for apprentices and trainees while also increasing the current payroll tax threshold. It is very important that we support our youth and adult trainees and apprentices to move forward.

I am very proud of both my lads. One is a mechanical engineer intern, operating out of Queensland at the moment, out of Mount Isa, Mack, and then Angus is a third year apprentice chippy builder. Both are contributing a lot to this state and this country.

We heard before how this Labor government are not paying tradies—how disgraceful. Tradies can just pick up and—

Mr Odenwalder: That's not true.

Mr PEDERICK: It is true; it's absolutely true, it's completely true.

The ACTING SPEAKER (Mr Brown): Order!

Mr PEDERICK: The government is in charge of a program where tradies are not being paid. It is outrageous. The tradies—

Members interjecting:

Mr PEDERICK: It's true. The tradies can just go—

The ACTING SPEAKER (Mr Brown): Order, members!

Mr PEDERICK: —and work somewhere else, because I can tell you that there is plenty of work, whether it is new builds, whether it is renovations, whatever is going on. There are many hundreds of thousands or millions of dollars worth of work that companies can do in the building industry, no matter what size they are. The government needs to get its act together. I do not care whether Spotless are running it, but the government is in charge and Peter Malinauskas is at the head of the government—

Members interjecting:

The ACTING SPEAKER (Mr Brown): Order!

Members interjecting:

Mr PEDERICK: You're in government now, so make it work.

The ACTING SPEAKER (Mr Brown): Order, members! Quiet, please.

Mr PEDERICK: They hate negativity on that side of the house, because they hate small business. What we need to see is this government supporting employers in this state so that we can get a better outcome for employment options in the state and get jobs activated so that people can earn what they need to earn, get paid appropriately, move into the future, and stop all these businesses from throwing their hands into the air and saying, 'It's just too hard.'

Mr COWDREY (Colton) (12:13): I just want to express my gratitude to members who have contributed to the motion today, and indicate that the opposition will not be supporting the amendment that has been brought forward by the government. I also indicate that clearly the next 24 hours will give some context and, more broadly, an indication of just how supportive the Malinauskas government is of small businesses in South Australia.

The house divided on the amendment:

Ayes 22

Noes 12

Majority 10

AYES

NOES

PAIRS

Amendment thus carried; motion as amended carried.