Legislative Council: Wednesday, June 01, 2022


Payroll Tax

The Hon. D.G.E. HOOD (17:05): I move:

That this council—

1. Commends the Marshall Liberal government for scrapping payroll tax for all small businesses in South Australia; and

2. Calls on the Malinauskas Labor government to retain this benefit to more than 3,200 South Australian small businesses and more than 135,000 microbusinesses and sole traders who can now create more jobs knowing they won't be hit with an extra tax as soon as they employ more South Australians.

When the Marshall Liberal government was elected in 2018, it swiftly implemented its policy to remove payroll tax for small businesses. Within its first year in office, the former state government delivered on this promise, benefitting more than 3,200 small businesses in South Australia and providing confidence to over 135,000 microbusinesses and sole traders, who could expand their operations knowing they would not be dealt with another tax simply for providing more South Australians with employment.

The Marshall Liberal government demonstrated leadership in boosting our economy through implementing this important measure that directly, or at least indirectly, benefitted every South Australian. The average annual cost of doing business in South Australia over the past few years has reduced by over $4,900, while small businesses are saving some $7,450 a year on average.

The previous Liberal government recognised the need to address the barriers to the creation of job opportunities that were experienced for years under Labor. Payroll tax had been imposed on businesses with payrolls of just $600,000 or more, effectively meaning that small to medium-sized businesses, which should be given the most incentive to prosper, experienced the most strain.

The previous Labor government relied on this stream of revenue for a quarter of its tax income, with South Australia having the lowest payroll tax threshold of almost any state and territory in the entire nation under the previous Labor government. This arguably prevented our state from reaching its economic potential—after all, fewer jobs inevitably lead to greater reliance on welfare payments, with less money being injected back into our local economy.

Given payroll tax was potentially deterring business owners from growing their enterprises and would have possibly caused entrepreneurs to reconsider basing their ventures in South Australia, the Marshall state government focused on creating an environment in which existing businesses could thrive and to which startups were attracted.

Of course, this measure could not have come at a better time for our state, as none of us could have predicted the immense impact the global pandemic was to have on our business sector. In the midst of the lockdowns and restrictions that were necessary for our communities to avoid the worst of COVID-19, South Australian businesses deserved any relief from financial burdens that our state government could offer, and the Liberals' policy was indeed fortuitous and well-timed in that regard.

Even in the midst of managing COVID-19 and having to deal with the unprecedented challenges, ABS figures have shown that the previous Liberal government transformed the South Australian economy into the fastest growing economy in the nation. Under the previous Liberal government, under our stewardship, the state led the nation in increasing our skilled workforce, with more than 52,000 apprentices, pre-apprentices and trainees commencing their training since the Marshall Liberal government was elected in 2018.

Having witnessed the positive effects that the removal of payroll taxes for small businesses was having in South Australia during the 2022 election campaign, the Marshall Liberal team announced it would extend the payroll tax exemption on all apprenticeships and trainees for two years, which would have saved employees $18.2 million and provided excellent career pathways for South Australians, preventing our young people from leaving the state, or the so-called brain drain as it is called.

Unfortunately, under the Malinauskas Labor government our businesses may not be afforded the same opportunity to capitalise on such a scheme, which would have helped to ensure we had the skills required to accelerate our economy and prevent the widening of skills shortages in key industries.

The Marshall Liberal government's initiative was widely welcomed by business owners and relevant interest groups. For too long excessive and unnecessary regulatory burdens have hindered businesses from flourishing, with payroll tax being a consistent point of contention. The former Liberal government adopted a pro-jobs, pro-growth and pro-economy agenda, boasting an innovative vision that spanned beyond its term in office. It did not limit its policies and actions to those which obtained short-term gain at the expense of South Australia's future economic vibrancy and competitiveness but rather sought to fuel investment and stimulate growth at every opportunity.

Given that there are over 145,000 small businesses operating in our state right now, providing employment to a third of our entire workforce, we cannot afford to have any of these enterprises at risk of closure simply because the reinstatement of payroll tax encumbrances render their operations unviable. Instead, we must continue to incentivise business expansion, which underpins a strong and thriving economy and is vital to lowering our unemployment rate.

I would strongly urge the Malinauskas Labor government to continue providing payroll tax relief to small businesses, which will contribute considerably to South Australia's long-term success and which was initiated under the Marshall Liberal government. I commend the motion to the council.

Debate adjourned on motion of Hon. R.B. Martin.