Payroll Tax

The Hon. C. BONAROS (16:44): I move:

That this council calls on the Premier to refer to the South Australian Productivity Commission the matter of payroll tax in South Australia and require the commission to report on the inquiry identifying further actions the South Australian government may take to improve the effectiveness of the current payroll tax system in promoting economic growth and job creation and its alignment with the overall economic goals of the state, and the inquiry should include evaluation of:

1. Payroll tax threshold and rates, including consideration of an annual review;

2. Incentives to promote regional employment and investment;

3. Opportunities for industry-specific incentives to support the growth and sustainability of key sectors;

4. The impact of recent payroll tax decisions on independent general practitioners and the general practice sector, including the exacerbation of workforce challenges and reduced access to health care;

5. The effect of grouping provisions on independently operated but co-branded businesses across various industry sectors;

6. Retrospective payroll tax liability determinations;

7. Compliance challenges faced by businesses;

8. Payroll tax systems in other jurisdictions to identify best practices and potential areas for reform and alignment; and

9 Any other related matters.

The motion that I am moving today calls on the Premier to refer to the South Australian Productivity Commission the issue of payroll tax in South Australia and, indeed, to inquire into and report on that. The terms of reference of this are not any different, or are only slightly different, to the previous terms of reference that I put up in this place and which the government, together with members of the crossbench, chose to oppose. I thank the opposition at that time for their support of that very important motion for an inquiry into payroll tax.

I like to keep good on my promises. I know there are rules around what we can and cannot do in this place in terms of issues being substantively the same, so I have a very creative list of very important and worthy bodies which are more than capable of inquiring into this important issue. If the Treasurer and the Premier think that we are not up to the task and that we do not have the expertise or nous to be able to consider the issues of payroll tax appropriately, then who better than the Productivity Commission to do just that? So that is what I am calling for this time: that the Premier—and the Treasurer, by extension—refer those terms of reference. Of course, I am more than open to considering the terms of reference being slightly altered if that is what the government needs to see this inquiry get off the ground. I am more than open to that concept.

As I said, we have a Productivity Commission here, and we have talked in the past about the importance of the Productivity Commission and the work that it does. It is well within the Premier's capabilities to refer this matter for inquiry to the Productivity Commission and get back some advice from them about the issues surrounding payroll tax: how that is impacting businesses in South Australia, how we fare compared to other jurisdictions, what things we could be doing to make payroll tax more equitable in this state, and how it is that we have retrospective determinations that can be made on the issue of taxation, and specifically payroll tax, that go back five years in this jurisdiction.

I have said previously in this place that I cannot think of any other law that allows a penalty to be imposed retrospectively for a period of five years, purely based on the determination of a commissioner and nothing else: no legislation required, no regulations required and no parliamentary oversight required. We have a commissioner, a determination is made, and they have the power to apply a determination retrospectively for up to five years, and businesses get to wear the costs of that retrospective determination.

We know that there are lots of businesses that are currently in the process of trying to deal with this issue with the government in terms of retrospective application determinations. We know that we have talked previously in this place about general practitioners who have one of these determinations that has been applied to them. We know that there have been discussions that have taken place around that determination. We know that dentists, surgeons, physios, chiropractors—the list goes on—everyone in the allied health professions have faced the same hurdle and the same obstacle and are continuing to face those challenges when it comes to those payroll tax determinations. We know that this is not limited but is having a particular impact on the allied health professions.

We know that doctors have warned us that the cost of visiting a local doctor will probably increase by something like $12 if this were to go ahead. We know that the amnesty that was afforded during that period was not going to do anything for those doctors who had not signed up, and that is just doctors—independent general practitioners. They are the only ones who have had the benefit of an amnesty. That is not a criticism of them; well done to them. But it does absolutely nothing to help the dentists, it does nothing to help the physios, it does nothing to help the psychologists, and it does nothing to help the chiropractors and the surgeons who are also impacted by the same determinations.

That is not all we are asking to look at in this inquiry. We know that regardless of those issues, or putting those issues to the side for a moment, as I have said in this place over and over, this government gets to reap the benefits of something like $5 million a day from payroll tax. Businesses across the state, particularly today in this cost-of-living crisis, are pleading with the government for some relief, are pleading with the government for some assistance.

I know businesses that are cutting their wages in the month of May to make sure they stay under their thresholds before the end of the financial year. It is extraordinary that in the toughest economic times we can imagine, and a cost-of-living crisis, we have heard crickets in terms of helping businesses deal with their payroll tax debts.

We know also that there is a creep effect when it comes to payroll tax—that, yes, despite the fact that we had a threshold increase under the former government and a steady rate at 4.95 per cent, more and more businesses are falling into the higher payroll tax bracket than ever before. That is as a result of the creep effect, and they simply cannot sustain it. Their choices are to shut up shop, to employ fewer people, to be less economically viable as a business, or to do the work themselves. They are trying all manner of things to keep their heads above water in the hope that the government will consider some payroll tax initiatives relief and reform.

There has not been any appetite whatsoever. There has been absolutely zero appetite up until this point from the government to examine this issue, because we also know that that revenue stream is critical to their coffers and one that they have become so reliant on that they cannot wean themselves from that reliance. Anything extra they are getting from those sorts of determinations that I pointed to earlier is a windfall gain for the government that they just cannot say no to.

I bet you if you went to businesses today and said to them, 'In the forward estimates there's going to be an extra $20 million or $30 million in surplus gains for the government that they never anticipated as a result of payroll tax', and asked them whether they would prefer that money to go into general revenue or provide some relief, albeit little, across the board to all businesses, I am sure they would take the latter, because that is how desperate businesses in this state are today.

We know that our regional towns are the lifeblood of our communities. If you went to businesses and said to them, 'Do you think we should look at the sorts of incentives that exist interstate like Victoria, where there is a 50 per cent reduction for our regional towns? If we considered that sort of incentive in South Australia, would you support it?' I am absolutely sure businesses across the state would say, 'Yes, let's do that.' That is something that Business SA—and I forget the new name, the Business Chamber—in South Australia has called for in the lead-up to the state government.

I could go on and on and on, because everyone knows that I have pages of this stuff, but we are talking, ultimately, about a government collecting over $100 million in payroll tax from businesses in South Australia each and every year, purely by virtue of the fact that they are employing people to work. That is what they are doing. They are not doing anything else. Businesses are generating jobs and they are generating incomes for families and they are generating economic activity, and they are being penalised severely as a result of payroll tax.

Any business in the state would tell you the impacts that this is having on them. We have $1.7 billion ($5 million per day) coming into government coffers from payroll tax. We have additional revenue in the order of about $100 million that the government never anticipated to be getting. If we went back to those same businesses and said, 'How about we look at incentives about how we can put that back in your pockets instead of our pockets', I reckon we would not be standing here all the time talking about payroll tax.

I am not going to repeat everything I have said previously on this issue, because I have spoken about it several times now, but I do remind the Premier and the Treasurer that those same concerned business groups that raised this issue initially remain concerned. They remain extremely concerned, especially in the lead-up to the budget, and they will take any sort of inquiry the Premier and the Treasurer are willing to give, because all they are asking for is genuine engagement with the government to find a better way of doing business in this state, and that is all I am asking for on their behalf.

If the government, if the Premier, if the Treasurer think that we are too politically motivated in this place and we cannot have an unbiased and impartial inquiry process to deliver that result, then here is a perfect alternative. Let the Productivity Commission have that inquiry. Let them consider the impacts payroll tax is having, let them consider the sorts of changes that have been implemented in other states, let them do those comparisons and let them come up with some recommendations, genuine recommendations, about what this government could be doing—in my view should be doing—to make payroll tax less of a burden on businesses, which we know are doing it tough across the board. With those words, I seek leave to conclude my remarks.

Leave granted; debate adjourned.