From payroll tax relief to fixing labour shortages: Here’s what SMEs want from the Victorian state budget

Victorian budget_payroll tax

Victorian Treasurer Tim Pallas and Victorian Premier Daniel Andrews. Source: AAP/Erik Anderson.

Small businesses are hopeful the Victorian government’s upcoming budget will include measures to address labour shortages, increase the payroll tax-free threshold and create more opportunities to expand local manufacturing.

The state budget, to be unveiled on Thursday, will include funding for transport, hospitals and changes to stamp duty. However, no pre-budget announcements have so far been made for the small business sector.

Treasurer Tim Pallas announced a premium stamp duty will be introduced for property transactions above $2 million to help improve the budget’s bottom line. This year, the deficit is expected to reach more than $17 billion.

Melissa Glentis, owner of Dilly Dally cafe in the Melbourne suburb of South Yarra, says the most pressing problem she wants addressed is labour shortages.

“I don’t know what the Victorian government can do, but the biggest issue in my industry is the lack of staff at the moment,” she says.

Glentis says workers who have chosen to stay in the industry already have jobs, and those who were stood down during the state’s prolonged lockdown last year have left hospitality altogether.

“I don’t think funding for training is going to make a difference,” she says.

The hospitality industry is recovering from the economic toll of the pandemic at an uneven speed, with some suburban businesses trading better than cafes, bars and restaurants in the CBD.

Glentis says the government should try to improve the low levels of foot traffic in Melbourne’s CBD, which is suffering from less local visitors as well as a lack of international tourists.

“We need people back in our country, we need people visiting our city.”

Payroll tax relief

An increase in the payroll tax-free threshold and reduction of the tax rate is something many small businesses would like to see in the Victorian budget, including Glentis.

“I would absolutely like to see tax relief. We’ve got a couple of sites, so the payroll tax being reduced would definitely help us,” she says.

The Victorian Chamber of Commerce and Industry has been lobbying the state government for changes to payroll tax.

Dylan Broomfield, general manager of policy and advocacy at the Victorian Chamber of Commerce, says he would like the government to increase the tax-free threshold to $1 million and lower the rate to 4% for metropolitan businesses.

“Payroll reductions [would] take the pressure off some of those small and medium business that find themselves just over the payroll tax threshold,” he says.

Skills and training

The Victorian Chamber of Commerce believes the government should invest in training to ensure that small businesses can access the skilled workers they need.

“We need to make sure that there’s funding for skills,” Broomfield says.

“We know that small and medium businesses are really crying out for that at the moment, especially in specific industries.”

Small businesses also need support so that their ability to do business is resilient, and to ensure they can invest in new opportunities can be undertaken, Broomfield says.

“These are the things that the Victorian government can best do to reactivate Victorian businesses and let them really become the heart of the economy again,” he says.

Grants for expansion in growth industries

Peter Strong, chief executive of the Council for Small Business Organisations (COSBOA) says it is vital the state government focuses on growth industries, such as manufacturing, in this year’s Victorian budget.

“We need to get support to those businesses that can expand their manufacturing by offering one-to-one support from experts,” he says.

Personalised training and grants are all approaches that Strong says would encourage small businesses to expand in up and coming industries.


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