Victorian businesses will save more than $1 billion in payroll tax, land tax and workers compensation premiums under the Victorian budget handed down by Treasurer John Lenders yesterday.
Payroll taxes, which had been scheduled to fall from 5.05% to 5%, have been slashed to 4.95%. The thresholds on land taxes have been increased by 10%, with the top rate cut from 2.5% to 2.25%. These measures are estimated to save $660 million, while the 5% reduction in workers comp premiums will save business around $352 million.
There were other goodies for business too. There is a $94 million skills and employment package, $240 million to help build a sustainable freight network and make freight easier to move, and $35 million on marketing for the tourism industry.
The budget also provides for $422 million in stamp duty cuts, which should ease the burden on property buyers. “We are providing a more competitive business environment to drive jobs and economic growth in Victoria,” Lenders said.
But Victoria’s peak employer group, the Victorian Employers’ Chamber of Commerce and Industry, isn’t completely sold on the budget. VECCI’s head of economic and industry policy, Steven Wojtkiw, said that while cost cuts are welcome, the budget was a “mixed bag” from an infrastructure point of view, and despite the Government spending $1.8 billion on transport initiatives, there is room to do more. “We would also hope that the Government can commence work on an urgently needed transport plan to anticipate the extra million people living in Melbourne in coming decades.”
Greg Chapman, a small business adviser and CEO of Empower Business Solutions, supports the VECCI argument. He says the budget has done nothing for the 61% of employing businesses that are too small to pay much payroll or land tax. They would have preferred infrastructure spending that would have addressed the transport crisis that is costing them money and lost time. “The current budget, like all recent budgets before, refers to ever more studies and plans but no actual commitment to invest.”
The operating surplus for 2008-09 is expected to be more $828 million, with net debt tipped to hit $3.7 billion by 30 June 2009. According to the budget, Victoria’s economy will grow at 3% next year, with higher interest rates and the global financial crisis putting the brakes on growth.