Page 2049 - Week 10 - Wednesday, 25 October 1989
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The expansion of payroll tax provisions into this discretionary area is very hazardous indeed. The ACT does not need, nor does it want, a bureaucratic nightmare associated with employing people. This would do nothing but create a labyrinth involving accountants and lawyers. What we do want is an effective government with an effective program, one that has other solutions than to go on an all-out attack on employers which they seem to see as a bottomless well capable to carrying an infinite range of taxes.
This Bill effectively disadvantages employers and will act as a further deterrent to private sector expansion. Merely by redefinition the payroll tax liability of some small businesses could increase significantly, perhaps by a factor of three or four in some cases. Employers already pay a hefty payroll tax, amongst many other charges, and they are faced with almost twice the national average in labour costs. Labour costs in the ACT rose by 13.4 per cent in 1988, while in New South Wales they rose by only 8.6 per cent in the same period. In 1987-88 average costs per employer in the ACT were $27,275 compared to the national average, which was only $23,980.
If the ACT is to become economically viable, greater incentives have to be given to ACT employers rather than levying further unnecessary charges and penalising a sector which is increasingly providing greater employment opportunities in the ACT. We do not want to face the dilemma of having to woo back employers to the ACT after they have left because of ill-considered legislation. This legislation will drive existing businesses across the border into New South Wales. It will drive some out of business altogether because they simply cannot absorb the increased taxes and they have no elasticity in their markets.
It will cause a retreat into smaller business for those small businesses currently at or about the current threshold for payroll tax. In short, it will do our economy no good at all. Our job opportunities and revenue base will both be adversely affected. In this connection I am astounded that the Office of Industry and Development is in agreement with these proposals. It must set back their ideas for enhancing the private sector about ten years.
The Government has to take responsibility for effective and fair government. It has to understand that it cannot put the economic squeeze on one sector of the community without having negative repercussions in the wider community. The effect of an increase in payroll tax, as defined in these provisions, will in some cases be borne by the consumer in the ACT as employers struggle for their survival - yet another round of price increases in both consumer and investment products simply to help a Treasurer who has failed to recognise or act upon the real budget imperatives. I believe, Mr Speaker, that the Treasurer herself does not understand the complexity of this Bill.
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