Page 1698 - Week 06 - Wednesday, 4 June 2014
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Of course, there are three main components of the territory’s economic growth—that which is driven in the public sector by the commonwealth and, to a lesser extent, by the territory government and, of course, the private sector contribution.
The commonwealth are retreating and their forward estimates indicate a reduction in real terms in spending in the economy. This obviously has flow-on effects here in Canberra to moderating the rate of growth in the private sector. This leaves the ACT government with the capacity, though, to forge new partnerships with the private sector to drive growth. So now is the time for us to step up, to shield our economy from greater risk. That is why we have taken the decisions we have to support growth.
I will spend some time now going through the ways that the government will seek to support the economy in the coming 12 months. First and foremost, we need to remove the deadweight loss of bad taxes. Tax reform creates the foundations for the long-term sustainability of our economy and of the territory government’s revenue base. Most importantly, it makes our tax system fairer, easier to understand and more efficient.
In the simplest possible terms, when it comes to taxes raised at this level of government there are bad taxes and there are efficient taxes. We are choosing efficient taxes over bad taxes, and the deadweight loss, the fiscal drag on our economy that this shift unlocks, is to the tune of $170 million, Madam Speaker, over the first five years. If you look at the economic modelling of what 6½ thousand job cuts from the commonwealth means, that is a contraction in our economy of around $600 million. Tax reform over five years frees up $170 million worth of deadweight loss. So it is a significant factor in ensuring that our economy is able to grow in the future.
This budget cuts payroll taxes—not the worst tax we levy but by no means the best tax we levy. But we do so at a time when local business needs that stimulus and that incentive to employ more people. So the cumulative impact of the payroll tax cuts announced over my time as Treasurer means that more than 23,000 businesses maintain their exclusion from the payroll tax system. If they were operating across the border in Queanbeyan, with a much lower threshold, thousands—tens of thousands—of ACT businesses would be paying payroll tax. They do not because they are in the ACT and this jurisdiction has the best payroll tax regime for small and medium-sized enterprises in this nation. The cumulative impact of the cuts to payroll tax since 2012, in the last two years, puts around $25,000 back into every Canberra business that pays payroll tax.
We are also cutting stamp duty on every single property in the territory, from the largest commercial properties through to the smallest of units. We have ensured that we are stimulating the high end of the commercial property sector as a result of these changes. The worst tax that we levy is two years from complete abolition—two years away. We have cut it by a third in this budget.
The Insurance Council of Australia CEO, Rob Whelan, pointed out in his comment on our budget:
The removal of stamp duties is of significant benefit to consumers in the ACT and we commend the government for leading the way on state tax reform.
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