Page 2780 - Week 09 - Tuesday, 16 August 2005
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release and looked at the Canberra Times story you would say that everybody should move to Canberra, that this is where you should come to do business, because it is so much cheaper here to hire people—until you looked at the survey.
The Chief Minister did not mention, and probably did not know, that the survey is of little value because it only looked at payroll tax and workers compensation, and even on that data it is wrong. The most important area in relation to the data is that in the case of the ACT there are some critical industry categories for which no estimates exist. The reason cited was confidentiality. The survey has taken the cost of those industries as zero. For example, there are no ACT estimates of payroll tax for the industry categories of government administration and defence, health and community services, and personal and other services. The cost of payroll tax in these cases is recorded as zero in the study.
By contrast, there are estimates in those categories for New South Wales. For the same items, the cost per employee amounts to $2,737. In other words, for payroll tax alone, the data show an apparent additional cost of $2,737 in New South Wales for no other reason than that ACT payroll tax in these three industry categories is not counted. Accordingly, there is no basis for making a comparison.
Similarly, for workers compensation, there is no ACT data for the industry categories of electricity, gas and water supply and of transport and storage, so the cost is taken as zero per employee. For the same industry categories in New South Wales, the cost of workers compensation per employee is $3,247. In other words, for workers compensation alone, the data show an apparent additional cost in New South Wales of $3,247 per employee for, again, no other reason than that the cost in the ACT is not counted. Again, therefore, it invalidates any basis for comparison.
Combining the two, the cost per employee in New South Wales appears to be $5,984 higher only because no estimates for these costs exist for the ACT. What is counted in New South Wales is not counted in this territory. That, of course, is why there is such a huge difference. In light of these very serious flaws and because the conclusions based on them can only be highly misleading, the so-called survey should never have been released.
In any case, comparisons of the cost of payroll tax between the ACT and New South Wales are virtually meaningless because of the large number of small firms in the ACT, which contrasts with the large number of big corporations in the New South Wales area. I think that is obvious to members of all sides in this house. The fact is that the Chief Minister is not comparing like with like. Payroll tax for the ACT is very unreliable for making comparisons because, where no estimate exists, the cost is again taken as zero. As is noted in the survey—I commend the Treasurer to look at this—there is a relative standard error rate of up to 50 per cent, which is way too high.
It has to be acknowledged that the commonwealth government has a major impact on the cost of employees in the ACT due to its competitive impact on the cost of office space, equipment, wages, salaries and conditions, but it does not pay payroll tax; so it totally skews the comparison. Any comparison of workers compensation between the ACT and New South Wales can be misleading because of the high proportion of administrative jobs in the ACT relative to the high proportion of manufacturing, construction and transport jobs in New South Wales. Again, the data for workers compensation in the
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