Page 2155 - Week 06 - Tuesday, 21 June 2011
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MR SMYTH (Brindabella) (7.40): The opposition will be supporting the Payroll Tax Bill, and I thank the Treasurer for arranging a briefing on the bill. In principle, this bill is a very sound move. It supports actions being taken by all jurisdictions across Australia to achieve greater uniformity on payroll tax regimes. Essentially, the bill is very straightforward. As I was told in the briefing, the bill will “align the form and structure” of payroll tax regimes in place across Australia. That, I would have to say, would be a very good policy move.
Even though the opposition will support the bill, there are still some concerns about what Australia in general and the states and territories in particular are doing to enhance Australia’s competitive position on the world stage.
A closer look at this bill sees two broad themes. Firstly, there are proposals to standardise the ACT’s payroll tax regime with those in other jurisdictions. Secondly, however, there are the exceptions to the standard approach which the ACT will maintain, and it is this second set of matters which will continue to create concerns.
I think it is important to put that concern into context. Consider Australia’s productivity performance over the last 50 years. Between 1960 and 2000, apart from a sharp decline in the mid-1960s and a blip in the 1980s, we recorded steady improvement in productivity until about 10 years ago.
There were many reasons for this improved performance. It reflects policy decisions taken by both coalition and Labor governments at the federal, state and territory levels. Two of these decisions that were particularly important were the introduction of the GST by the Howard government and the floating of the Australian currency back in 1983 by the Hawke Labor government.
The question is: what has happened since 2000? Australia’s productivity performance appears to have slumped and, if you look at the trend, it does not appear to be very positive. That brings me back to the bill. We commend the steps being taken to align the various payroll tax regimes. Our concerns, however, lie with the exceptions which exist in the ACT’s payroll tax policy. These exceptions, in addition to the variation to the rates of payroll tax and payroll tax threshold, include primary carer leave, exemptions for charities and employment companies.
The argument, presumably, will be mounted that the ACT’s differences from the national approach are not all that great, and that these differences will be relatively minor in the broad scheme of payroll tax policy. But I think that response ignores the very real and serious implications created by these differences in practice.
It is easy to imagine the following scenario. Consider any company which operates across Australia—any of the major banks, for instance, or a major retail chain—and consider what has to happen if the ACT changes its policy, even in the smallest way, relating to primary carer leave, such that there are payroll tax implications. The national employer has to become aware of this change—a change in one of the smallest jurisdictions and in which their employment base is probably one of the smallest for the company. A company has to have people on staff who monitor these matters continually, with the resultant additional cost to the company, or it has to buy
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