MORE THAN AN ELECTION BUDGET – ITS ACTUALLY A GOOD BUDGET!

8 June 2010

NSW’s largest business organisation, NSW Business Chamber, said the 2010-11 Budget provided the state with workable policies designed to improve the long-term competitive position of NSW.

Welcomed initiatives in the 2010-11 State Budget include:

• Two cuts to payroll tax – 5.5% from 1 July 2010 and 5.45% from 1 January 2011,
• Increase in payroll tax threshold from $638,000 to $658,000 on 1 July 2010,
• Abolition of the insurance protection tax from 1 July 2011,
• A Comprehensive Housing Supply Strategy that will introduce zero stamp duty for off-the-plan purchases of new homes up to $600,000 (a potential saving of $22,490 per home),
• A 25% stamp duty cut on newly constructed homes,
• Zero stamp duty for over-65s who sell their family home or downsize to a newly constructed home worth up to $600,000,
• An additional $40 million for the Major Investment Attraction Scheme to attract large ‘footloose’ projects to NSW: and
• A $75 million defence industry package.

“This is more than an election budget – it is actually a good Budget.  It seeks to create workable solutions to issues around business costs, expanding housing supply and investing in transportation and infrastructure”, said Stephen Cartwright, CEO of NSW Business Chamber.

“It is fair to say that NSW has come through the GFC better than expected.  However, there are still some clouds on the horizon and we have to work hard to improve the economic position of NSW.

“Treasury’s projections for growth and jobs reflect a strong, diversified and competitive business sector.  The GFC has highlighted that strong and competitive local businesses are the best antidote to global instability.

“We welcome the cuts to payroll tax.  Payroll tax is more than a tax on jobs, as the Henry Review highlighted, it is also a tax on wages.  Whilst the additional cut in January is small at 0.05%, business recognises that the Government has pursued a strategy of small incremental cuts.  This strategy has resulted in NSW now having the lowest payroll tax rate in 30 years.

“The reforms in terms of housing supply are also significant.  The planning reforms, changes to levies and the zero stamp duty opportunities will encourage the supply of new housing and will remove some of the inefficiencies in the current system. 

“Housing affordability has the potential to become a significant business issue in coming years as workers get priced out of Sydney accommodation.  This will result in skills shortages which will increase pressure on transport and infrastructure.

“The initiatives in terms of the Major Investment Strategy Scheme, and the investment in defence jobs, highlight a more pro-active approach by the Government in creating new business opportunities for NSW.  These initiatives are welcome and supported.

“We also welcome the announcement about traineeships and apprenticeships for young people and we are particularly encouraged by the announcement of new trade schools.”

Mr Cartwright said he was disappointed that the Government did not adopt a more aggressive approach to regional development in NSW.

“We need to invest further in our regional communities by encouraging relocations and by encouraging greater diversification in our regional communities.  NSW Business Chamber argued for a Develop Regional NSW Fund and we believe there is still more to do in this area.

Mr Cartwright said another area of concern within the Budget was the increase in employment costs.

“The Mini-Budget in 2008 committed the Government to a 2.5% cap in employee related expenses.  According to the Budget papers, employee related expenses grew by 6.6% in 2009-10 and are forecast to grow by 4.7% per annum over the four years to 2013-14.”

Mr Cartwright said it should also be noted that a Budget is exactly that – a Budget.  It is not a document that benchmarks NSW against other jurisdictions, or highlights areas of efficiency. 

“Budgets by their nature aren’t reforming documents.  Whilst this Budget delivers on reducing business costs, dealing with housing supply and invests in infrastructure, we do believe even more could be achieved if the Government undertook a comprehensive reform and audit of its own activities, work practices and performance."