The State Government’s proposed changes to the Payroll Tax Exemption puts the WA economy at risk, leaving WA businesses and workers with little support to upskill while the Government makes policy on the run.

The Chamber of Commerce and Industry WA (CCI) has today released a paper outlining the detrimental impact that the Government’s policy shift – removing the Payroll Tax Exemption (which supports businesses to upskill their workforce) for all existing employees and restricting it to new employees earning less than $100,000.

CCI Chief Executive Officer Chris Rodwell said this change will put a handbrake on WA’s already declining training sector and employers’ ability to upskill and retrain their workers to stay at the cutting edge.

“It will create a policy vacuum where businesses have little support to upskill their existing staff before a Grants Scheme is proposed to be introduced, for which no details have been released,” Mr Rodwell said.

“Claims by the Government that CCI is compromised on this are false. This is bad policy that leaves businesses to do the heavy lifting on upskilling and reskilling the WA workforce while the Government walks away without a plan. It’s CCI’s primary role to hold any government to account on skills policy, which we have done with many other industry associations.

“We recognise the important job the Government has in finding savings, but industry can’t afford to wait until July 2019 for a proper plan to be in place to skill WA’s workforce for the future.

“For years’ business has worked with governments of both major parties to resolve skills challenges in the market. Changes to the Payroll Tax Exemption, coupled with restrictions in skilled migration, leave business holding the fort while the Government takes a vacation to consider its options.

“This will hit workers in regional WA and older employees the hardest. Studies show that the jobs of older workers are most at risk of losing their jobs to automation and AI if they are not supported by constant upskilling.

“While we welcome the Government’s changed conditions to the $100,000 threshold to not include allowances, as recommended by CCI, it remains the case that the new policy settings are inadequate in responding to the current skills environment in WA.

“WA workers with 20th century skills can no longer compete in this digital world, and neither can the businesses in which they work.

“Forty per cent of jobs in Australia are at risk of being automated within a couple of decades, which means constant retraining is required as automation and AI become the norm.

“It’s employees in the industries of hospitality, tourism, retail, early childhood education and care, disability care and civil construction who are all currently upskilling their existing workforce through traineeships that will now be shut out.

“This doesn’t just undermine business; it undermines the aspirations of average working West Australians.”

The Government has raised concerns about large numbers of employees being put on traineeships so that business can access the Payroll Tax Exemption. 

The Government has approved every training contract, and additional measures were put in place by the Apprenticeship Office in 2015, including capping the number of existing worker traineeships. These changes were already working to address any perceived misuse.

“Businesses tell us that if training numbers continue to decline, we will see skill shortages in three to five years,” Mr Rodwell said.

“CCI is calling on the Government to immediately reverse its decision to remove the Payroll Tax Exemption for existing employees at least up until July 2019 if a new scheme is to be introduced. The Government should then undertake widespread consultation with industry to inform best practice for future training.”

To read CCI’s policy paper, click here