Payroll tax lever must be pulled now to boost business confidence and create jobs

Western Australia’s business confidence has fallen for the second quarter in a row, down 13 per cent since December 2018, sending a clear message to the State Government – reduce WA’s jobs tax to support business investment and job creation or risk the State’s economic recovery.

The latest WA Super–CCI Business Confidence Survey conducted by WA’s peak business body, the Chamber of Commerce and Industry WA (CCI), is the only WA-specific index in the country, providing a snapshot of state-wide economic conditions and business expectations.

CCI Chief Executive Officer Chris Rodwell said WA businesses decline in confidence over the short-term, combined with 72 per cent planning to reduce their staff levels or keep them the same, is a worrying sign for WA’s economic recovery.

“With four out of five jobs created by business in WA, the State Government needs to be doing everything it can to support businesses to grow and create jobs. Every other state understands the importance of reducing payroll tax so small businesses can hire more people, which is why we are left with the highest payroll tax burden in the country,” Mr Rodwell said.

“Just two months ago Queensland increased its payroll tax threshold by $200,000 to $1.3 million at the same time that the WA Government knocked backed an opportunity to help the almost 90,000 West Australians who want a job but can’t find one when it rejected payroll tax relief in the May Budget.

“This means a Queensland business could hire almost five additional workers on WA’s average full-time salary before being taxed by the Government for creating those jobs, compared to a WA business.

“Every day the State Government puts its hand in the till of WA businesses – taxing them for no other reason than giving more West Australians a job.”

Thankfully, there is optimism on the horizon for WA businesses, with more than four out of ten (41%) expecting economic conditions to improve over the next 12 months, largely driven by businesses in construction (54%), mining (50%) and manufacturing (50%), as the mining sector gears up for a new round of investment.

“The real estate industry has overtaken mining as leading confidence for the first time since CCI began publishing these industry results in 2017. Almost three out of five (59%) real estate businesses expect stronger conditions over the next 12 months, up 25 per cent,” Mr Rodwell said.

“It’s not doom and gloom for the mining industry though, with only 13 per cent of businesses expecting weaker conditions for the year ahead and half are planning to increase their production over the next three months.”.

“This is a serious contrast to WA’s struggling retail sector, with two out of five (41%) retailers expecting conditions to worsen – up 13 per cent – one out of three (33%) expecting to lay off staff over the next three months and only 5 per cent expecting to increase their capital expenditure. This reinforces CCI’s calls for the State Government and Opposition to act now to implement incremental changes to WA’s outdated retail trading hours and regulations to support WA retailers to compete.

“CCI’s profitability index continues to ring a major alarm bell, with the index sinking to 95.9 – the lowest value in three years. Over half of businesses (56%) reported a decline in profitability over the June quarter, with only 10 per cent stating that their profit margins improved.

WA Super Chief Executive Officer Fabian Ross said it is apparent that WA consumers are still being cautious with their spending as the property sector continues to stagnate. This is obviously impacting retailers.

“If reducing Payroll tax will encourage businesses to employ more people, then this will help improve consumer confidence and ultimately benefit the retail sector,” Mr Ross said.

To read our WA Super–CCI Business Confidence Survey click here.

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