22 June 2017

Relief on payroll tax and jobs grant funding to hire apprentices/trainees welcome

Future jobs fund will provide opportunities for existing SA business grants/loans

An SA bank levy does not send the right signal and could cost business and consumers

The State budget released today was strongly focused on health and community infrastructure as well as some major transport projects largely contingent on significant Federal Government contributions. Small business benefitted from an extension to the 50% payroll tax rebate on a declining scale to $1,500,000 and the rebate will now be converted to a permanent change in the rate for businesses with payrolls between $600,000 and $1,500,000. Business SA had called for permanent payroll tax relief and while we recommended the threshold be lifted, any extra relief on payroll tax will help small business.

The Jobs Accelerator Grant (JAG) will now include a $5,000 additional payment for all businesses with payrolls less than $5,000,000 to hire a new apprentice and trainee, providing that their total full-time equivalent workforce actually increases over the period. Business SA had called for additional incentives in the JAG for apprentices, trainees and graduates so we welcome the State Government’s response to our recommendation.

A new $200 million Future Jobs Fund includes $120 million for business grants and loans to develop in key sectors including defence/shipbuilding, renewable energy, mining, tourism/food/wine, health/biomedical research and IT/advanced manufacturing. With the high costs of doing business in South Australia, these grants and loans will provide opportunities for existing businesses doing it tough to proceed with expansion projects.

The overall budget surplus has decreased to $72 million for 2017/18 but there are still surpluses expected over the forward estimates with net debt will peak at $6.8 billion in 2019/20, still within the Governments debt to revenue limit. Public Sector FTEs have increased from 81,388 to 82,190 over the past 12 months and although they are expected to decline to 81,785 by 2020/21, employee expenses are $8.3 billion now and set to increase to $8.5 billion by 2020/21.

Business SA CEO Nigel McBride said “We need to focus on what is important for business from the Budget and payroll tax relief and incentives to help employ apprentices and trainees will support job creation”

“The ‘Future Jobs Fund’ will also provide additional support to help businesses get a case up to invest in South Australia when they may otherwise not be able to proceed with the high costs of doing business, particularly electricity and gas”

“While a South Australian bank levy may be appealing to the State Government, Business SA is concerned about the message it sends potential investors about doing business in South Australia”

“There are no major savings announcements in the Budget and public sector employee expenses continue to climb which is something which must eventually be addressed to ensure South Australia’s long term prosperity”

“Business SA welcomes $100,000 in funding to host in-bound trade missions over two years to assist with bringing potential investors and business partners to the State and providing opportunities for local businesses to explore export markets”

“There are no new initiatives to help business with rising energy costs, including gas, and it is critical the both the State and Federal Governments collaborate to ensure there is an agreed emissions reduction policy for the national electricity market to put downward pressure on prices”