Bellingen Chamber of Commerce

State Budget 2018-19

19 Jun

Today the NSW Government handed down its 2018-19 Budget.
Pleasingly, the 2018-19 Budget embraces much of the Chamber’s advocacy agenda for NSW.  In particular, the commitment to cut payroll tax will assist small business in unlocking new opportunities and drive employment growth.  Key measures recommended in the Chamber’s pre-Budget submission and other advocacy announced today include:
    Lifting the payroll tax threshold from $750,000 to $850,000 in FY 2018/19 and to $1 million by FY 2021/22.
    Funding boost for Service NSW to deliver a significant scaling up of the “Easy to do business” program.
    The state-wide expansion of the Government’s Infrastructure Skills Legacy Program.
    Transport Signalling to improve rail network efficiency.
    The development of a Cross Border Infrastructure Fund to assist with infrastructure investments on NSW’s borders.
    Increasing the investment in regional tourism infrastructure to encourage visitor dispersal across the state.
Building on efforts to improve the State’s fiscal position through strong expenses management, the Budget announces a new NSW Generations Fund, a sovereign wealth fund, seeded with $3 billion from balance sheet reserves, to support the State’s triple-A credit rating.  Up to 50 per cent of investment returns from the Fund will support local communities through investments in projects such as ability playgrounds, community mobility services and public gardens.
The NSW Business Chamber Policy & Advocacy Team have undertaken an analysis of what the budget will mean for business and how the changes will impact our members.
Set out below are the key budget measures and the overall financial position of NSW.
1 — Payroll Tax
The Government will increase the payroll tax threshold from $750,000 to $1 million over four years.  The payroll tax threshold will increase to $850,000 for 2018-19, before increasing by $50,000 each year to 2021-22.
    This will save businesses $881 million over four years.  Importantly, the change will also mean that around 5,000 businesses will no longer face payroll tax.  These businesses will also benefit from reduced tax administration costs reported to be around $10,000 for the typical business just over the threshold.
    Businesses over the existing payroll tax threshold will save $5,450 in 2018-19; $8,175 in 2019-20; $10,900 in 2020-21; and $13,625 in 2021-22 and beyond.
    Regional NSW will be a major beneficiary of the payroll tax increase.  Regional NSW accounts for a higher relative share of small and medium enterprises therefore this measure will provide more relief to regional NSW.
    This announcement follows consistent efforts by the Chamber to make the case for a payroll tax threshold increase and a cornerstone of our  “Keeping NSW Number 1” campaign.  A $1 million threshold will improve the competitiveness of NSW’s payroll tax system, compared to other jurisdictions.
2 — Budget Position and Economic Forecasts
Government finances are in a strong position with a $3.9 billion surplus expected for 2017-18, equal to 0.6 per cent of Gross State Product (GSP), and a surplus of $1.4 billion is expected for 2018-19 (0.2 per cent of GSP).
  2017-18 2018-19 2019-20 2020-21 2021-22
Budget Result ($bn) 3.9 1.4 1.5 1.4 1.9
Gross State Product (%) 3 2 3/4 2 ¾ 2 1/2 2 1/2
    GSP is forecast to grow at an above trend 2 3/4 per cent in 2018-19 and 2019-20 before moderating to 2 1/2 per cent in 2020-21 and 2021-22.  Drivers of growth in the near term are shifting from dwelling construction and household construction towards business investment and exports.  The NSW economy continues to be buoyed by low interest rates and a low Australian dollar with particularly strong momentum in the labour market.
    Surpluses are expected to moderate over the forward estimates off the back of declining revenue growth.
    Stamp duty receipts have been revised down by $5.5 billion since December owing to a fall in property market turnover.  Stamp duty is a volatile revenue source and notoriously difficult to forecast.  The impact of first homebuyer concessions, tighter lending standards and the impact of foreign investor surcharges are expected to have a chilling effect on stamp duty receipts.
    Offsetting this is higher than anticipated GST transfers from the Commonwealth, which are $3.8 billion higher than expected at the time of the 2017-18 Budget, and strong growth in other own-source revenue sources such as mining royalties.
3 — Jobs, Education and Training
Mirroring calls made by the NSW Business Chamber, the Budget has made some significant commitments and investments to both school and importantly vocational education.
New initiatives announced in the Budget include:
    $285 million to provide free training for 100,000 apprentices.
    $66.8 million under Smart Skilled and Hired to assist the disability sector scale up to deliver National Disability Insurance Scheme services.
    $13.9 million over four years for Regional Industry Education Partnerships.
    $30 million over four years for the Skills for Business initiative to give small businesses and their staff access to free TAFE NSW business training.
    $8 million over four years to support 15 to 19 year olds not in study or a job to find pathways into education and training through the Regional VET Pathways Program.
    $18.5 million to recruit up to 253 additional teachers to meet increased demand for trade qualifications.
4 —Transport and Infrastructure
The Government continues its strong investment in major transport and infrastructure projects.
Key highlights from the Budget include:
    $4.3 billion for the Sydney Metro Network.
    $1.8 billion for the Westconnex Motorway.
    $880 million for signalling improvements on the T4 Illawarra Line and T8 Airport Line.
    $600 million boost for targeted road safety infrastructure upgrades across NSW.
    $137 million for the Northern Beaches B Line.
    $258 million to commence construction of Parramatta Light Rail stage 1 and $20 million.
    $496 million for the New Intercity fleet for Central Coast, Newcastle, Blue Mountains and Illawarra.
    $110 million to deliver Newcastle Light Rail.
    $235 million in 2018/19 for essential infrastructure to support new housing development.
5 — Regions
The Budget confirms Regional NSW will receive the full benefit of the $4.15 billion in proceeds from the Snowy Hydro Fund. This Fund will help in the delivery of a number of new initiatives announced in the Budget include:
    $50 million to support local businesses in mining-related areas through the Resources for Regions program.
    A $20 million NSW Cross-Border Commissioner’s Infrastructure Fund will be established to make it easier to fund and build vital infrastructure that benefits communities living on the state’s borders, particularly where co-investment is required from neighbouring states.
    $118 million for new tourism projects through the Regional Growth – Environment and Tourism Fund.
    $40 million to complete the sealing of the Cobb and Silver Highways.
    $155 million to match the federal Government’s commitment to build a new Nowra Bridge.
6— Other business initiatives
    The Government will invest $37 million to expand the “Easy to do business” initiative. “Easy to do business” facilitates streamlined application procedures for new or existing businesses setting up in a new location.  In addition to the NSW Government’s commitment, “Easy to do business” will benefit from $95.9 million additional Commonwealth funding to boost Service NSW’s delivery of the program.  The new funding will be targeted to reduce red tape for restaurants, cafes and construction businesses.
    The Budget confirms $13.3 million in funding for the NSW Productivity Commission.  The NSW Productivity Commission is tasked with identifying ways to improve the economic capacity of NSW including by reducing compliance costs for NSW businesses.  First projects for the NSW Productivity Commissioner include a review of Payroll Tax Administration, development of a portal to assist NSW Businesses identify opportunities to reduce red tape, and developing a new regulatory policy framework for NSW.
    The Budget also includes $30 million for Business Connect, with $7.6 million invested in 2018-19, to provide State-wide business advice and skills training to help businesses establish and grow.
    Small business access to finance will be improved for eligible businesses with $46 million in 2018-19 allocated to continue a suite of grants and loan products delivered by Jobs for NSW, as well as facilities such as the Sydney Start-up Hub.  A further $42 million is allocated in 2018-19 to invest in fast growing companies through the GO NSW Equity Fund in partnership with First State Super and ROC Partners.
    As part of the Budget, ten of the most common parking fines issued by the NSW Government will be reduced by 25%. New legislation will also be introduced to allow local governments and other authorities the flexibility to also charge lower amounts.
    The Government has also announced an Australian first initiative trialling online dispute resolution in a NSW court (the Supreme Court’s Possession List – which deals primarily with claims related to the possession of land).The $7 million trial is part of the NSW Civil Justice Strategy and aims to allow litigants in certain court lists to go through entire proceedings, from filing documents to judgments, entirely online. It’s expected the initiative will help civil litigants, especially smaller businesses.
A copy of the Chamber’s media release can be found here. A full copy of the budget papers including summaries on key initiatives and the Treasurer’s Budget Speech can be found at: www.budget.nsw.gov.au.
Kind regards,
Policy and Advocacy Team
NSW Business Chamber