In handing down the NSW budget for 2020–21, NSW Treasurer Dominic Perrottet said the government was in a strong position to deploy its “fiscal firepower”, which would be coupled with record-low interest rates, to stimulate a strong recovery through responsible borrowing.
“The risk of long-term economic damage is too great if we do not take action, so we are taking advantage of record-low interest rates and a strong balance sheet to turbocharge our recovery,” Mr Perrottet said.
“That doesn’t mean abandoning our firm commitment to fiscal responsibility. This budget includes measures to chart a course back to surplus by 2024–25, and a strong economic recovery will support that goal.”
The NSW budget announcement comes as Victoria is set to follow suit with its budget announcement on 24 November and Queensland with an as-yet-unspecified date, with Premier Annastacia Palaszczuk promising before her October election win to deliver a budget before the end of this year.
Payroll tax measures a welcome relief for SMEs
The measure receiving the most approval was the one to increase the payroll tax threshold from $1 million to $1.2 million, with ScotPac chief executive Jon Sutton saying other states should follow suit.
Mr Sutton said co-ordinated action by all states to reduce or remove payroll tax would have a big impact in aiding a 2021 recovery for small businesses across Australia.
“Simplifying the complex national tax system, getting rid of state payroll taxes and cutting red tape nationally would have the biggest daily impact for Australia’s small- to medium-business sector,” he said.
Business NSW chief executive Nola Watson agreed, saying payroll tax is a tax on jobs and serves as a disincentive for businesses to take on extra staff.
“At a time when global economies are reeling, any support mechanisms to encourage business owners to invest by taking on additional staff should not be penalised through payroll tax,” Ms Watson said.
Out and About scheme a highlight
Other stakeholders highlighted the Out and About voucher scheme as a welcome measure to stimulate the hard-hit hospitality and entertainment sector.
Chief executive of small business lender Prospa, Greg Moshal, said the scheme will help boost spending and lift confidence for hospitality and entertainment businesses across the state, and that the CBD trial should provide support to some of the hardest hit business owners in these sectors at a key time of year.
“CBD-based cafés and restaurants have experienced a dramatic drop in footfall over the past several months due to the shift to remote work, while many suburban cafés have enjoyed a boost, finding new customers now working from home and staying in their local communities,” Mr Moshal said.
“With December and January a typically quiet period for CBD businesses, this incentive to start venturing back into the city could deliver a much-needed cash injection for those businesses that have had a particularly tough eight months.”
Budget seen as targeting recovery of hard-hit industries
CreditorWatch chief executive Harley Dale pointed to the budget’s targeted assistance for specific industries impacted by COVID shutdowns — such as the art, sport and taxi sectors — will be crucial in rebuilding the economy.
“The government has done what it has needed to do to try and stimulate these struggling industries,” Mr Dale said.
“Now, only time will tell how quickly these businesses can stand on their own two feet and whether these short-term aids announced today will have the desired long-term effects.”