It sounds like something from the popular British TV sitcom Yes Minister – spend more money to achieve cuts. Yet that’s exactly what was unveiled in the federal budget last night.
The federal government said it has stripped $5.8 billion worth of red tape burden from businesses and the community through various unnamed reforms, and now it is seeking to entice state governments to do the same.
Treasurer Scott Morrison announced incentives worth up to $300 million for state governments that achieve tangible reductions in the regulatory burden facing SMEs and their ability to compete in the open market.
“The $300 million in funding announced by the government to form a National Partnership of Regulatory Reform with state governments and territories to reduce red tape for small businesses is welcome,” says Reckon CEO, Clive Rabie.
It’s no surprise the move was welcomed by the business community. Indeed, a recent straw poll by My Business found that cutting red tape was a close second on the wishlist of business owners, with 29 per cent listing it as the top thing the government could do to support their business. First was tax relief at 32.1 per cent.
“Removing unnecessary red tape and removing restrictive measures like state payroll tax is essential. Funding these reforms with a focus on small business efficiency will drive forward Australia’s economic performance,” adds Adam Joy, CEO of Australian Lottery and Newsagents Association.
Will the measure actually deliver results?
As David Spurritt, Bentleys director, Taxation Services – Adelaide, suggests, it remains to be seen whether this investment will result in tangible benefits for the business community, or simply an act of politicking.
“Although the states are getting a $300 million incentive to reduce compliance, we are interested to see how this translates for the SMEs,” he says.
Yet Council of Small Businesses of Australia (COSBOA) CEO Peter Strong believes the policy should be given a chance to prove its worth.
“Our clear hope is that the new $300 million announced for the new National Partnership on Regulatory Reform announced by the Treasurer will see state and territory governments follow the Australian government’s lead on genuinely supporting small business.”
Payroll tax the reddest of red tape
One of the prickliest of issues in terms of red tape remains state payroll tax. Mr Strong suggests that “reducing or abolishing payroll tax should be the key goal of this [regulatory reform] partnership”.
Yet as Mr Rabie of Reckon points out, if the federal government wanted to lead by example on cutting red tape, it could have moved to make its own reductions to payroll tax.
“It is disappointing that high payroll tax rates were not addressed at a national level. Victoria has already moved to reduce payroll taxes, including bold cuts to help regional Victorian businesses and boost job creation,” he says.
“There’s no need for big promises and idealistic plans, just a clear-stepped approach to tackling taxes levied on businesses one area at a time.”