Release Date: 24/05/2013
PEAK employer organisation, the Tasmanian Chamber of Commerce and Industry (TCCI) says today’s budget is an ‘overall disappointment’.
The member body was commenting on the State Budget handed down today by Premier and Treasurer Lara Giddings.
TCCI Chief Economist Phil Bayley says the increased threshold for payroll tax exemption will be welcomed by many businesses.
“Payroll tax is a hit on Tasmanian businesses that want to grow and employ more people,” Mr Bayley said.
“However, the threshold of $1 million has been in place for more than 10 years without any indexation for wages growth. Therefore this announcement simply repays several years of more and more businesses being trapped in the tax net.
“To a large extent, the deterioration in the budget position reflects a significant worsening in revenue forecasts, including a smaller GST pool as foreshadowed in the Federal budget last week, as well as weak State revenue.”
Mr Bayley said while the TCCI had commended the Premier for her actions in restraining unsustainable spending growth, it was concerned that the Government was taking its foot off the brake pedal.
“These fears are confirmed by this Budget and the Government has not faced up to the reality that further savings need to be found across the bureaucracy. The most disappointing aspect is the Government’s failure to put its foot back on the brake of its own spending.
“There are 58 new spending initiatives announced in this budget, and only one savings measure.
“While savings are often unpopular in the community, all Government spending must be subject to regular reviews. It is hard to believe that there were no other savings that could be found in this Budget.”
Mr Bayley said the Government wanted the Tasmanian community to believe that every single person and program funded by the State contributed to improved economic and social outcomes.
“This is simply not believable and demonstrates that the Government could, if it wanted, find further savings that ease the long-term pressure on Tasmanian taxpayers.
“As well, the amount being spent on State employee salaries is at least two per cent higher in every year across the forward estimates than outlined in the Revised Estimates report in December.
“In other words, more public servants are being employed despite a chronically weak revenue base.”
Mr Bayley said the combined impact of a deteriorating GST and own source revenue base, increased spending, and ongoing capital expenditure was a concerning rise in the ratio of net financial liabilities to revenue – in other words, the State’s capacity to cover its debt.
“This is a key measure used by ratings agencies, and they will be watching this trend closely.
“Unless revenue grows stronger than expected, the only upside is that the value that the private sector will pay for Aurora’s retail customer base is not included in this Budget.
“We are hopeful that this value will pay down the growing debt balance. However, this is a one-off item and cannot compensate for deteriorating revenue and spending growth,” Mr Bayley said.
Ends…
Contact: TCCI Chief Economist Phil Bayley, phone 0418 967 377