Qld budget provides payroll tax concessions but business costs jump by $500 million

Business groups in Queensland have welcomed payroll tax concessions, announced in the Queensland budget, for companies that hire apprentices but have hit out at a $500 million jump in business costs.

Under the details of the payroll concession, the State Government will provide a 25% payroll tax rebate on the eligible wages of apprentices and trainees, in addition to these wages being exempt from payroll tax. It expects the measure will save businesses around $15 million in 2009-10.

While this measure was welcomed by the Australian Industry Group and the Queensland Chamber of Commerce, the chamber was quick to point out that $15 million of savings off the $2.7 billion in payroll tax paid by Queensland businesses won’t exactly solve the cashflow problems faced by struggling companies.

Business groups are particularly angry about scrapping of the state’s 8.5 cents a litre fuel subsidy.

“This budget does little to resolve the cash flow issues which pervade much of industry,” AIG’s Queensland director, Chris Rodwell, says.

“Industry will face about an extra $500 million in costs as a result of measures in this budget, including the removal of the fuel subsidy, the introduction of the land tax surcharge, and the increases in motor vehicle registration fees. This is especially concerning as almost 60% of Queensland businesses are currently struggling with cash flow issues.”

Of course, Queensland Premier Anna Bligh and Treasurer Michael Fraser have had a difficult job framing a budget that has been ravaged by the global economic crisis, which has seen revenue projections for the four years between 2008-09 and 2011-12 cut by $15 billion.

Fraser expects a budget deficit of $1.954 billion in 2009-10 and deficits of between $3 billion and $4 billion for each of the following three years. The budget is not expected to return to surplus until 2016-17.

“What we’ve seen here is the global recession completely run into the sides of the state’s finances. You can’t have a $15 billion wipeout in revenue and turn it around overnight,” Fraser said yesterday.

“This is the first budget that deals with the fallout from the global recession. It won’t be the last.”

In order to prevent unemployment going above the state’s predicted level of 7.25% in 2010-11, the government will boost infrastructure spending by 2009-10 to $18.2 billion.

This is one item that apparently everyone supports.

“This program provides a significant buffer for the state’s industry from the global economic downturn. Our own research reveals that more than one in two businesses in industry have been positively impacted by this investment,” Rodwell says.