‘Increased taxes and fees will cost jobs’

02 August, 2017

CCIWA has issued a warning to the McGowan Government in its state pre-budget submission that new or increased taxes, fees and charges will cost jobs.

The submission calls on the State Government to return to its pre-boom size by reducing expenditure growth to pay down the State’s $42 billion debt and regain its AAA credit rating.

CCI Chief Economist Rick Newnham says any job losses as a result of the state budget will be in direct conflict with the McGowan Government’s election mandate to boost employment in WA’s private sector.

“We have witnessed reckless public spending in recent years and as a result WA governments have spent more per person than any other state in Australia,” he says.

“In fixing the budget the McGowan Government has two options; increase taxes or reduce spending.

“It is a culture of spending that dropped us in this mess and the obvious choice, which will give our WA economy a fighting chance of recovery, is spending restraint.

“As a result of the higher spending, the size of the WA government has blown out from 7.2 per cent of the economy in 2000, to 10.4 per cent today.”

Newnham says the anomaly is that compared to other states, WA’s tax regime is appropriate, but its spending has been completely out of sync with its revenue.

He says four out of five WA jobs are in the private sector and businesses must feel certain and confident in the economic environment to maintain staffing levels and create new jobs.

“If the State Government is truly committed to creating new employment opportunities and state growth, it should not slug businesses with new or increased taxes, fees or charges,” he says.

A recent CCI member survey revealed WA business supports the sale of private assets like TAB, Gloucester Park and Western Power.

Newnham says asset sales remain on the table as a way to reduce debt and regain WA’s AAA credit rating.

The submission acknowledges and applauds the McGowan Government’s efforts to achieve savings by streamlining government departments, committing to strict wages policy and taking steps toward reducing electricity subsidies.

Newnham says the long-term goal of the State Government should be to create new jobs through payroll tax reform, once the domestic economy starts moving from recovery into growth.

“While payroll tax reform remains the number one priority of the WA business community, the dire state of the WA budget means the current tax rate and threshold should be maintained until the domestic economy begins to grow again,” he says.

“Our forecast is that we should see growth of 2.5 per cent next financial year, but any increase in taxes, fees or charges on business will put that at significant risk.

“The State Government has a massive challenge ahead and we look forward to continuing to work with Premier McGowan and Treasurer Wyatt on job creation and budget savings measures in future.”

 View CCI's pre-budget submission here.