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Business calls for tax reform as opposition slams Victorian government’s ‘pathetic’ economic growth plan

By Rachel Eddie and Kieran Rooney
Updated

A prominent Victorian business leader has called for tax reform to be included in the state government’s new economic growth statement, while Opposition Leader John Pesutto has accused the government of reneging on a budget promise by omitting it.

Treasurer Tim Pallas announced the statement in the May state budget to “drive higher economic growth, productivity and living standards for all Victorians” – signalling a keenness to work with business.

Victorian Chamber of Commerce and Industry boss Paul Guerra and Treasurer Tim Pallas in March this year.

Victorian Chamber of Commerce and Industry boss Paul Guerra and Treasurer Tim Pallas in March this year.Credit: Joe Armao

The government had previously listed its six pillars for growth in the prior budget: a more efficient tax system; promoting innovation and developing stronger industries; keeping Victoria moving; growing a skilled Victorian workforce; better regulation and planning to make it easier to do business in Victoria; and higher-quality and more efficient public services.

This year’s budget said the statement would “develop and build on this”. At a business breakfast the next day, Pallas told the audience those pillars would be the “starting point for the economic growth statement”.

The statement, due to be released next month, is no longer expected to include tax reform. The government maintains tax efficiencies were dealt with previously, through changes to the payroll tax-free threshold and phasing out stamp duty for commercial and industrial properties. The government this week also announced temporary stamp duty concessions for buying off-the-plan residential property.

Victorian Chamber of Commerce and Industry boss Paul Guerra led an advisory committee informing the statement and said the government had genuinely listened and engaged.

“Our perspective is certainly [that] tax reform needs to be part of that,” Guerra said. “All we’re saying is it shouldn’t be a series of words, it needs to be meaningful.

“It’s one thing to signal it, but it’s another thing to act.”

Guerra said the last week of housing announcements from the Victorian government weren’t going to “move the needle on housing” and did not address the issues affecting housing supply in the state.

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“If the [economic growth statement] ends up being one of those, then it’ll be an opportunity lost. Now, I don’t want to pre-judge it because I haven’t seen the final outcome of it yet, but it has to be really clear and tangible on how business is going to engage.

“So, what are the sectors that we think we can dominate and therefore use that opportunity across Asia Pacific? How do we attract more investment? Importantly, how do we trade?”

Premier Jacinta Allan on Sunday declared the statement would “confirm Victoria is open for business”. She said it would focus on cutting red tape which had held too many businesses back and that it would outline priority sectors including manufacturing.

“I want to build the workforces we need for the future, drive growth in wages and ensure no Victorian is left behind. It’s what industry has told me they need – and it’s what I’ll deliver.”

A source with knowledge of the plans, unable to speak publicly, told The Age the statement would also look at boosting land for industrial use, reform regulations in the food, environment and construction sectors, overhaul environmental effects statements to get renewable projects off the ground more quickly, and lift the cap on waste to energy projects.

Pesutto said the economic growth statement now seemed “rather pathetic”.

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“In May of this year there were six pillars, now there’s only five. They’ve cut the most important and consequential piece from that strategy,” Pesutto said.

“The Allan Labor government is simply incapable of, and cannot be trusted to deliver the recovery our state needs.”

A confidential National Australia Bank survey commissioned by the state government last year found Victorian companies were suffering the highest red-tape burden in the country, particularly large manufacturers.

Freedom of information documents from February 2023, also obtained by the Victorian opposition and previously revealed by The Age, show Pallas sought advice on how to encourage government departments to reduce the number of business licences in Victoria.

VCCI’s annual business pulse survey found that 67 per cent of businesses, of the 1100 surveyed between August 28 and September 8, identified the cost of doing business as their most significant challenge.

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Original URL: https://www.smh.com.au/politics/victoria/pathetic-economic-growth-statement-drops-tax-reform-20241027-p5klnu.html