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Labor backs business, but business backs away

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The State Government has shirked an opportunity for broad taxation reform and a commitment to infrastructure spending is one of the “big furphies” of Labor’s budget, according to a leading economist.

Darryl Gobbett this morning addressed a business breakfast hosted by Master Builders SA, at which the main beneficiaries of Treasurer Tom Koutsantonis’s budget reforms appeared largely underwhelmed.

“We could have done something more audacious, I think,” Gobbett concluded.

“The rate and pace of change nationally and globally is much faster, I think, than the Government recognises (and) if you don’t get ahead of it, you’re probably dead … I don’t see what’s happening in this budget reflecting that pace of change.”

He said a commitment to $1.3 billion of infrastructure spending was “one of the big furphies of this budget”, since most of that was comprised of ongoing work on the new hospital and SA Water’s “normal maintenance spending”.

READ MORE: SA Budget 2015 – Key measures in summary | Labor backs business to grow economy

Master Builders policy director Ian Markos had a withering response to the scrapping of minor financial imposts such as the River Murray and Hindmarsh Island development levies: “Big deal.”

He said the broader reform measures, most notably the phasing out of conveyance duties of commercial property transactions, “will probably create hundreds of jobs, however we really need thousands and thousands of jobs”.

The association had one of its wish-list items ticked off, with Labor’s commitment to extend its payroll tax rebate, but lamented that its three other key budget bids were ignored, with no payroll tax “holiday” for new, long-term jobs, no extension of stamp duty concessions beyond the CBD and, crucially, no commitment to meaningful public sector reform.

“The business community has been asking for public sector reform for years and years (but) the Treasurer made it clear yesterday there’d be no changes to the public sector,” said Markos.

“You have this hanging around your neck … almost half of every tax dollar you pay pays for public sector wages,” he told the gathering, arguing that wages growth in the public sector has outstripped the private sector in 11 of Labor’s 13 years in office.

He noted that “almost every public sector jobs forecast since 2000 has missed its target” and suggested the bureaucracy’s primary mission was to “dream up ways to increase red tape and make it harder to do business”.

Gobbett said the public sector’s full-time earnings ran 20 per cent higher than the private sector, telling those assembled: “The public sector is taxing you to pay themselves more.”

“People I’ve spoken to in the public sector don’t believe payroll tax is a tax on jobs – I don’t know what they think it is,” he said, lamenting that Labor’s much-anticipated tax reform “was hardly to the scale of what was expected and I think that will cause a lot of frustration around the place”.

“People will say we lost an opportunity, because people contributed to a debate and very little came out of it… and now you say the debate’s not going to occur because payroll tax is a federal issue,” said Gobbett.

“So the tax debate is finished – it’s done… I think it’s really unfortunate they’ve squibbed on big reform and squibbed on public sector reform.”

David Fechner, partner in local audit and accounting firm BDO, said the budget put “kindling in the fire” but failed to deliver any promised fireworks, warning he was unconvinced the measures went far enough to deliver a substantial lift in business confidence.

But if the local business community was largely underwhelmed, Koutsantonis’s second budget has received rave reviews on the national scene.

The Australian Chamber of Commerce and Industry said Labor’s stamp duty cuts “set an example to other states and show that the State Government has listened to some of the concerns of business”.

“This significant step may have a short-term impact on the budget bottom line but will have long-term benefits for South Australians,” said ACCI CEO Kate Carnell.

“Other states should consider following South Australia’s lead and free up their own economies from the constraints of stamp duty, which increases transaction costs and lowers transaction volumes.”

Accountancy giant CPA Australia’s chief executive Alex Malley said the Government was “to be congratulated for getting on with the job of reforming the state’s economy and reducing impediments to business restructuring”.

“Treasurer Koutsantonis is to be commended for getting on with the tough and unpopular job of tax reform, and not sitting idly by awaiting the outcome of the Federal Government’s Tax White Paper process,” he said.

“The South Australian Government is showing it’s serious about real tax reform.”

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