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Eight State Budget measures that might affect your business

Business

Here’s our guide to the key measures in the State Budget – including big new spending and taxation initiatives – that could affect your business.

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Treasurer Rob Lucas unveiled the Marshall Government’s second State Budget last week.

Below, we summarise the key measures affecting industry.

Land tax collection, collected

The Government will crack down on property owners minimising their land tax liabilities using multiple corporate entities.

Properties owned by one landlord through multiple corporate entities – taxed at a lower rate – will be grouped as one, netting the Government an expected $40 million every year.

Corporate finance partner David Fechner, of business services firm BDO, says landlords who control multiple properties will need to assess the changes before they come into effect on July 1 next year.

“These measures will ultimately have flow-on effects for rent expenditure of residential and business tenants,” he said.

Lucas told reporters assembled at last week’s budget lockup that: “We make no apologies for people who are not paying their fair share of land tax… there will be very little sympathy [for them] in the community”.

But SA president of the Property Council Daniel Gannon said the measure only entrenched what he describes as “the most anti-competitive land tax regime in the country”.

“The budgeted changes to land tax aggregation provisions are a sharp sting in the tail for property owners and investors, and will deliver a tidal wave of taxation revenue,” he said.

“By addressing this aggregation issue, the Government is further taxing the biggest contributors to state taxation revenue in South Australia, which presents some level of investor risk and will have flow-on implications for tenants and consumers.”

No new payroll tax relief, but more compliance

The budget contains no new payroll tax relief – but reveals a new compliance program to enforce payment.

The Government estimates it will raise an extra $10.8 million over the next four financial years by cracking down on unpaid payroll tax.

The RevenueSA compliance program will focus on businesses that have failed to register for payroll tax, those that use contractors, how corporate entities are grouped together and “other high-risk areas”.

There were no new payroll tax cuts on top of those announced in last year’s budget.

The Marshall Government’s first budget contained $157 million in payroll tax cuts.

Businesses with taxable annual wages below $1.5 million were made exempt from payroll tax from the start of 2019, and businesses with annual taxable wages between $1.5 million and $1.7 million were to pay less payroll tax.

Rubbish rates

Councils responded to the budget by warning they may have to raise rates to cover increases to the solid waste levy and the construction industry is also worried about its impact.

Tea Tree Gully and Salisbury councils have already done so.

Lucas announced that the current $100 per tonne levy for waste, taken to metropolitan Adelaide dumps, would increase to $110 a tonne on July 1 this year, before leaping to $140 a tonne from January 1 next year.

The Local Government Association expects the higher levy to translate to a 0.5 to 1 per cent increase in council rates.

LGA president Sam Telfer described it as a “stealth attack on ratepayers” and at a time when councils were in the process of consulting local communities about their own budgets.

The Government expects the measure to raise an extra $14.8 million next financial year, climbing to $24.9 million by 2020/21.

Master Builders SA CEO Ian Markos told InDaily last week the move will “drive up the cost of construction” at a time when the housing sector is suffering a downturn.

Most of the new revenue will be used to fund environmental projects, including coastal remediation and sand replenishment.

The Government will also spend $12 million over the next financial year in a bid to keep waste that could be recycled or composted out of landfill.

Infrastructure spending, funded by debt

The budget includes hundreds of millions of dollars in new infrastructure spending, financed by a major increase in state debt.

Lucas says the big spend, financed by cheap debt, will avoid any “valley of death” for the construction industry.

It includes a $104.5 million housing stimulus package, featuring $21.4 million for the SA Housing Authority to build 90 new homes and $21.1 million to perform maintenance.

The Government is planning a 57 per cent increase in net debt over the forward estimates.

That’s $7.72 billion more debt between the 2019 financial year and the 2021 financial year than Lucas forecast in the Marshall Government’s first state budget. 

Skills boost

The Government has budgeted more money to process business migrant nominations and will spend an extra $25 million to support TAFE SA.

Lucas says an extra $3.4 million will be spent employing case managers to support an additional 1000 business migrant nominations each year.

And the Government has budgeted $25.4 million to support the operations of TAFE SA, which is forecasting lower-than-expected growth in external revenues.

“South Australian job seekers and businesses need TAFE SA to be a high-quality training provider,” Education Minister John Gardner said.

“This investment builds on the $110 million rescue package already provided to TAFE in last year’s budget.”

Biosecurity and agriculture 

The state budget has new funding for fruit fly and citrus canker eradication, plus an innovation fund for the red meat and wool industries – but imposes new savings on the Primary Industries department.

There’s $2.7 million to respond to outbreaks of fruit fly in the Riverland and on the West coast, as well as to contribute to the national response to outbreaks of the bacterial disease citrus canker, in the Northern Territory and Western Australia.

In addition, Lucas announced $7.5 million over three years for a Red Meat and Wool Growth Program.

The initiative is a partnership between the Government, industry and universities aimed at:

Primary Producers SA chair Rob Kerin said he hoped $20 million in new efficiency saving targets imposed on Primary Industries and Regions South Australia in the budget wouldn’t undermine the work of BioSecurity SA and the South Australian Research and Development Institute.

“Research, development and biosecurity are vital to the growth of the food, wine and fibre sectors, which are continued performers when it comes to exports from SA,” he said.

Selling SA to the world, not to itself

The Marshall Government announced a major new tourism marketing spend, but also new efficiencies, following its decision to axe Brand SA funding.

Lucas announced $30 million in new funding for tourism campaigns to market South Australia as a premium tourist destination.

The extra $10 million each year over the next three financial years comes from the Economic and Business Growth Fund.

The Government had already promised, in last year’s budget, to give tourism marketing a $10 million within the 2019 financial year.

On the other hand, the Government expects the South Australian Tourism Commission to save $12 million over the next four financial years.

The budget announcements came a month after the Government announced it would scrap all funding for BrandSA last month.

Trade, Tourism and Investment Minister David Ridgway defended that decision at the time by arguing that South Australia is better off focusing on marketing itself to the world, as opposed to promoting itself within the state.

Mining exploration funding, but higher fees on miners

The Government allocated $10 million over three years to fund mining exploration activities.

It will fund exploration drilling, the development of new exploration concepts and technologies, the sharing of data and the discovery of groundwater resources to benefit the agricultural sector.

Minerals Council of Australia Tania Constable said the announcement would “stimulate future growth and enhance the state’s position as a world-leading mining investment destination”.

“Government partnerships with Australia’s minerals industry are critical in securing investment and creating highly paid, highly skilled jobs in resource-rich states like South Australia.”

The funding is offset, however, by about $8 million worth of higher fees levied on the mining industry over the forward estimates.

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