Stephen Moir says a change to the payroll tax exemption will affect the bottom line of MTA members’ operations. Photos: Attila Csaszar

Businesses wary of tax training plan

Thursday, 12 April, 2018 - 14:59

The state government’s plan to remove the payroll tax exemption for employees undertaking training has secured the support of the Greens and The Nationals WA, despite strong opposition from the Liberals and the state's leading business lobby group.

While the state government claims big businesses are rorting the system and federal cuts have forced reform, shadow treasurer Dean Nalder said the amendment was a tax grab by the state government and would jeopardise skills and jobs.

“It beggars belief that at a time when the Western Australian economy is refocusing in the wake of the mining boom, and the workforce is needing to adapt to that new focus, this government wants to cut back on funding for training,” he said.

“It says the changes are necessary because of rorting of the existing system but has not made public any detail to back up that claim or justify dismantling the existing system.”

Shadow small business minister Libby Mettam said the former government became aware of rorting in 2015 and introduced measures to counter that.

“These measures worked, the number of exemptions being claimed dropped and the government as a consequence is now unable to point to any examples of the ‘systemic rorting’ it claims this tax grab will stop,” she said.

Treasurer Ben Wyatt retaliated by claiming the Liberals had decided to launch a scare campaign rather than support small businesses.

“Rather than a ‘tax grab’ as the shadow treasurer attempted to argue, this scheme would see every dollar raised put back into the training needs of our workforce,” Mr Wyatt said.

Kim Brunswick believes big companies are taking advantage of the system.

The retrospective exemptions, as of December 2017, would be limited to apprenticeships and traineeships undertaken by new employees earning a maximum of $100,000 per annum, with company benefits included.

The exemption scheme reportedly equates to 2.4 per cent of the payroll tax base and, according to the state government, its removal would redirect savings into 9,600 otherwise unfunded training places through a grant scheme planned for mid-2019.

Education and Training Minister Sue Ellery told Business News that, not only were some employers rorting the system, funding cuts from the federal level meant the government needed the payroll tax revenue to support targeted training areas.

“One of the major factors impacting training, not just in WA but around Australia, is the federal government’s decision to walk away from funding general training positions,” she said.

Mr Nalder claimed the state government was ignoring $1.5 billion worth of funding currently available to the states and territories through the newly proposed Skilling Australians Fund.

However, Ms Ellery said the fund disregarded growth areas.

So far no state has signed up for the fund, which is to be bankrolled through a levy paid by employers on skilled migrants.

“It effectively only funds apprenticeships and traineeships,” Ms Ellery said.

“To work in disability, to work in aged care, to work in hospitality, you used to get high-quality certified training, but the Commonwealth is no longer making the contribution it used to make in that area.

“We know that the labour market needs training in those positions and we’ve got to continue to provide funding for those training places, so that was one of the motivations around changes to the payroll tax exemption.

"It will help fill the gap created by the federal government's changes to Commonwealth funding agreements for training places, which has resulted in $54 million less for Western Australia compared to 2016-17," Ms Ellery said at the time of announcing the removal.

Sue Ellery says federal cuts to the training sector have prompted the decision to axe the payroll tax exemption. 

Chamber of Commerce and Industry of WA chief executive Chris Rodwell urged the state government to access the Skilling Australians Fund as soon as practical and reverse its decision on the payroll tax exemption.

The chamber has put a call out to businesses with a petition to ‘Save Our Skills’.

“Since 2012 there has been a steep decline in the number of people starting apprenticeships and traineeships across WA,” Mr Rodwell said.

“At the same time, the McGowan government has reduced the number of occupations on the skilled migration list from 178 to 18.”

Motor Trade Association of WA chief executive Stephen Moir said the MTA employed 200 apprentices, and expected the changes to significantly affect the bottom line of some businesses.

“The removal of the payroll tax exemption is a really significant problem for our industry. We need those incentives to keep employers employing young people,” Mr Moir told Business News.

“A lot of employers use the services of a group training organisation; the MTA has one of those, and the only reason that that is a viable option right now is because of the tax exemptions,” he said.

In contrast, the owner of WA-based RTO Down to Earth Training and Assessing, Kim Brunswick, said he was certain large companies were taking advantage of the system by putting entire executive teams through unnecessary training.

“It’s the big companies that have been cruelling it for a lot of the smaller companies … and the department recognises that, they’re not stupid,” he said.

Special Report

Apprentices and training 2018

16 April 2018