27/07/2020 - 10:00

WA stimulus plan criticised

27/07/2020 - 10:00

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The state government has foreshadowed more big spending initiatives to boost the economy but been criticised for the lack of detail and not including tax reform.

WA stimulus plan criticised
Mark McGowan says the plan will stimulate job creation following the removal of most COVID-19 restrictions. Photo: Gabriel Oliveira

The state government has foreshadowed more big spending initiatives to boost the economy but been criticised for the lack of detail and not including tax reform.

Chamber of Commerce and Industry of Western Australia chief executive Chris Rodwell said the government’s economic recovery plan should include the potential transition from stamp duty to land tax as part of a broader effort to reform national and state taxes.

“The premier has indicated today that he is not convinced of the merit in taking action to reform WA’s anti-competitive taxes,” Mr Rodwell said.

“This is unfortunate as we need to thoroughly examine options that will bolster job creation and support a return to economic growth.”

Mr Rodwell was speaking after Sunday’s announcement the government plans a further $2.7 billion in spending to boost jobs and repair damage to the WA economy from COVID-19.

The recovery plan listed 21 priority areas but outlined only two new initiatives, with others to be rolled out in coming weeks.

It added to almost $2.8 billion in stimulus measures already announced since the start of the pandemic.

Shadow finance minister Steve Thomas welcomed the additional expenditure on WA’s COVID-19 response but has called on the McGowan government to immediately reveal the full details of its ‘WA Recovery Plan’.

“The government has obviously costed its plan, or it would not have been able to spruik the final cost of $5.5 billion,” Mr Thomas said.

“It is purely political sophistry to then detail only $60 million for upgrades of government buildings and $66.3 million for a renewable energy package at yesterday’s announcement.

“They have now “trickled out” another $60.3 million in environmental programs today.”

In contrast to WA’s approach, the NSW government has announced tax concessions for first home buyers.

From 1 August, the NSW stamp duty exemption limit has increased from $650,000 to $800,000 for the purchase of a newly built home.

The NSW stamp duty concession will also increase to cover newly built homes from over $800,000 up to $1 million in value.

Mr Rodwell said that since the outset of COVID-19, the business community has clarified the need to deal with deep structural issues which challenge the performance of the WA and national economy.

This principally relates to tax reform and regulatory reform, including greater labour market flexibility.

“Non-competitive or inefficient taxes disincentivise behaviour within the economy which ought to be encouraged,” he said.

“Stamp duty makes it more expensive to move house for work, or to be closer to preferred schools.

“Reducing or removing stamp duty would benefit our regional centres, in making it cheaper for workers to migrate and reducing the reliance of resource companies on FIFO workers.

“Payroll tax makes it more expensive for businesses to employ more Western Australians.

“Transitioning away from such taxes will improve economic growth.”

Mr Rodwell said CCIWA recognised the complex challenge posed by the pursuit of tax reform.

It is currently modelling various scenarios which would enable Western Australia to transition and replace inefficient taxes like stamp duty with broad-based ones like land tax, over a suitable period of time.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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