Backing our business community

Running a business is always challenging, but the challenges do appear to be increasing. This was recently confirmed in Business NSW quarterly Business Conditions Survey which reported “The resilience of the NSW business community is being tested.  Rising insurance and wage costs, skills shortages, a broken workers’ compensation system, the AI revolution and an outdated tax system which disincentivises investment and entrepreneurship, all weigh heavily on business.” 

Three issues I wish to discuss are: the structure and operation of icare, the NSW workers compensation scheme, the static NSW payroll tax threshold and the recent defunding of the NSW Business Connect program.

Following the government’s announcement that workers compensation premiums could increase by 36% over three years, even for those with no claims against them, nearly half of Business NSW respondents reported they would reduce headcount, and one in five reported their business would no longer be viable.

Many credible sources, including the NSW Auditor-General, have identified ongoing concerns about icare’s performance. These include: premium volatility – with employers with no or low claims still experiencing rising premiums; a lack of transparency – with many businesses reporting difficulty in understanding how premiums are calculated; and limited accountability – with the monopoly structure limiting the ability of many employers to seek alternative coverage, even where performance has been unsatisfactory.

Larger employers may apply for self-insurer status, but this is not an option for most small and medium enterprises. Without changes to the NSW workers compensation scheme, these businesses will continue to face inflexible and opaque pricing in a system with limited avenues for redress. I am pro-business and support reform of icare, making our workers compensation scheme sustainable and reducing the impost on small and medium businesses.  

Another cost that impacts many businesses and disincentivises them to invest and grow is payroll tax.  I note that our state’s payroll tax threshold has remained static at $1.2 million since 2020, despite increases in wages and inflation. Based on current average salaries, this threshold captures businesses with as few as 10 to 12 full-time equivalent staff, depending on industry. NSW has one of the lowest payroll tax thresholds in Australia, despite having one of the highest payroll tax rates.

I am advocating for the government to commence annual indexation of our payroll tax threshold.  This will help reduce a disincentive for businesses to hire, upskill and retain staff. 

Finally, I wish to express my disappointment about the decision in the NSW 25/26 Budget to defund the NSW Business Connect program. Since 2017, this program has assisted over 60,000 NSW businesses with up to eight hours of tailored, one-on-one advisory sessions each year – covering business planning, marketing, financial management, digital tools, and more. 

Northern Beaches Council recently passed a motion requesting funding be reinstated to this important program and I urge the NSW Government to listen to councils and communities and reverse this short-sighted cut.