by Innes Willox, Chief Executive of Ai Group
After Tuesday’s Budget, Victorians may wonder what they have done to deserve the unrelenting fiscal pain they will endure for the next decade.
Businesses, too, will look at the roadmap ahead — increased taxes, new levies, minimal support and the realisation that they are being treated as cash cows — and choose to take their investment, jobs, innovation and entrepreneurship elsewhere.
On Tuesday, Victoria, with a quarter of Australia’s population, reinforced its status as our nation’s weakest link. Debt, deficit and decay as far as the eye can see.
After six lockdowns that tore the heart out of thousands of businesses, exhausted employers and their workforces, and at the time turned our central business district into a shell of its former self, Victorian businesses have struggled to get back on their feet.
To claim that business did well out of Covid is simply insulting. Business leaders don’t forget the State was shuttered for nearly five months in July 2020. Nor do they forget the paralysis created by the repeated haphazard lockdowns that followed.
Support when it eventually came was seen by many as misdirected, poorly delivered and provided through gritted teeth.
Now many businesses face hikes in payroll taxes — a penalty for employing Victorians — an array of increased levies, premiums and charges and cuts to support programs that encourage growth and innovation.
There is no real incentive to grow and invest. WorkCover premiums are up by 42 per cent. Payroll tax for many businesses has increased 41 per cent over two years. A decade of levies and charges to pay for Covid response largesse and blunders awaits. State debt — already the largest in the nation by a country mile — continues to escalate out of control.
The only money to support industry across the State from the Budget is little more than that given to one regional art gallery and appears tied to a Federal Government program that in turn has received less than five per cent of its funding.
Meanwhile, poorly managed infrastructure programs have ground to a halt, and many are hopelessly burdened by projected cost overruns.
The future beyond appears perilous, too, as employers struggle to get employees back to work, encouraged by a government that continues to let its bloated public service primarily work from home.
Further down the line, business notices that the reading capabilities of Victorian schoolchildren — the workforce of the future — are now the worst in the country and ponders where enough of the literate, digital-savvy employees of the future will come from.
Industry gets to the point where despite its inherent optimism it understands the signals. It can tell when the welcome mat has been withdrawn and that the investment, innovation, jobs and entrepreneurship it provides aren’t being encouraged. Business has options to take its business elsewhere. For many, that time sadly may have just come.
The begging bowl Victoria put out to the Commonwealth before the Budget was ignored but talk of the need for a federal bail-out will continue. Imagine the reaction of the other states if and when they are asked to divert funding and resources to prop up a state where waste and incompetence have reigned. Sadly, the weakest link threatens to drag us all down.