10 December 2024
Victorian government must look closer to home to understand why businesses aren’t investing
The Victorian government’s Economic Growth Statement announced plans to cut the number of regulators in half along with promises of making it easier to do business. This may be a step in the right direction, but still does not address the underlying factors impacting business confidence and discouraging private sector investment in the state.
“Regrettably, Victoria is seen by most small and large businesses as the least attractive Australian state or territory in which to invest because of its high taxes and reputation for over-regulation,” says Elinor Kasapidis, CPA Australia’s Chief of Policy, Standards and External Affairs.
“Halving the number of regulators does not necessarily translate to halving regulation or reducing the impact it can have on business. Removing specialist regulators and their staff may even risk service delivery as evidenced by the recent blowout in service times for the Victorian Small Business Commission following staffing cuts.
“Rather than only reducing the number of regulators, the government should be prioritising reducing red tape. Businesses are looking for effective and appropriate regulation which requires government investment in technology, federal and state law changes, and an ongoing commitment to good regulatory design in consultation with business.
“The obvious glaring omission from the statement was Victoria’s uncompetitive tax system. The government has given no clear direction to business and investors about its approach to taxation, leaving many uncertain about their futures in Victoria.
“Without acknowledging, and starting to address, the systemic issues that have so badly damaged business confidence in Victoria, the government has little chance of attracting the kind of investment to bring the economic growth the state desperately needs, not only in the priority sectors identified in the Statement, but more broadly across the entire economy.
“There are visible signs of the consequences of the government’s business policies from Melbourne CBD to the outer suburbs and regional Victoria. High taxes and a growing regulatory burden make Victoria an unattractive place to do business and create jobs, leaving offices and retail spaces vacant at an alarming rate.
“To get Victoria growing again, the government must properly engage with business, diverge from the centralised decision-making process that causes delays and holds back investment, and set targets to ease the tax burden on business and investors that is proving so restrictive to business and consumer confidence.
“While Victoria’s troubling economic conditions mean the government’s levers of intervention are limited, a visible and genuine cultural shift in how it engages with business could have a positive flow-on effect and start to result in more investment.”
CPA Australia welcomes Premier Jacinta Allan’s plan to create a new taskforce to improve relations between government and industry.
“While business confidence in Victoria is low, businesses still want to invest and grow where they can. They need a government that supports them and encourages growth and entrepreneurialism, rather than creating roadblocks,” says Ms Kasapidis.
“The introduction of a taskforce of this nature may be treated with scepticism by some in the business community who have been trying to engage with the Victorian government in good faith for many years, but it is at least an encouraging first step in the right direction.”
Ms Kasapidis said government investment in digital infrastructure is just as important to the economy as roads and rail, especially as the world shifts to technology-driven economies.
“We welcome the announcement of digital transformation to improve government efficiency, but further details and industry consultation are required to increase the probability of success. Without it, businesses could be forgiven for thinking they have heard it all before.”
About us:
About CPA Australia
CPA Australia is Australia’s leading professional accounting body and one of the largest in the world. We have more than 173,000 members in over 100 countries and regions. Our core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. Find out more at cpaaustralia.com.au
Contact details:
Simon Downes, External Affairs Lead, simon.downes@cpaaustralia.com.au or 0401 461 503
