The Australian Bureau of Statistics (ABS) released data on Counts of Australian Businesses, including Entries and Exits for the 2022-23 financial year.
This data showed that the number of businesses in operation across Australia rose by 19,973 across the nation over the financial year, representing a growth rate of 0.8%.
Every state and territory recorded an increase in business counts except for Victoria.
Queensland enjoyed the largest increase in business counts, up 11,013 (+2.3%) over the financial year.
By contrast, Victoria bucked the trend, losing 7,606 businesses over the financial year, representing a 1% decline:
There are likely two main reasons for the decline in Victorian business counts.
First and most important, the Victorian Government’s draconian Covid lockdowns have likely sent many businesses to the wall, especially those that are small and focused on people-servicing (think cafes, personal trainers, shops, etc).
Second, the Victorian introduced a payroll tax surcharge in the 2021-22 State Budget as part of a Mental health and wellbeing levy; albeit only for businesses with a payroll of $10 million or above.
The 2022-23 State Budget then lifted payroll taxes again on these same businesses as part of a 10-year Covid debt levy to help pay back the record borrowing the government undertook during the pandemic.
I spoke recently to a person working in a business that meets this $10 million threshold. They said their business was planning to relocate its head office from Melbourne to Brisbane, where payroll taxes are lower.
The Victorian Government risks sending more businesses out of the state with its proposed increases to WorkCover premiums, which fall on businesses.
WorkCover is mandatory if actual or planned employee remuneration exceeds $7,500, or if apprentices and trainees are hired.
Changes to the mandatory scheme were announced in May, with premiums increasing by 42%, from 1.27% to 1.8% of a company’s employee remuneration.
Analysis from the Victorian Parliamentary Budget Office estimates the reforms will cost businesses $17.8 billion over the next decade.
The Opposition’s shadow minister for WorkCover and the TAC, Ann-Marie Hermans, said “it’s little wonder businesses are fleeing Victoria and it’s workers and families who will be punished as a result of Labor’s incompetence”.
ANZ Chief Executive Shayne Elliot recently described Victoria as “one of the toughest” locations to do business.
The ABS’ data on business counts seemingly backs up these views, with Premier Dan Andrews successfully driving businesses north, primarily to Queensland.
