Wednesday, 29 May 2024

Government performance

Cindy McLEISH (Eildon) (17:30): If only Victoria was a nation-leading state. The state of Victoria and the things in Victoria are pretty grim. You only have to talk to the person on the street, the average person on the street – you could actually probably have a couple of sneaky conversations with Labor backbenchers – and you would know that they equally think the state of Victoria is quite grim. Those backbenchers are just leaving at the moment; they are the ones I am talking about.

We have only got to have a bit of a look at the last couple of budgets. In 2023–24 Labor were in such a big hole they did not know how to get out of it without doing the big tax grabs, so they absolutely put all of these nasties in there to get as much tax from people – anyone that they thought was doing it easy, which is nobody. But they still went for the big grab there, and we are still feeling those impacts, and I will talk about that in a minute. Then the current budget, the 2024–25, has minimal tax reform. There are still a couple of extra ones in there, but it reduces spending and has cuts left, right and centre.

We see that the government still are addicted to spending. They just cannot help themselves. The net debt is rising, and the debt has consequences. When you have got a debt that is $188 billion projected, it is extraordinary. One billion dollars used to mean something, but now it really does not mean something, and that is really scary. For the government it is always somebody else’s money so they do not have to worry about it so much. But in the next three years we will be paying $26 million a day for the interest on the debt. That is an incredible amount of money: $26 million a day. Mansfield needs a new hospital, and within a week we could have that new hospital if we did not have this level of debt. I do remember the Treasurer saying that while interest rates were low, borrow, borrow, borrow, but the thing is you have got to pay it back at some point, and I think that they just missed that in finance 101. Yes, while it is cheap, great. But you have got to pay it back, and if you do not pay it back while it is cheap, and the interest rate goes up, it causes all sorts of strife.

What does the government do? They have to revenue raise, and they revenue raise through these taxes. What does that mean? Through taxes, money is diverted elsewhere. We have got to pay this interest, and the taxes are being taxed to pay the interest, not just to pay the debt off. I do not think they are very interested in paying the debt off. But they are taxing, and this loss is a loss of services across the board, and it is a lack of infrastructure. There are 55 new and increased taxes in the last decade when the government said no, they were not going to do anything, and we all knew that was a furphy. We knew that was a Pinocchio commitment and that the government cannot walk away from those sorts of things, but they seem to bury them.

Look at the tax grabs that we have got. At the minute we have got an additional $21.5 billion: $7.8 billion in a land tax grab – whoa – and $10.1 billion in land transfer taxes. We have got the fire services property levy whacked up – farmers, a 60 per cent increase. That is extraordinary. It makes it very difficult to do business. We have got the COVID tax on there.

I want to stop for a minute and talk about small business. Every now and again the minister pops up and mentions that small businesses are the heartbeat of the state, and they are. Most people are employed in small businesses. They are not employed with large corporations. So who owns small businesses? It is mums and dads. A small business might only have two employees. It might be a sole trader, or it could have up to 20 or so, where the turnover and the payroll bill, I suppose, starts to get around a million or a few million dollars. But these small businesses are absolutely doing it tough. The cost-of-living crisis that we are in, in Victoria particularly, makes it exceptionally difficult. We have got inflation still on the way up. We have seen some ordinary numbers in the last little period, but everything has gone up. All of the costs of goods that they are looking to sell or to make something with, all of those base costs have gone up. Insurance has gone up – we want to talk about power. Council fees and permits – having a little sandwich board out on the footpath is a cost that small businesses complain about regularly, because it is just another cost.

We have land tax and we have rent. There are some businesses who may own their own building. They may own a shop. They may lease a shop. They may own a factory. They may lease a factory. They might have a shed. They might lease a shed, some of them, depending on your set-up and your structure and what money you have been able to invest in it. If you have to rent it, a lease has gone up. And why would that have gone up? It is because your landlord has been hit with a whopping land tax bill. I spoke to a company out in Dandenong. They owned a factory and they leased a factory. The factory that they owned, the land tax had not just gone up, but it got revalued before it went up. It went from $1.2 million to $2.4 million – it doubled in price in 12 months, or what they thought the value was. It doubled, and then they get the increase in land tax on that. This is exceptionally difficult for businesses to make ends meet when you have these sorts of costs that are being imposed on them. So if you own it, like this person did – they owned one and they leased one – they had that increase in land tax that they had to pay, but on the other property, the owner of that property had that increase and then would pass it on. This is what happens. These taxes get passed on to the consumer, and it makes it harder for everybody.

I want to have a look at the NAB quarterly business survey from December 2023. It said:

Business confidence turned significantly negative in the quarter –

the last quarter last year –

as the outlook became increasingly clouded.

The chief economist Alan Oster made a number of points, but one of them that I want to pick up, because I have not picked this up for small business, is the cost of employing people. It is really difficult. He said labour availability remains a significant issue for a third of firms, and wage pressures remain the top concern for businesses. When you have got staff, if they are casual, their costs go up, or however many hours they do, and what happens is the business owners stop using those people. They will use their families. They will use people who are under the age of 18 to get the lower wage bill. I spoke to a business owner a few months ago at a pizza shop, and I asked him what was the biggest cost increase that he had, and it was cheese, surprisingly enough. He said, ‘But I can’t pass on the cost of that cheese’ –

Members interjecting.

Cindy McLEISH: Pizzas – they use loads of cheese. ‘I can’t put the prices of my pizzas up, because I still need to sell them.’ The amount of money that he was making then was impacted significantly, as was the cost of employing staff, so who did he have working for him? It was Mum and Dad. Here was a guy who would have been mid to late 30s. He cannot afford to absorb the increased costs. He cannot put those up, because he saw everyone in the area really struggling. He still wanted to sell his pizzas. He had his shop. He had the power prices. He had the rent that he had to pay. So what he did was get his parents in there to help him. Also Alan Oster said, notably, the slowdown in demand has meant firms appear to have had less scope to pass on costs to consumers. That is a really good example, that pizza guy that I have just mentioned.

I want to turn now to insolvencies, because insolvencies in Victoria give us a really good indication of how easy it is for businesses to continue on. It was very recently that the Australian reported on the number of insolvencies; I think it was 27 March. The Victorian data for 2022 was 1041 insolvencies; for 2024, 2304. That is 1263 additional businesses in that two-year period. It kept escalating. Businesses cannot make ends meet, so what do they do? They have to pack up shop, and that is really quite scary. ASIC data confirms that the construction industry, and this is no surprise, has by far the most company failures. We hear this all the time, and I doubt if the government is really concerned about this increase in company failures. I do not know if they accept any responsibility for the construction industry having the most failures. I do not know that they even recognise that excessive red tape and intolerable tax burdens are causing so many business failures. I do not think the government have really got their eye on the ball there.

I want to have a look at some of the small businesses that have closed, that have packed up shop. In Geelong, in Pakington Street – which has been a great street – we keep seeing businesses close down. One of the new businesses was a toastie food truck that went to bricks and mortar. This business was called We Are The Press. It started up late last year, and they have closed up. They put that down to a ‘combination of everything’. What does that mean? It means:

… interest rate rises and cost-of-living pressures, as well as untenable power and gas prices.

I wish the member for Tarneit had a really good understanding of businesses, because I can tell from his comments that he has got no idea. This business owner has had to close the doors. And I might say I find it quite disturbing that members of the government think this is a funny story, to hear about all of these businesses that are going broke, the insolvencies that have doubled in two years and what has happened in Pakington Street in Geelong.

Members interjecting.

Cindy McLEISH: I will be making sure that they know about your comments. But he said they were not alone in facing the struggles. His friends and colleagues have been forced to close hospitality venues in recent times. This was in an article in the GeelongAdvertiser on 18 May, only a couple of weeks ago. It is quite disturbing.

I want to talk now about sole traders. Who are sole traders? Sole traders are often tradies, hairdressers, freelancers or consultants. It could be your physio, it could be another allied health professional. One of the stats that came out of the Hnry Sole Trader Pulse in March 2024 was particularly worrying for women. We know that sole traders are responsible for putting their own superannuation aside, so when things get tough, what happens? 31 per cent of women, alarmingly, are deferring their super contributions because they cannot afford them. There is already an issue for women not having enough superannuation as they get older because they have often taken maternity leave or time out of the workforce with families. Here we are and sole traders are deferring putting money into their superannuation because they cannot afford it. I find that really quite disturbing.

I want to talk about unsustainable energy costs. In March 2024 the chief executive of the Victorian Chamber of Commerce and Industry Paul Guerra said that if the Victorian government:

… cannot guarantee that the lights remain on in this state, then I can guarantee that many businesses will find places other than Victoria to set up.

What have they done? Let us have a look. Out of Albury, Seeley International, Australia’s largest gas heating manufacturer, described the ‘inexcusable anti-gas obsession’ of the Victorian government as a nail in the coffin for its Albury factory located on the Victoria–New South Wales border. It has packed up. It will close. It employs approximately 85 permanent and 40 casual staff members. Where are they going by the end of next year? Over to Adelaide. Toilet paper manufacturer Sorbent made a similar decision last year, with Asia Pulp and Paper citing the challenging macro-economic environment, including unsustainable energy costs, among other things, having forced them to go offshore and move many of their brands to Indonesia.

I think people in this chamber would not like to hear that, not at all. We also have a bit of a retail recession, and this is about consumer confidence in Victoria. I think it is quite telling we have had an article in today’s paper, and it cites Swinburne professor Sean Sands, who is from their School of Business, Law and Entrepreneurship. He has talked about Victorian shops, restaurants, builders, brewers – they could continue to bleed and go broke for another two years; already I have given you the insolvency stats. He has warned of this retail recession, which is looming:

People can’t afford to spend as much as they have in the past … they’re not eating out as much, they’re not buying as much.

I think this government has levers that they can pull, and they are pulling the wrong ones, because they are taxing everybody to death.