NSW Mid Term
Australian Business Limited
140 Arthur St, North Sydney NSW 2060
Locked Bag 938, North Sydney NSW 2059
Telephone: 13 26 96
NSW Mid Term
Report Card 2005
Australian Business Limited
The NSW Mid term Report Card assesses the performance of the
State Government and Opposition in relation to business issues
since the re-election of the Carr Government in March 2003.
The NSW Mid Term Report Card has been validated by • Government debt has been reduced and the
Triple A credit rating is secure
• Eight business roundtables throughout New
South Wales involving representatives of • Businesses and community organisations
ninety businesses have seen the beneﬁts of tort law reforms
introduced prior to the last election
• A NSW issues survey completed by 600
businesses • Low unemployment, improved border
protection, the heroin drought, ‘gaol not bail’
• The development of an interstate benchmark legislation and better policing have seen
of State and Territory Government crime rates fall consistently over the past
performance, covering 1,800 businesses two years.
The business negatives for the Government include
The Mid Term Report Card ﬁnds that the performance
of both the Government and the Opposition has been • The size of Government continues to increase.
patchy. Insufﬁcient attention has been paid to issues NSW Government taxation revenue is up 8.1%
such as the diminishing competitiveness of NSW, the or $1.1 billion above Government forecasts.
skills crisis and labour market shortages, increasing Expenditure is up 10.5%, or $3.6 billion above
State taxation and expenditure and the growing Government forecasts
compliance burden. Business has serious concerns
in particular with the Government’s approach to • NSW businesses are burdened by the highest
Occupational Health and Safety (OH&S). payroll tax rates, Workers Compensation
premiums and on-costs of any Australian
Neither the Government nor the Opposition should State
take NSW’s economic and jobs growth for granted.
Complacency about the capacity of business • Infrastructure is not keeping pace with the
to compete with those in lower cost Australian economic needs of NSW
States and offshore will further disadvantage NSW
businesses. • Government strategies to address critical
labour and skills shortages are insufﬁcient
Recent national economic performance statistics
demonstrate the need for new commitment and • Signiﬁcant compliance issues in OH&S are
renewed vigour to making NSW the most competitive resulting in low levels of business conﬁdence
location for business. in WorkCover. Many small businesses have
‘given up’ on OH&S compliance
The business positives for the Government over the
last two years include • Business and employment in NSW are being
hampered by labour market and workplace
• Employment has grown strongly and relations inﬂexibility.
unemployment has fallen from 6.1% to 5.1%
The Government needs new commitment to
economic reform and a focus on longer term
structural issues rather than the current focus on ‘day
to day’ issues. To this end, the recent appointment of
a NSW Minister for Economic Reform is welcome.
Like the Government, the Opposition has focused
on day to day political issues and has not
demonstrated a willingness to enter into detailed
and complex policy debates in areas such as
labour shortages, workplace relations, OH&S and
Over the ﬁrst two years of this term, the business
positives for the Opposition include
• The Opposition has advocated a lower tax
position, but has yet to detail how it will pay
for its lower tax approach
• A future Coalition Government is committed
to benchmarking and a focus on outputs in
the State Budget
• The Coalition has opposed the Government’s
Draft Workplace Fatalities legislation.
There is concern regarding the Opposition’s
• Reconsideration of its past support for the
Government’s tort law reforms
• Failure to address in any real detail issues
relating to labour market and skills shortages,
OH&S compliance issues and WorkCover
Government Report Card
Issue Grade Comment
State economy is strong and has beneﬁted from strong
Economy B national economy. State’s underlying fundamentals are
Debt levels are low. Little attention paid to expenditure
efﬁciency. Tax burden is increasing.
Queensland outperforms NSW on every measure. High
payroll tax and Workers Compensation premiums are
State Competitiveness D hurting business. Tort law reforms have been positive for
business. Need to increase funding of key infrastructure.
Work on reducing business compliance burden needed.
Crime A Crime rates have fallen consistently over the term.
Some improvement in performance of TAFE, however
Skills C Government is moving too slowly. Real concerns amongst
NSW businesses about skill and labour shortages.
No change in recent years. NSW system remains relatively
inﬂexible. NSW Government must engage Federal
Workplace Relations D
Government in debate over future direction of workplace
Some improvement in transparency. Costs to business are
Workers Compensation C- the highest in Australia. Beneﬁts from improved scheme
performance not yet passed on to business.
Impossibility of compliance with current legislation makes
the application of OH&S a critical business issue. Some
recent attempts to improve communication with small
Draft Workplace Fatalities legislation does not deliver on
Workplace Fatalities F
Government’s stated objective.
Opposition Report Card
Issue Grade Comment
Economic performance is not inﬂuenced by Opposition
Lower tax philosophy is welcomed, but must be
Budget B- matched by details of expenditure cuts. Budget
benchmarking and focus on outputs is positive.
Coalition appears to understand business concerns
regarding competitiveness, but detailed policies
State Competitiveness C
needed. Business is concerned about Opposition
backsliding on tort law reform.
Opposition supported ‘gaol not bail’ legislation and
increased Police numbers.
Major business issue receiving insufﬁcient attention by
Opposition has expressed support for more ﬂexible
Workplace Relations B
workplace relations system.
Workers Compensation C- Detailed policy from Opposition awaited.
Opposition yet to engage in this extremely important
but complex policy area.
Coalition opposes current draft Bill. Opposition needs
Workplace Fatalities A to take constructive approach to ensure ﬁnal legislation
reﬂects employer and employee needs.
INTRODUCTION Priorities 2003 outcomes. The Opposition is assessed
against the policy determinations it has made to date
22 March 2005 marks the mid-point of the Carr and its response to business legislation presented to
Government’s third term in ofﬁce. the Parliament.
The Government won the 2003 election with over To validate the Mid Term Report Card, Australian
56% of the two party preferred vote. Yet the political Business Limited undertook eight business
landscape has changed since March 2003 and latest roundtables throughout NSW involving
polling has seen the Government’s primary vote fall representatives of over 90 businesses. A
to 35% and its two party preferred vote fall to 48%. comprehensive survey of over 600 businesses
was also conducted. Sensis was commissioned
The Government’s budgetary position has also shifted to interview 1,800 businesses across Australia
signiﬁcantly with a $463 million surplus in 2002/03 to to develop a benchmark of State and Territory
a deﬁcit position. This is despite signiﬁcant changes Government performance. The results of the
to broaden the Government’s tax base (bracket creep roundtables, benchmarking interviews and the survey
in payroll tax, abolition of land tax threshold, the new form the basis of the ﬁndings of this report.
2.25% vendor duty and poker machine tax).
The Mid Term Report Card focuses only on issues
Since 2003, new issues affecting business which relate to and impact business.
competitiveness have also emerged. These include
the application of tort reforms, the Workplace
Fatalities debate, the application of the OH&S Act and
the continuing skills crisis.
In late 2002, Australian Business Limited developed
in collaboration with its members NSW Business
Priorities 2003. The ten priorities, presented to
Government and Opposition during the election
campaign prior to the March 2003 poll were
1. Better access to an appropriately skilled
2. Reduce the burden of workplace compliance
3. Stem the rising cost of insurance premiums
4. Review stamp duty on insurance premiums
5. Maintain reliable utility infrastructure
6. Improve transport infrastructure
7. Reduce payroll tax
8. Ensure environmental and economic
9. Reduce crime
10. Streamline regulations for environmental and
This Mid Term Report Card assesses the performance
of the Government and the Opposition against the
priorities set out in NSW Business Priorities 2003.
The State Government is assessed on its legislative
initiatives and performance against NSW Business
State Final Demand grew 5.7% in the year to March
2003, compared to the latest available data of 3.1%
in the year to December 2004. State Final Demand,
while trending down, has been strong in absolute
terms over the last two years.
NSW State Final Demand Percentage Growth
Source: Australian Bureau of Statistics, (at No: 5206.0)
Treasury’s Assessment of the Performance and
Outlook for NSW since July 2003*
Actual Budget Medium
2003/2004 Review Term
Outcome Forecast Projection
Gross State 2.0% 3.25% 3.25%
Final State 4.6% 3%
Employment 1.4% 1.25% 1.25%
Unemployment 5.6% 5.5%
Sydney CPI 2.1% 2.5% 2.25%
Wage Cost Index 3.8% 3.75% 3.5%
*Year average percent change, unless otherwise indicated
Source: NSW Treasury, 2004/05 Half Yearly Budget Review
Since March 2003, the unemployment rate for
NSW has fallen from 6.1% in March 2003 to 5.1% in
January 2005. This is consistent with the fall in the
national rate of unemployment from 6.2% in March
2003 to 5.1% in January 2005. The only times NSW
unemployment rate has been below 5.1% were in
May and June 1981 when it fell to 5.0% and 4.5%
Since March 2003, the NSW labour force has risen
by 64,400, including 33,900 full time positions. The
number of unemployed persons has fallen by 24,100
from 198,400 to 174,300.
Unemployment in NSW
Source: Australian Bureau of Statistics, (at No: 6202.0)
Although many of the factors determining economic
growth and employment are outside the control of
the NSW Government, its provision of services and
leadership does inﬂuence the State’s performance.
Nevertheless, NSW is perceived to have a stable
and strong economy assisted by a stable political
GRADE: B GRADE: N/A
(Economic performance is not inﬂuenced by Opposition policy.)
BUDGET Signiﬁcant additional recurrent expenditure has
been required by Government to fund successful pay
Since 2003 the Budgetary position of the NSW claims by teachers and nurses.
Government has tightened. At the 2002/03 Budget,
the projected tax revenues for the year 2004/05 stood This is reﬂected by the changes in expected employee
at $14.1 billion and expected expenditure was $34.5 related expenditure. At the time of the 2002/03
billion. At the 2004/05 Half Yearly Budget Review, Budget, expected expenditure for employees in
expected tax revenues had risen to $15.2 billion and 2004/05 was $16.9 billion and at the 2004/05 Mid Year
expenditure had risen to $38.1 billion. In three years, Review this had risen to $18.8 billion. In three years,
expected tax revenue for 2004/05 has risen 8.1% and expected employee expenditure for 2004/05 has risen
expenditure by 10.5%. by 11.5%.
The Government has supplemented its tax base by
The NSW Budget 2004/05 Estimated vs Actual introducing a number of new revenue measures,
Estimated Increase • A new poker machine tax on licensed clubs
June 02 %
$ Billion • A new 2.25% vendor duty on property sales
Tax Revenues 14.10 15.24 8.1 • Abolition of the land tax threshold.
16.87 18.81 11.5 In each case the Government has linked these
changes in taxation to other measures. The poker
Total Expenses 34.45 38.09
machine tax on clubs has been allocated to providing
additional health funding, the vendor duty to pay for
the ﬁrst home owners stamp duty exemption and the
Source: NSW Treasury, 2002/03 Budget, 2004-05 Half Yearly Budget Review
abolition of the land tax threshold to pay for a cut in
the land tax rate.
2002/03 (Actual) 34,277
2003/04 (Actual) 36,443
2004/05 (Projected) 38,088
2005/06 (Projected) 39,014
2006/07 (Projected) 40,569
2007/08 (Projected) 42,233
0 10,000 20,000 30,000 40,000 50,000
Source: NSW Treasury, Budget Papers and 2004/05 Half Yearly Budget Review
NSW Queensland Victoria
Payroll Tax in $ Millions
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
(projected) (projected) (projected) (projected)
Source: NSW Treasury, Budget Papers and 2004/05 Half Yearly Budget Review
Of concern are the projections in the Half Yearly It should be noted that NSW residents pay the highest
Budget Review regarding NSW payroll tax collections. taxes of any State or Territory in Australia. According
The Review detailed an additional $3.7 billion in to the Australian Bureau of Statistics, every NSW
payroll tax collections over the four years to 2007/08, resident in 2002/03 paid $2,477 in State and Local
equating to a 32% increase. This represents a taxes, compared with $2,267 in Victoria, $2,136 in
signiﬁcant competitive impost on NSW businesses. West Australia, $2,010 in South Australia, $1,867
NSW has the highest rate of payroll tax of mainland in Queensland and $1,557 in Tasmania. NSW has
Australian States at 6.00% and compares with historically collected more taxes per capita than any
Queensland at 4.75% and Victoria at 5.25%. other Australian State and Territory.
State Taxes Per Capita
0 500 1000 1500 2000 2500 3000
Source: Australian Bureau of Statistics, (at No: 5506.0)
The NSW Government has, without success, • Abolishing the 2.25% vendor duty by 2011/12
continued to seek greater fairness from the
Commonwealth Grants Commission. Business • Keeping the stamp duty concession for ﬁrst
supports the NSW Government in its attempt to home buyers.
end the signiﬁcant unnecessary cross-subsidisation
of other States with taxation collected from NSW The Opposition has pursued tax reductions in areas
businesses and residents. of high electoral worth, but has yet to detail any
policies aimed at reducing taxes on business.
Signiﬁcantly, the Government in its 2004/05 Half
Yearly Budget Review announced that the Net The Opposition is yet to detail any signiﬁcant changes
Operating Surplus would be used as the new to expenditure. The Opposition prior to the last State
measure of the ﬁnal budget outcome. This change Election unveiled its expenditure cuts and costing
recognised that the Government had fulﬁlled the key documents less than 48 hours before the poll, which
objectives of the 1995 Debt Elimination Act and brings coincided with the commencement of the war on Iraq.
NSW in line with standard practice in other Australian Business will not have conﬁdence in the strength
States. of Coalition commitments if there is a similar late
release of expenditure cuts and costing documents.
According to the 2004/05 Half Yearly Budget Review
“the ﬁscal strategy will now place more emphasis The Leader of the Opposition, in his 2004 Budget
on the broader concept of net ﬁnancial liabilities. Reply Speech, committed the Opposition to
This measure takes into account the full range of undertaking benchmarking in Government and
the general government sector’s future ﬁnancial assessing the performance of Government against
obligations, including debt, and so represents a more outcomes as distinct from inputs. This is a welcome
complete picture of the sector’s ﬁnancial health”. development and demonstrates a commitment to
using the Budgetary process as a means of lifting
The Government has set itself a new long term ﬁscal Government performance.
goal of reducing general government net ﬁnancial
liabilities to 5% of Gross State Product in 2020.
The consistent work at reducing the ﬁnancial
exposure of NSW means its Triple A rating is secure.
As importantly, it now allows the Government to The Government has faced strong budgetary
invest in major infrastructure projects to strengthen pressures particularly in relation to wages. However
the productive capacity of NSW. additional staff costs equate to less than half of the
increase in expenditure since 2003.
The Opposition The Government has signiﬁcantly increased the tax
Following the 2003 State Election, the Opposition burden since 2003 and there is little evidence of the
signalled a new approach by handing the role of Government seeking to rein in or cut expenditure.
Shadow Treasurer to the Leader of the Opposition. High levels of taxation, particularly in relation to
business taxes like payroll tax, are making NSW
Predominantly, the Opposition has focused on increasingly uncompetitive relative to Queensland.
matters of taxation, rather than issues of expenditure.
To date, the Opposition has made a number of However, the Government has kept a tight control on
taxation commitments for the 2007 Election, including debt levels, ensuring the State’s Triple A credit rating
is secure. By the Government’s own admission, debt
• Modifying the new poker machine tax on levels have fallen to a point where the Government
clubs can now lift infrastructure spending without
endangering the Triple A rating.
• Re-introducing a tax free threshold for land GRADE: B-
tax (though not the same threshold as that
abolished in 2004)
Opposition The Mid Term Report Card survey found
The Opposition has committed itself to a lower overwhelming support for the Premier’s
tax burden on NSW taxpayers, but has focused to campaign to reform the Commonwealth
date on tax cuts to individual taxpayers rather than Grants Commission system for allocating
businesses. Commonwealth revenue to the States and
Territories. Over 77% of respondents support
Whilst the Opposition recognises the need to the Premier’s campaign to overhaul the
improve the performance of Government through Commission.
benchmarking and assessing performance against
outputs, it has yet to detail how these taxation and Business also had a clear view in relation to
spending promises will be paid for. where any tax relief should be targeted in the
2005/06 State Budget, with 55% nominating
There is a case for NSW to take on more debt to pay payroll tax, followed by 42% nominating the
for additional infrastructure and the Opposition has new 2.25% vendor duty on investment property
already indicated it will pursue this option. However, sales and 3% nominating cutting the new poker
this is only acceptable when the complete ﬁnancial machine tax.
details of any infrastructure proposals are on the
table. Indications that the Government intends to
increase its infrastructure program are widely
The Opposition should release its costing of election supported by business. 75% indicated support
commitments on an ongoing basis. Costing of for increased infrastructure spending and that it
promises and details of departmental expenditure was appropriate to use debt responsibly to fund
cuts should be detailed when policy commitments are this increase.
made public. The Opposition should not repeat the
way the 2003 costing document release was handled.
GRADE: B- Source: Australian Business Limited survey February/March 2005, 600 responses
STATE COMPETITIVENESS An example of the differences in costs between NSW
and other Australian States is shown below, based on
According to the Australian Bureau of Statistics, NSW a 15 employee business spending $5,000 per month
residents pay more per capita in taxation than any on rent and requiring three employee parking spaces.
other Australian State or Territory. Taxation at a State The company owns two cars each worth $20,000 and
level is investment based, either on property (stamp a van valued at $50,000 which are all registered.
duties, land tax, parking space levy) or on labour
(payroll tax). In such an environment, State taxes This comparison demonstrates the difﬁculties many
can and do have an effect on the levels of economic businesses in NSW face in competing with those in
activity within and between States. States that have a signiﬁcantly lower tax base, and
this is before NSW’s higher Workers Compensation
On this basis, NSW has a signiﬁcant competitive premiums are paid.
disadvantage to its nearest neighbours, Queensland
The State Chamber of Commerce (NSW) has
undertaken a comparison of costs on business
between Australian States. NSW is clearly the least
competitive of any Australian State when business
taxes are compared.
NSW QLD VIC WA SA TAS
$ $ $ $ $ $
Total Wages 773,916 693,030 741,078 746,070 684,918 663,000
843,568 755,403 807,775 813,216 746,561 722,670
Total Expenses 14,614 0 13,533 3,477 13,753 0
Payroll Tax 14,614 0 13,533 3,477 13,753 0
210 210 0 210 600 0
Parking Space Levy 2,580 0 0 540 0 0
Stamp Duty on Vehicle
4,200 1,800 2,250 3,500 2,610 2,646
Total State Taxes
21,604 2,010 15,783 7,727 16,963 2,646
Source: State Chamber of Commerce (NSW) 2004
Workers Compensation Workers Compensation Costs as
Costs per employee a proportion of total earnings
NSW 1,161 2.7
Victoria 969 2.4
Queensland 602 1.6
South Australia 916 2.5
Western Australia 760 2.0
Tasmania 902 2.7
Northern Territory 845 2.2
ACT 937 2.1
Australian Average 939 2.3
2003/04 Source: Australian Bureau of Statistics, (at No: 6348.0.55.001)
Workers compensation costs represent a particular The
2004/05 NSW Government in January recognised the
burden for NSW businesses with workers issue of economic competitiveness through the
compensation costs per worker in NSW the highest appointment of NSW’s ﬁrst Minister for Economic
in the nation at $1,161 per employee compared Reform. This new Ofﬁce of Economic Development
with $602 per employee in Queensland. Workers will have responsibility for future privatisations,
compensation costs per employee in NSW are 2007/08
improving performance of Government departments,
93% higher than in Queensland, despite the fact role of 20,000 service 40,000
lifting the 10,000 business in 30,000 delivery and
average salaries in NSW are only 18% higher than improving the competitiveness of NSW. This is a
Queensland. The difference in cost can also be welcome development as is the appointment by the
attributed to factors such as premium calculation, Opposition of a Shadow Minister for Reform
beneﬁts payable and scheme performance. These of Government.
factors when combined create an additional burden
NSW Queensland Victoria
The relative attractiveness of Queensland to business
is reﬂected by the escalating movement of NSW
residents to other States. In 2003, a net 31,800 NSW 2003
residents moved interstate. During the same year
an additional 39,200 residents moved interstate to
Queensland and 28 people moved to Victoria. 2002
The number of NSW residents moving interstate is
increasing each year and it appears to reﬂect among 2001
other issues dissatisfaction with taxation, compliance
and infrastructure in NSW. -30,000 -20,000 -10,000 0 10,000 20,000 30,000 40,000
Source: Australian Bureau of Statistics, (at No: 3412.0)
State Final Demand
Tort Law Reform The Government has stood by these reforms, which
NSW Business Priorities 2003 identiﬁed great concern are effective and strongly supported by business.
over the escalating costs of public liability and
professional indemnity insurance premiums. Business is concerned that the Opposition may
unwind these reforms by supporting a Legislative
Since that time, the insurance market has stabilised Council inquiry into them. Requests for a public
and this is due, in signiﬁcant measure, to quickly assurance from the Opposition that they continue to
implemented tort law reforms by the NSW support these reforms have gone unanswered.
Sensis and Australian Business Limited
The latest analysis of public liability and professional Benchmark of State and Territory
indemnity premiums by the Australian Competition Government Costs and Regulation
and Consumer Commission has detailed a 15% During February 2005 Sensis in conjunction with
decrease in average premiums for public liability Australian Business Limited undertook a survey of
insurance and a 17% decrease in real average 1,800 Australian businesses regarding the ease of
personal indemnity insurance premiums in the ﬁrst doing business in each State and Territory.
six months of 2004.
1,800 small and medium sized businesses were asked
0% 1.0% 2.0%
The reforms have stabilised insurance premiums and 3.0% 4.0% 5.0% 6.0%
“Taking into account your State/Territory Government
provided greater stability to the re-insurance market. costs and regulatory system, how easy do you ﬁnd
it to do business in your State/Territory, on a scale
of 1 to 10, 1 being extremely difﬁcult and 10 being
Rating of State or Territory Government Costs and Regulatory System
New South Wales 5.6
The higher the
South Australia 6.3 score the easier it
is to do business
Western Australia 6.2
Northern Territory 6.2
Australian Capital Territory 6.6
regulatory system, Sweeney
Q. Taking into account your state/territory government costs andSource: Sensis Business Indexhow Research February 2005
easy do you find it is to do business in your state/territory, on a scale of 1 to 10,
1 being extremely difficult and 10 being extremely easy?
SOURCE: Sensis ® Business Index
Sweeney Research February 2005
The benchmark ﬁnds that NSW signiﬁcantly The introduction of tort law reform by the State
underperforms every other Australian State or Government over two years ago continues to
Territory Government. The ﬁndings of this benchmark have widespread support amongst business,
demonstrate that NSW small and medium sized with 83% indicating support. The high level
businesses ﬁnd it more difﬁcult to do business due of support is a warning to the Opposition that
to State issues than their counterparts in all other business will strongly oppose any attempt to
Australian States and Territories. roll back these reforms.
Summary The appointment of the ﬁrst Minister for
Economic Reform has been welcomed by
business. 68% supported the appointment of
a Minister for Economic Reform, 15% opposed
The appointment of a Minister for Economic Reform it and 17% were not sure. This result indicates
indicates that the Government is beginning to strong business goodwill towards the creation
address issues of competitiveness. However, with the of this new role.
appointment only made weeks ago, it is too early to
tell if it will address competitiveness issues.
Whilst the Government demonstrated political
courage in tackling tort law reform, other areas of
reform and competitiveness are yet to be addressed.
The ﬁnding of the Sensis and Australian Business
Limited benchmark of Australian businesses
demonstrates an unsatisfactory level of difﬁculty in
doing business in NSW. The combination of high
taxation and difﬁcult compliance regimes have
resulted in NSW being the poorest performer against
this State and Territory benchmark.
The Government has made little progress in
improving efﬁciencies, nor in making NSW more
competitive with neighbouring States and Territories.
The Opposition has consistently demonstrated an
understanding that NSW is uncompetitive relative to
It is concerning that the Opposition has entertained
debate to roll back the tort law reforms introduced by
the Carr Government. A roll back of tort law reform
will result in higher insurance premiums and a
signiﬁcant disincentive to invest.
CRIME The fall in crime across NSW has not occurred
in every local Government area. In the Hunter
NSW Business Priorities 2003 raised the concerns for example, rates of crime have remained static,
of business regarding escalating levels of crime and however, the statewide trend is downward.
concerns regarding adequate sentences. Businesses,
in many areas of the State, believed that crime and Since 2003 the Government has
fear of crime, was having an impact on business.
• Increased the size of the NSW Police Service
By almost all measures, the strengthening economy, with 15,009 Police Ofﬁcers as at 30 June 2004
more stringent checking at ports and airports, the
heroin drought and the introduction of ‘gaol not bail’ • Passed legislation providing for up to 14 years
legislation has resulted in a substantive decrease in gaol for drive-by shootings
reported crime over the past three years.
• Implemented legislative changes for bail
In almost all categories of crime, there have been conditions (changes to presumption against
signiﬁcant falls in the rate of crime. bail in relation to crimes of violence and
The release of the 2003 Recorded Crime Figures,
detailed that crime rates fell for eight of the 16 Summary
major crime categories. In the 2003 Recorded Crime
Statistics, the recorded rate of
• Robbery without a weapon fell 4.6% Crime has fallen and this is welcomed by business
• Robbery with a weapon other than a ﬁrearm as crime levels affect both costs and revenues of
fell 19.3% business.
• Break and enter (dwelling) fell 11.4% GRADE: A
• Break and enter (non-dwelling) fell 12.8%
• Motor vehicle theft fell 17.3% Opposition
• Steal from a motor vehicle fell 14.7% It should be noted the Opposition prior to the 2003
• Steal from a person fell 6.8% State Election initiated policies supporting ‘gaol not
• Fraud fell 15.2%. bail’ legislation and also supported an increase in
Police Service numbers.
The remaining eight major categories of crime
(murder, assault, robbery with a ﬁrearm, sexual
assault, indecent assault, stealing from a retail store,
stealing from a dwelling and malicious damage to
property) showed no signiﬁcant upward or
Rate per 100,000 Rate per 100,000
Population 2001 Population 2003
Murder 1.6 1.4
Robbery – without a weapon 122.3 96.6
Robbery with ﬁrearm 13.5 10.6
Robbery with a weapon not a ﬁrearm 65.7 33.6
Break and Enter non dwelling 796.9 545.4
Motor Vehicle Theft 822.5 524
Steal from retail store 316.1 335.5
Fraud 491.4 448.6
Source: Bureau of Crime Statistics and Research: Recorded Crime Statistics
SKILLS implication and potential of this are yet to be
seen. Early indications are that it will help
76% of businesses interviewed in NSW Business the Government respond more effectively
Priorities 2003 indicated that a skilled workforce was to industry training needs, to integrate
either very important or extremely important to their vocational education delivery and improve
business. utilisation of existing infrastructure.
Business recognised in 2003 that skills shortages These positive initiatives have been offset by
were emerging across most sectors. The situation has
worsened since that time. The March 2005 Australian • Continued resistance to fully implementing
Business Limited/Sensis Manufacturing and Allied the nationally agreed User Choice Policy
Services Index found that the ‘skills crisis’ is now
the primary concern of manufacturers with 20% of • Insigniﬁcant growth in State Government
companies in the manufacturing sector expressing funding for vocational training. This is in part
“ﬁnding quality staff” as the primary business due to the roll-over of the Australian National
concern of their organisation. Training Authority Agreement with the
The lowest unemployment rates in thirty years have
worsened the skill shortage crisis, yet there has been • Failure to address the negative impact of
little attempt to increase the availability of ﬂexible, annual contracting of training under the
workplace-speciﬁc vocational education & training Apprenticeship and Traineeship Training
(VET) to respond to user end need. Program (ATTP). This, coupled with increased
administration and reporting requirements
This is particularly so in regional NSW, where labour without CPI linked funding, is creating a
and skill-speciﬁc shortages are impacting on business signiﬁcant barrier to sustainability
costs and output.
• Removal of Workers Compensation coverage
Despite this, there appears to be little sense of for trainees in the 2003/04 Budget
urgency within the NSW Government to tackle this
growing issue. The State Opposition has been silent • Introduction of a vocational education
and is yet to demonstrate an interest in vocational fee. While this fee reﬂects action taken in
education & training needs. other States, tender requirements to deliver
public funded training mean that it applies
Business has welcomed the following initiatives of to both TAFE and private training providers.
the State Government Combined, Australian Business Limited
considers that these two issues have had
• Increased Department of Education & Training a negative impact on industry uptake of
focus on professional development for school vocational training in 2004
based careers advisers but has yet to develop
any clear, long term strategies to better • Inaction by the NSW Department of Education
connect with industry & Training to broaden ﬂexibility in funding
for either new entrant or existing workers.
• Creation of the NSW Industry Skills Forum Existing worker traineeships in NSW do
enabling high-level industry input into training not attract NSW Government incentives for
priorities and advice on industry needs for the registered training providers, despite being
allocation of public funds for training registered and regulated by the Department.
• Re-structure of the NSW Department
of Education & Training to integrate
administration and align the TAFE and
School regions across the State. The full
Summary The Opposition has not taken an active interest in
addressing the mismatch between business needs
Government and public and private capacity to deliver training.
As a consequence, the Opposition’s demonstrated
The Government is yet to fully demonstrate that
understanding of the needs of business in relation
it understands the needs of business in relation
to vocational education, is inadequate.
to skills shortages. Feedback from business
roundtables on the performance of TAFE was mixed,
with performance directly related to the capacity of
local TAFE management to connect with business.
Business considers that the State Government
However, even when local roundtables expressed
has not responded quickly to the skills crisis.
positive sentiments regarding the performance of
79% of businesses believe the Government
TAFE, this support was always tempered by the TAFE
is not doing enough in relation to address
system’s relative inﬂexibility.
current skills crisis. This reﬂects the results
of the Matching Workplace Skills to Business
Incremental initiatives to make TAFE more ﬂexible
Needs study undertaken by Australian Business
and responsive are not enough given the skills
Limited in late 2003.
shortages faced by business. Changes to TAFE
course fees and the decision to remove the Workers
The study found that 46% of businesses
Compensation coverage for trainees indicate that the
wanted greater customisation of training under
Government does not comprehend the seriousness
public funding and 42% of businesses wanted
of the current skills crisis.
to cut red tape in the administration of New
Integral to addressing skills shortages is changing the
perspective of high school students towards trades
based careers. Not enough work is being undertaken
with either teachers or careers advisers in high
schools to address this perception.
Major cultural change is needed within both the
Department of Education & Training and the broader
school communities to achieve this end.
Prior to the last State Election, the Leader of the
Opposition spoke often about the need to change
perceptions in high schools regarding trade based
careers. This welcome approach has not been taken
further and integrated into a substantial policy
The Opposition has, since the election, indicated
its support for Workers Compensation coverage for
trainees and also opposition to additional course
charges for TAFE students. However, the extent of the
Opposition’s involvement in the vocational training
debate does not extend past these issues. The
Opposition has been silent about matching business
needs with a ﬂexible and responsive vocational
WORKPLACE RELATIONS under the Federal system. After taking population
into account, it is estimated that some 3,000 Federal
The efﬁciency of the NSW workplace relations Agreements were entered into in NSW. Businesses
system has a major effect on the productivity of the are therefore making agreements under the Federal
Australian economy, as NSW makes up one third of system at ten times the rate of the NSW system.
the Australian labour market.
This trend has accelerated over the last eighteen
The NSW Department of Commerce estimates that months with a continuing decline in the number of
38% of the NSW labour force is employed under State enterprise agreements being entered into under the
awards, 31% under Federal awards and 31% work NSW system.
The application of unfair dismissal laws in NSW
The 38% of the labour force employed under State places considerable pressure on employers. In 2003,
awards work within an inﬂexible, rigid workplace over 4,000 applications for unfair dismissal were ﬁled
relations system. in the State Commission in NSW. This compares
with 1,378 applications from NSW under the Federal
The way that the State’s workplaces are regulated system, despite a comparable number of employees
was a central concern of business in NSW Business being covered under each system.
Priorities 2003. Concerns related to the unfair
dismissal system, workplace regulation and anti- A survey of Australian Business Limited members
discrimination legislation. in 2004 found that 75% of businesses rated the
application of unfair dismissal laws as a “moderate
Business saw workplace regulation as over- .
or major concern” The Federal Government has
complicated, detailed and difﬁcult to understand indicated that it will exempt small businesses from
with certainty. This complexity was immeasurably the Federal unfair dismissal regime. This exemption
compounded by the requirement for business to is expected when the Coalition gains control of the
deal with both State and Federal legislation in their Senate on 1 July 2005.
The re-election of the Federal Government
The existence of dual systems and regulation was with majority control of the Senate provides an
perceived as adding to the weight of regulation, opportunity to develop a simpliﬁed and uniﬁed
time costs of compliance and difﬁculties making workplace relations system. A uniﬁed system will
productive, effective workplaces. remove duplication, simplify workplace relations and
improve national competitiveness.
There is a perceived lack of balance in workplace
relations regulation. Employees’ rights dominate over The State Government has recently indicated its
employers’, tribunal processes are time consuming opposition to a uniﬁed system. Given that no
and unpredictable, union and employee rights proposal from the Federal Government is on the
dominate business needs. Workplace regulations table, it is difﬁcult to assess if this is only a holding
rarely work to assist businesses to operate better. position or if the State Government will enter
In addition, business continues to raise concerns
about inadequate support and disincentives to Workplace relations reform is critical to lifting national
enterprise bargaining. competitiveness. It can be expected the response by
the State Government and Opposition to the Federal
Federal legislation is strongly preferred by employees Government’s proposed changes to workplace
for making enterprise agreements. relations will form a signiﬁcant part of businesses’
judgement about their respective performances in the
In 2003, only 347 enterprise agreements were made lead up to the March 2007 State Election.
under the NSW system. In the same period there
were 8,679 certiﬁed agreements signed nationally
In the Mid Term Report Card survey, 92% Opposition
expressed support for the State Government The Leader of the Opposition has stated he is
to work with the Federal Government in receptive to Federal plans for reform of workplace
developing a simpliﬁed, uniﬁed workplace relations in Australia. He has also indicated
relations system. this should be part of any debate between the
Commonwealth and the States about issues of
Business support on this question was the Federalism and overlapping jurisdiction.
highest of any question in the Mid Term
Report Card survey. Businesses are seeking Given that the Opposition’s ﬁnal position is
a co-operative approach from Governments dependent on seeing a deﬁnitive Federal Government
to removing duplication, improving position, the State Opposition is not expected to
competitiveness and making the workplace outline detailed proposals for workplace relations
relations system more responsive to business reform in NSW until the Commonwealth’s ﬁnal
needs. position is known.
Australian Business Limited encourages the Statements by the Leader of the Opposition indicate
State Government to sit down with the Federal support for workplace relations reform.
Government to develop a plan that will remove
duplication, simplify workplace relations and
improve national competitiveness.
The Government has shown little or no interest
in reforming workplace relations to facilitate
more productive workplaces and simplify existing
workplace regulation in NSW. The proposed
introduction of further regulation in areas such as
workplace surveillance and the current system for
enterprise agreements is discouraging. In addition,
the NSW unfair dismissal system fails to reject
unwarranted claims early enough and has uncertain
The Federal system is expected to become even more
ﬂexible with the Federal Government indicating that
workplace relations reform is its highest priority in
The initial response by the State Government to the
Federal Government’s reform proposals has not been
WORKERS COMPENSATION Inherent in such a system is a framework that
provides reasonable certainty for businesses as to the
In NSW Business Priorities 2003 workers cost of premiums.
compensation premiums were rated as the highest
concern for businesses employing twenty people The release of a discussion paper in March 2005
or more. Seven in ten businesses said workers regarding the setting of premiums is welcome. The
compensation was impacting signiﬁcantly on discussion paper seeks to provide business with
business operations, with 42% of respondents rating greater certainty for premium setting, retrospectively
the impact as highly important. adjusting premiums for employers who have been
the victim of fraudulent claims, rewarding small
The primary concerns of business relate to the cost to medium sized businesses who promptly report
of premiums, lack of transparency in the premium claims and rewriting premium documents so they are
setting process, slow responses by WorkCover when understandable.
premiums are in dispute and concerns about bias
and fairness. There also appears to be inaction by This need by business for greater certainty and
insurers regarding fraudulent or exaggerated claims transparency was demonstrated in the 2004 Premium
and a perception that return to work initiatives were Order, which in a number of instances produced
not encouraged. anomalous results. In some circumstances premiums
rose despite unchanged tariff rates, and stable or
The State Government recognised these concerns reducing wages bills and claims costs.
and commissioned McKinsey and Company to
undertake a review of Workers Compensation in Harmonisation with other State schemes has not
NSW. The Government has actively pursued the been signiﬁcantly advanced. Recommendations by
recommendations in the review. the Productivity Commission that would have made
it possible for a wider group of national employers
Areas that have received attention from the State to move to self-insurance were only partially adopted
Government since the 2003 Election include by the Commonwealth. Harmonisation remains a
difﬁcult political challenge but must remain a key
• Obtaining greater harmonisation with other longer term objective.
Workers compensation costs continue to be
• Establishing an independent insurance entity signiﬁcantly higher in NSW ($1,161 per employee in
with statutory supervision 2002/03) than in any other jurisdiction. At the same
time the Scheme has in recent years consistently
• Maintaining a publicly underwritten paid for itself on an annual basis. Despite the
scheme and expanding the range of claims improvement in position, the NSW Government is
management suppliers yet to pass on any premium reductions. There is
no compelling argument that total elimination of
• Improving premium setting to better reﬂect the Scheme deﬁcit be the pre-requisite for premium
business risk reductions. The substantial savings expected from
Partnerships for Recovery and the Review of Premium
• Creating proxy market signals to inform Setting are yet to be seen.
employer choice of provider.
As yet, the Opposition has not developed any policy
The results of the current Review of Premium options for WorkCover, nor has it sought to use its
Setting are not yet known. However, WorkCover has position to constructively develop options to assist
sought to engage employers in the current review. business.
Employers are seeking in the Review of Premium
Setting a system that better reﬂects the risks inherent
in a business and the costs to the scheme of claims
from that business.
The Minister for Industrial Relations has implemented
signiﬁcant reform in relation to the operation of
the Workers Compensation Scheme and setting of
Whilst there has been an improvement in the
Scheme’s performance and greater transparency,
feedback from roundtables reﬂects continued
concern. Further work is needed to establish greater
transparency and fairness before business conﬁdence
in WorkCover can be expected to increase. Despite
the improvements in the Scheme’s performance in
recent years, the Government has yet to pass on any
of these beneﬁts to business in reduced premiums.
The Opposition is yet to release any policies in
relation to the administration and calculation of
WorkCover Premiums. This is a signiﬁcant area
of business interest and the Opposition has yet to
identify any improvements to the operation of the
OCCUPATIONAL HEALTH AND SAFETY • The lack of any public provision of data in
relation to the application of OH&S continues
NSW Business Priorities 2003 identiﬁed Occupational to impair conﬁdence in the OH&S system.
Health & Safety (OH&S) compliance as a signiﬁcant Business still believes the OH&S system
and negative issue for NSW businesses. According is unreasonably biased against them and
to the survey of members, 41% of respondents there is an imbalance in the enforcement of
answered that OH&S compliance issues were OH&S between employers and employees.
signiﬁcant and impacting negatively on their Until there is public scrutiny of OH&S data,
operations. there will continue to be a perception that
the system is unreasonably biased against
In September 2003, the 24 month transition period business
for the Occupational Health & Safety Regulation 2001
(OHSR 2001) concluded and all small businesses had • The NSW Government has demonstrated
to comply with the Occupational Health & Safety Act little interest in developing national
2000 (OSHA 2000). To this end, WorkCover indicated consistency in OH&S. The Productivity
it would focus on advice and assistance to ensure Commission in its report, National Workers
businesses were aware of their OH&S obligations Compensation and Occupational Health and
through the Small Business Assistance Strategy. Safety Frameworks, recommended greater
national OH&S consistency and the Federal
Since 2003 the following has occurred Government has proposed a new Australian
Safety and Compensation Council to increase
• There has been a discernable increase in the national workers compensation and OH&S
effort expended by WorkCover in the provision consistency. It also recommended uniform
of support to business with respect to OH&S legislation
compliance issues. This has been welcomed
by business and it is recognised that it is an • Concern has emerged at the application of
activity which requires persistence on the part the absolute duty of care required by OHSA
of WorkCover 2000. The Industrial Relations Commission
has applied the duty in an arbitrary rather
• The Government has chosen not to bring than an equitable way. The application of the
forward a review of the OH&S Regulation. absolute duty has tightened with subsequent
There is consistent evidence to show that narrowing of statutory defences. The result
many businesses have found it difﬁcult is that over the last two years business
to comply with the requirements of the perceptions of a fundamental lack of balance
Regulation and that compliance costs to between the obligations of employers and
business are signiﬁcant employees have sharpened. Many employers
regard it now to be impossible to comply with
• WorkCover has directed considerable the legislation. This was highlighted by the
resources to education and assistance to Committee of Experts.
employers as a result of the magnitude of the
changes introduced via OHSR 2001. While Compliance concerns are growing, particularly for
welcome, this assistance does not deal with the small business sector. The 2004 Red Tape Register
the core issues of complexity and compliance compiled by the State Chamber of Commerce
costs found that compliance time for small business
was increasing. In 2003, 13% of small businesses
• WorkCover Assist was funded for a further surveyed in the register spent 5 to 15 hours per week
two years (until Mid 2005). This is a welcome on OH&S related issues and in 2004 this had risen
development and continues the positive to 25%.
engagement of employers and employees and
ensures WorkCover’s message continues to be
delivered to the widest possible audience
The operation of OHSR 2001 and OHSA 2000 has
created considerable concern amongst business. In
particular, the tight interpretation of the duty of care
has created considerable angst particularly amongst
small business. The arbitrary and absolute way the
Commission has applied the duty of care has resulted
in many employers simply giving up.
Greater attempts are needed by WorkCover to
co-operatively communicate with small to medium
sized businesses. Conﬁdence in the fairness of OH&S
is low and WorkCover has made no substantive effort
to address this lack of conﬁdence.
The ﬁve year review of OHSA 2000 is expected in
late 2005. Changing WorkCover’s culture and the
current application of OH&S will be a critical issue for
The Opposition has not entered into any debate
regarding the application of OH&S legislation since
the election. It is a signiﬁcant compliance issue for
business and the Opposition has yet to engage in
meaningful and positive dialogue.
It became apparent through the business
roundtables and the Mid Term Report Card
Survey there is considerable anger directed
towards the State Government over the
administration of the workers compensation
system. Only 12% of respondents said
WorkCover’s performance has improved over
the past two years. 39% said its performance
had stayed the same, 15% said it had
deteriorated and a further 34% were ‘not sure’.
In the roundtables, the primary causes of
dissatisfaction were identiﬁed as a lack of
transparency from WorkCover and the current
unworkable application of the duty of care.
WORKPLACE FATALITIES LEGISLATION Summary
The most signiﬁcant workplace issue to emerge since Government
the 2003 election is the issue of Workplace Fatalities
The Government correctly rejected the call for
industrial manslaughter legislation but the Draft
Workplace Fatalities Bill is fundamentally ﬂawed.
Business groups, the Government and the Opposition
support the need for ‘rogue’ and reckless employers
As yet the Government has not answered the
to be brought to account. There is however
concerns of business in relation to its draft Workplace
signiﬁcant differences between business and the
Fatalities legislation. The Australian Business Limited
Government about how this is meant to be achieved.
plan on Workplace Fatalities legislation creates
a framework which meets community need for
The Government has, as requested by business,
legislation to punish reckless and rogue employers.
rejected the option of industrial manslaughter
The Government as yet has not accepted the
legislation within the Crimes Act. However, the
reasonable suggestions of business.
draft bill presented by the Government in 2004 has
raised concerns primarily because it acts within
the framework of OHSA 2000 and the impossibility
of compliance by employers with the Act. The Opposition
combination of an absolute duty of care with a new The Opposition has indicated its commitment to
offence that carries up to ﬁve years gaol is a concern oppose the draft legislation. It is, however, unclear
to every employer. if this commitment to oppose the draft legislation
means that it will not vote for any amendments to
The draft legislation, in its current form, is not improve the legislation.
supported by either business or the Opposition.
At the time of writing, the Government is yet If the Government proceeds with legislation, the
to respond to the ﬁve point plan developed by Opposition will need to ensure that it works to
Australian Business Limited on Workplace Fatalities remove those elements of the draft bill that are
which repugnant to business.
1. Requires that prosecutions under Workplace The grading of the Opposition is based on its
Fatality provisions are only launched when commitment to oppose the draft legislation
employers act ‘recklessly’ and endanger the and assumes that it will not oppose reasonable
life of another amendments if legislation becomes inevitable.
2. Provides only WorkCover and the Crown with
the right of prosecution (thereby removing
unions’ right to prosecute)
3. Removes ‘bounty hunter’ incentives for trade
unions to prosecute
4. Ensures a right of appeal when custodial
sentences are applied
5. Introduces a practical application of an
employer’s duty of care.
The issue is a major concern to business and the
discernable differences on the Government and
Opposition positions are clear.
There is overwhelming concern in the
business community about the current draft
Workplace Fatality legislation. All roundtables
expressed extreme dissatisfaction with the
draft legislation. Concern stems from the
fact the new offence will form part of the
Occupational Health and Safety Act 2000 which
has an extremely broad and difﬁcult obligation
in relation to the duty of care. This broad
deﬁnition ensures that compliance is legally
near impossible and as such employers have
every right to be fearful of gaol if a workplace
fatality occurs at their workplace.
Two aspects of the Workplace Fatalities
legislation were surveyed as part of the
Mid Term Report Card, they being the right
of unions to initiate workplace fatality
prosecutions against employers and rights of
appeal under the draft legislation.
Only 10% supported the right of trade unions to
prosecute employers with 84% of businesses
opposed to this power. The view of the
respondents reﬂects the combined business
submission put to the NSW Industrial Relations
Minister that trade unions should not have
‘police style’ powers against employers. This
power should rest with WorkCover and the
An overwhelming 89% of respondents believe
that any employer who receives a gaol sentence
for a workplace fatality should have the right of
appeal to a higher court.
NSW must preserve the economic and jobs growth
that have occurred in recent years. The current levels
of economic growth cannot be taken for granted.
The gains of the past decade will be put at risk if
there is complacency about the growth in the size
of Government and the ensuing growth in taxation.
As importantly, issues of compliance, particularly
in OH&S and workplace relations, are inhibiting the
capacity of business to compete with other States and
The Mid Term Report Card details an action plan for
both the State Government and Opposition. It is
against this action plan that both the Government and
the Opposition will be assessed by business in one
1. Establish an expenditure taskforce under the 1. Commit to cutting payroll tax. Currently
chairmanship of the Minister for Economic Opposition tax cuts are not targeted towards
Reform to cut the growth in Government business. Cutting payroll tax must be central
expenditure. This growth in expenditure is to any plan to cut taxation.
putting additional taxation pressure on NSW
businesses and making them uncompetitive 2. Detail nature and extent of proposed
against Queensland and Victoria. expenditure cuts. Opposition plans to cut
taxation and lift infrastructure spending will
2. Commence a four year program to cut not have credibility if it does not detail how it
payroll tax from 6.0% to 5.5% and increase will fund these initiatives.
the tax free threshold to $700,000. At this
level, the rate will still be above the 4.75% 3. Commit to an ongoing release of costed
in Queensland and 5.25% rate in Victoria. policies. Any last minute release of costing
The NSW Government would need to forgo documents in the 2007 election campaign will
approximately $600 million of the projected not inspire conﬁdence or credibility.
$3.7 billion increase in payroll tax revenues.
4. Focus Opposition policy attention on
3. Further invest in infrastructure. NSW’s Triple A Vocational Education. To date the Opposition
credit rating is secure and there are extensive has focussed more on schools than training.
pressures on the water, electricity, road and
rail networks. 5. Publicly re-commit the Opposition to tort
law reform. Ongoing support for the
4. Negotiate with the Federal Government Government’s tort law reforms is essential.
to develop a simpliﬁed, uniﬁed workplace
relations system. 6. Provide bi-partisan support to the NSW
Government in its attempts to reform the
5. Return the beneﬁts of Workers Compensation Commonwealth Grants Commission.
Scheme surpluses to businesses in the form
of lower premiums. The performance of the 7. Publicly release the Opposition’s Occupational
Scheme has improved in recent years and the Health and Safety policy by March 2006.
beneﬁts should be passed on.
8. Publicly release the Opposition’s policy
6. Engage constructively with business on Workers Compensation premiums by
on labour force and skills issues. The March 2006.
Government should establish and implement
a coherent strategy to address the current
skills crisis and future skills needs.
7. As a matter of urgency, review the OH&S
2000 Act with particular focus on reforming
the duty of care. The current application of the
duty of care is having signiﬁcant unforeseen
consequences, including many smaller
businesses giving up on OH&S because
compliance is too difﬁcult.
8. Amend the draft Workplace Fatalities
legislation by adopting the Australian
Business Limited ﬁve point plan.
Championing the cause of business
Tel: 13 26 96 140 Arthur Street Locked Bag 938
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Email: firstname.lastname@example.org Web: www.australianbusiness.com.au