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Small to Medium Enterprise (SME
SMALL TO MEDIUM ENTERPRISES
ORGANISATION
DELEGATION CONTACT
DELEGATES ATTENDING
DELEGATE ISSUES
WEBSITE LINKS
ATTACHMENTS Cairns TNQ Convoy to CapitalQ
Advance Cairns, Tourism Tropical North Queensland and Cairns Chamber of Commerce are leading the region’s largest ever business delegation to Brisbane. The delegation includes more than 50 business leaders over a two-day period (February 18-19), representing 12 key business sectors to meet with State MPs and attend the Speaker’s Cocktail Reception.
Further information: Nick Trompf, Executive Chairman Advance Cairns E: nicktrompf@advancecairns.com | M: 0412 786 719
Small to Medium Enterprises (SME’s): Sean Adams
1. Sean Adams, Director CSF Industries & Director Advance Cairns 2. Patricia O’Neill, CEO Cairns Chamber of Commerce 3. Elisha-Vi Raso, Managing Partner – FNQ Regional & Agribusiness Queensland NAB 4. Andy Reeves, General Manager The Cairns Post (News Corp) 5. Shaun Donaldson, Director Halpin Partners
Attached are bios on each delegate.
Small to Medium Enterprise (SME) issues to discuss:
• Rising Input Costs • Payroll Tax • Skilled Labour • Best Practices Principle Policy
Attached are briefing papers on each issue.
• Attendee biographies • Briefing papers
With over 20 years experience working within the construction industry, Sean Adams has a wealth of knowledge and a passion for all facets of business. As a hands-on director, he is dedicated to his staff, improving efficiencies and providing cost effective supply solutions to his clients.
Having graduated from The University of Queensland with an honours degree in Structural Engineering, he has worked as a design engineer with international firms located in both Australia and the UK.
Joining CSF Industries in late 2003, Sean became managing director in 2009. Under his leadership, CSF Industries has diversified and Sean now oversees three separate business units: CSF Steel Fabricators, CSF Roofing and Thomas Steel Fabrications which is based in Townsville. In 2014, he launched a start-up transport company, Intrans Logistics, where he remains the Managing Director.
Born and raised in Cairns, Sean believes in the opportunities our region has to offer for current and future generations.
PATR ICIA O’NEILL CEO CAIRNS CHAMBER OF COMMERCE
Well known to the Cairns business community, Patricia O’Neill has a strong commitment to, and belief in, local business. Currently leading the Cairns Chamber of Commerce as CEO, Patricia previously worked in the media industry in Cairns for the last 13 years. During this time she worked closely with both the business and corporate sector in building strategies to ensure the long term sustainability of the Cairns region.
In 2014 alongside others stakeholders such as Cairns Regional Council and Tourism Tropical North Queensland, Patricia was part of the Australian Tourism Exchange (ATE) working committee. ATE is Australia’s largest annual travel and tourism business-to-business event which was hosted in Cairns in 2014. The committee was successful in delivering a seamless event, which showcased the Cairns region to a large number of people from all over the world.
Patricia is an enormous advocate for small business, and strongly believes that it is a privilege to be given the opportunity to support the growth and prosperity of the Cairns Business Community. Although a passionate Scot by birth, Cairns is home for Patricia, and she confidently feels there is no place quite like Cairns.
ELISHA-VI RASO MANAGING P ARTNER – FAR NORTH QUEENSLAND REGIONAL & AGRIBUSINESS QUEENSLAND , NATIONAL AUSTRALIA BANK LIMITED
A Far North Queensland local with over 18 years banking and finance experience, Elisha stared her career with PricewaterhouseCoopers in Cairns before moving into a career in Banking.
Elisha has spent the past 16 years developing skills across Retail and Small Business Banking, Corporate, Commercial and Agribusiness Banking sectors throughout Regional and South East Queensland.
She sits on the UDIA Cairns Board as an Executive Member, is a member of the Advance Cairns Advisory Council and is especially passionate about mentoring young professionals looking to build a career in the finance sector.
Andy has spent the last 25 years working with and alongside small business owners, understanding their challenges and working with them to grow and solidify their businesses. He has well rounded experience across newspapers and B2B publishing, sales and sales management, digital marketing, franchise development and asset finance.
As the General Manager of the Cairns Post, Tablelander, Port Douglas Gazette and Innisfail Advocate newspapers he meets and speaks with Far North Queensland business owners across every conceivable cross section of industry on a daily basis.
In his time outside of work he plays and manages a football team, enjoys camping in the beautiful Far North and spends time with his growing family.
SHAUN DO NALDSON DIRECTOR HALPIN PARTNERS
With over 16 years of experience providing specialist tax and advisory services to businesses across the property, construction, hospitality, manufacturing and tourism sectors, Shaun is now pursuing his passion for proactively assisting businesses to become more productive and more profitable.
A big picture thinker and with experience working with small to medium-sized business seeking to expand operations, optimise productivity and profitability, or to address tax or operational issues, Shaun has the knowledge and skills required to identify new opportunities and to fix emergent, business-threatening problems.
Servicing businesses in Cairns and throughout North Queensland from Mt Isa and Townsville and north to the Cape, Shaun enjoys tackling the issues that other accountants are not trained or experienced in handling, so that he can assist clients to develop solutions and strengthen their businesses into the future.
COUNCIL: ALL TNQ STATE ELECTORATE: ALL TNQ FEDERAL ELECTORATES: LEICHHARDT, KENNEDY INDUSTRY DEVELOPMENT
BUSINESS GROWTH FACTORS
BRIEFING NOTE SUMMARY
• Tropical North Queensland (TNQ) has not seen any significant economic growth in small and medium businesses since the years preceding the Global Financial Crisis.
• The Queensland Government has announced that the Buy Queensland Best Practices Policy will apply to the Cairns Convention Centre expansion, leading to concerns over escalating payroll costs.
• With the current economic conditions, it is difficult to encourage private sector investment and skilled labour to the region.
• To stimulate economic growth and the regional economy overall, there is a need to: (1) attract and retain skilled labour; (2) address rising cost pressures; and (3) further amend payroll tax in terms of the grouping provisions.
THE ISSUE Tropical North Queensland (TNQ) has not seen any significant economic growth in small and medium businesses since before the Global Financial Crisis. While many opportunities exist within the region, continuing economic challenges have depleted human and business capital, making it difficult for local business to take advantage of these opportunities. Despite the recently-completed construction of significant tourism accommodation in the Cairns CBD, the local economy has not improved in its level of confidence and retail spending continues to decline. In many sectors the TNQ economy is worse now than at any time in the past 10 years. This has placed many small businesses and medium enterprises (SMEs) in overtly stressed financial situations. Over the past decade there have been very few good news stories regarding living or working in the north of the state with media focussed on the negatives – namely weather events such as flooding, cyclones and extreme heat, crime and unemployment. With the current flat or declining economic conditions, it is difficult to encourage private sector investment and skilled labour to the region. To stimulate economic growth within the SME sector and the regional economy overall, initiatives are required which: 1. attract and retain skilled labour to the region to help grow regional capacity and population;
2020 STATE ELECTION PRIORITIES FOR TNQ 2. address rising cost pressures which make it more difficult to do business in TNQ; and 3. further amend payroll tax.
SKILLED LABOUR IMPEDIMENT Regional centres have a limited pool of skilled labour to draw from to help drive growth. As a result, it is often necessary to either train apprentices, bring in qualified workers on a visa, or attempt to create an environment that is enticing to people from out of state to move here. Employers in TNQ consistently find that: 1. there are not enough organisations employing apprentices to increase our skill base. This is largely caused by costs and low productivity involved in apprenticeship training; 2. people are reluctant to move to TNQ due to negative perceptions of living in regional areas; and 3. the cost of attracting skilled labour through visa programs is often prohibitive. For example, a $7300 training fee paid in advance for each 4-year visa is required per employee. While part of this fee goes to the Skilling Australia Fund, Queensland is not a partner and therefore our employers cannot benefit from it. Combined, these issues contribute to a lack of skills in the region which holds back economic growth, meaning local businesses cannot take
“Rising input costs are ultimately passed onto customers, meaning many regional businesses are not able to remain competitive against businesses in metro markets”.
advantage of growth opportunities. Attracting and retaining more skilled people to the region will prime the economy, improve the building and housing markets and ultimately create more business, education, training and advancement opportunities for those already in the region. A workable solution exists to address each of these issues, improving the building and housing markets and ultimately creating more business, education, training and advancement opportunities for TNQ. These are outlined below.
RECOMMENDED SOLUTIONS Attracting and retaining skilled labour 1. offer job seekers tangible incentives to move to TNQ: • increase the first QLD home owners grant from $15,000 to $20,000 for new build homes; • introduce stamp duty exemptions to encourage skilled labour to move permanently to the region including the following: • deferring stamp duty for five years for residents who move to regional areas for work and purchase a home; • removing stamp duty on motor vehicle purchases in the first 2 years; • removing stamp duty on home and contents insurance in the first 2 years. 2. undertake a coordinated advertising campaign that targets skilled workers to move to QLD - focus on young families struggling with cost of living and other pressures in southern capitals. 3. provide incentives to both new and existing regionally-based businesses to encourage business to start-up or relocate to regional QLD (where a workforce of 100+ is relocated either to one area or assigned between regional towns and cities). 4. locate or relocate State Government employees to service centres in TNQ.
Boosting apprenticeships While apprenticeship incentives are already in place they do not cover the costs incurred by a regional business. Apprentices require significant training and supervision resulting in a loss of productive labour for a business. To boost apprentice numbers in TNQ we recommend that existing apprenticeship incentives, including payroll tax exemptions, be increased to 100% for regional employers. Apprentices trained in the region are more likely to stay in TNQ boosting the long-term skilled labour force. Attracting skilled visa workers Work with the Commonwealth to reduce the charges applicable to regional SME employers who access skilled labour through visa schemes.
RISING INPUT COSTS IMPEDIMENT Business insurance premiums have skyrocketed in recent years. For one of the delegation members premiums have risen 52% since 2016 and for another, by 177% in the same period. The 177% was a reprieve as the company changed insurer, with the original insurer quoting an increase of 300%. In addition, the Ergon Energy small and large business tariff 22 has risen by 34% since 2013 and many small business owners have experienced increases in excess of this. These cost increases are ultimately passed on to customers meaning many TNQ businesses are not able to remain competitive against businesses in metro markets.
RECOMMENDED SOLUTIONS Insurance costs • implement an annual declaration by insurers regarding their policy underwriting calculation, by component, for both residential and business policies. This would be similar to the CTP process already in place where insurers would provide a body (similar to the Motor Accident Insurance Commission) an explanation of how they have costed the policies on offer for each region of the state.
Electricity costs • remove Ergon Energy’s “no return policy” currently in place for companies using greater than 100 Megawatt hours of electricity per year; • enable residential customers and small business customers the ability to move retail providers in regional areas; • sell excess power generated by business solar panels to the grid on weekends; • work with the Commonwealth to simplify the carbon credit claim system for large scale generators; and • simplify the administrative process for large scale generators not in the business of power generation at the level of a commercial power station.
PAYROLL TAX IMPEDIMENT While changes in payroll tax were made in the 2019 Queensland State budget there is still a need to review both the rate and the overall structure of this tax.
RECOMMENDED SOLUTIONS Amend grouping rules The payroll tax grouping rule currently applies to start-up businesses and small otherwise independent businesses, which eliminates entrepreneurism and diversity in business. Payroll tax should not apply to a business that produces a materially different product or service and that operates independently to the associated business that causes a grouping. The rules are counter intuitive as: 1. start-ups associated with larger enterprises cannot afford this overhead. 2. small independent businesses caught by grouping rules cannot afford this overhead. The following grouping provisions should therefore be removed: • same person, or persons controlling 2 or more businesses; • an entity has a tracing interest in corporations (indirect interests); • a person is part of 2 or more groups.
Reduce location-based payroll tax by 1% • To encourage businesses to move to north and far north Queensland, make businesses within the defined northern Australia area eligible for a flatline reduction of 1% on payroll tax regardless of business size. If a business workforce covers multiple regions, then identify the taxable wages within the eligible locations and apply the discount to those taxable wages.
QUEENSLAND PROCUREMENT POLICY IMPEDIMENT While only designed for projects over $100 million, the Best Practices Principles (BPP) procurement policy proposed for the Cairns Convention Centre upgrade will negatively impact subcontractors and suppliers on large construction projects in regional Queensland. The BPP will lead to much higher wage costs for Government projects, causing disparity in the local workforce, and making local businesses reluctant to tender for the work. As a result, project managers will find it cost effective to source workers from outside the region. The BPP also involves a hot weather policy which is unworkable in TNQ. With the Queensland Government announcing the BPP will apply for the Cairns Convention Centre project, there is growing concern in the region relating to this project. First, the BPP will lead to inflated unionspecified wages, causing disparity across every contractor’s workforce. Increases ranging up to 200% will occur in some instances for staff working on the project compared to their colleagues on another site. The impact of these issues has already been felt through the recent Townsville Stadium construction where a crane operator on an existing rate of $40-$43 per hour moved to $83-$88 per hour. This significant payroll expense is not economically sustainable for local employers nor will they be competitive on future projects. Second, the implementation of the BPP hot weather policy as applied to the Queen’s Wharf project in Brisbane is not a viable proposition for TNQ. According to the Bureau of Meteorology, over the 12 months to October 2019 the policy’s humidity level of 75% was exceeded on 117 days and the temperature level of 28 degrees was exceeded on 295 days. The implementation of this policy on a project in TNQ is therefore not practical. North Queensland based employees are acclimatised to working in tropical environments and workplace health and safety measures are taken to ensure staff safety.
RECOMMENDED SOLUTIONS • the BPP in its current form should not apply to projects undertaken in TNQ; • wage rates already passed by Fair Work Australia should be retained as per each company’s existing industrial agreement, irrespective of the project their employees are deployed to; and • hot weather working conditions should be governed by the requirements of the existing approved WorkCover codes of practice.
OUR RECOMMENDATION
• That in 2020-2021 the Queensland Government invest in attracting and retaining skilled labour to regional areas through a combination of tangible incentives, coordinated advertising campaigns and the relocation of Government workers to regional Queensland.
• That in 2020-2021 the Queensland Government boost apprentice numbers by increasing payroll tax exemptions to 100% for regional employers.
• That the Queensland Government work to reduce small business input costs by increasing the transparency of insurance costs, facilitating competition in the regional electricity market, and working with the Commonwealth to simplify the carbon credit claim system for large scale generators.
• That the Queensland Government revisit the BPP for the Cairns Convention Centre upgrade to accommodate TNQ hot weather working conditions and the payment of existing salaries as approved by Fair Work Australia.
