More than half of Australian businesses consider Victoria to be the most difficult state in which to conduct business, with local operators paying the highest taxes in the country.
The Victorian Chamber of Commerce and Industry unveiled its first cost of doing business index on Wednesday, which ranks the cost of doing business in all states and territories throughout the country.
More than half of Victorian businesses with operations in other regions of the country said Victoria was the most difficult state to conduct business in the country.
Only 7% of respondents said that the Andrews government was doing a good job of lowering the cost of doing business in the country.
Businesses in the state paid the highest local and state taxes in Australia, accounting for 6.2 per cent of gross state product, with the next highest rate being 5.7 per cent in New South Wales.
In terms of the number of permissions, licences, and regulations required to start a business, Victoria was the second-worst jurisdiction, with an average of 43 forms required per new enterprise.
The Australian Capital Territory (ACT) required the most permits on average, with 45, while the Northern Territory required the fewest, with 29.
According to a survey conducted by the Victorian Chamber of Commerce, wait times for government services, including compliance and regulation, are increasing longer.
Some firms have reported having to deal with “inconsistent rules or conflicting messages” between government departments that don’t communicate with one another on a regular basis.
In terms of affordability and labour productivity, Victoria was placed second to last, with tourist gross state product between 2018 and 2019 totalling $82,273 per worker, trailing only Tasmania’s figure of $78,950. This is in comparison to the state of New South Wales, which had the highest salary at $97,478.
Victoria was placed top in terms of skills and labour, and it has one of the most highly educated workforces in the country.
Businesses reported that they were having trouble obtaining the labour and skills they required, particularly in entry-level and vocational roles, according to four out of five respondents.
With a firm entry rate of 16.6 per cent between 2017 and 2021, the state was ranked second in entrepreneurship and innovation, trailing only the ACT, which had a rate of 18.1 per cent.
The chamber’s report acknowledged the impact of the COVID-19 pandemic on Victoria, with businesses in the state experiencing greater disruption than those in other parts of the country.
According to Martin Pakula, the state’s Industry Support Minister, the findings highlighted “the extremely tough pandemic circumstances” that the state had encountered.
Since 2002, Melbourne has continuously been in the top three of the world’s most liveable cities, although it lost its title as the most liveable city in the world last year, sliding to eighth position. Saul Eslake, an economist, has cautioned that, following a decade of decline, Victorians have become poorer than residents of any other state or territory, with the exception of South Australia.
In 2019-2020, the following percentage of gross state product is represented by tax expenses (including state and local).
- The state of Victoria has a 6.27 per cent tax.
- The state of New South Wales has a 5.72 per cent.
- South Africa has a 5.68 per cent.
- Tasmania has a 5.2 per cent.
- The state of Queensland has 5%.
- Western Australia only 4%
The Victorian Chamber of Commerce and Industry is the source of this information.
In response to the findings presented in the report, VCCI provided eight practical recommendations for government to address the costs and barriers faced by our members.
The recommendations include:
- Developing a business concierge to streamline the experience for business at the interface of government and industry.
- Conducting a root and branch review of the Victorian tax system with the aim of optimising state revenue collection to deal with the costs facing Victorian businesses, while also making Victoria the lowest taxing jurisdiction for business in Australia.
- Fast-tracking government approvals, grants and programs to get business back in business, and to address the backlog of projects delayed due to COVID-19.
- Continuing to enhance and evolve the culture of the public sector and of local government in engaging with business, so that it has a business enabling and proactive mindset.
- Creating a permanent forum or working group for a diverse set of industry stakeholders to provide early input into policy design and delivery.
- Expanding the facilitation role of Invest Victoria to have a greater focus on boosting the success of small businesses and regional industries.
- Building on the partnership between VCCI and the Victorian Skills Authority to help address the rising skill mismatch challenge in the state, particularly in vocational education and in regional areas.
- Seeking out opportunities for the government to partner with the private sector in delivering key services where appropriate.
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