The South Australian Business Chamber has expressed concern over the Fair Work Commission’s decision to increase Minimum Wages and Modern Awards by 3.75% and is calling for urgent payroll tax reform in response.
“When you add the mandatory increase in superannuation of 0.5% for the new financial year, businesses will face a total increase of 4.25%,” said Andrew Kay, CEO of the South Australian Business Chamber.
While the Chamber supports reasonable and sustainable pay increases, Mr Kay noted that a hike higher than inflation, following an already stimulative Federal Budget, poses challenges to Australia’s economic recovery efforts.
“The decision by the Fair Work Commission will make it significantly harder to bring inflation back within the Reserve Bank of Australia’s target range and comes on the back of last year’s 5.75% increase,” he said.
More critically, the Chamber highlights that today’s wage increase will push more South Australian businesses over the payroll tax threshold.
“If a business is just under the current $1.5 million payroll tax threshold and employs staff on awards and minimum wages, they will now find themselves subject to payroll tax for the first time come July 1,” Mr Kay explained.
In light of today’s increases, the Chamber is renewing its call for the state government to raise the payroll tax threshold to $2.1 million in Thursday’s State Budget, aiming to make South Australia the most competitive in the country.
“Our calls for changes to the payroll tax threshold are now even more urgent,” said Mr Kay. “Without this reform, the combined impact of wage increases, and additional payroll tax will push many businesses to the brink.”
Today’s decision means that minimum wages in Australia will increase to $24.10 per hour or $915.90 per week from the first full pay period on or after 1 July 2024. Combined with a further 0.5% increase in superannuation, businesses will pay 4.25% more to eligible employees.
“Businesses that can pass costs to consumers will have no choice but to do so following the Fair Work Commission’s decision this morning.
“At a time when operators are already struggling with the costs of doing business, without payroll tax reform, I fear this could be the final nail in the coffin for many,” Mr Kay concluded.
