Queensland budget: Payroll tax deduction for SMEs and mental health levy for big business

Queensland Treasurer Cameron Dick handed down the Queensland 2022-23 budget yesterday, with SMEs to benefit from a deduction in payroll taxes while big businesses are set to pay a mental health levy.

The government also introduced a massive $3.5 billion investment in rail projects and $35.5 million for medical manufacturing, with a number of infrastructure projects that will boost jobs and business for SMEs. 

Here are the highlights. 

What’s in the budget for SMEs?

This year’s budget sees Queensland return to surplus, with the government now expecting to deliver a $1.9 billion net operating surplus in 2022-23, after a deficit of $1.49 billion was expected in December. According to the Treasurer, Queensland is the first of four governments — that is, the federal government, NSW, Victoria and Queensland — to deliver a surplus after a COVID-related deficit, with the surplus driven by high coal and oil prices, and land transfer duties. 

Small to medium-sized Queensland businesses with payrolls up to $10.4 million will see a deduction in payroll tax starting January 1, 2023, which the government says will provide benefits of up to $26,000 per year for more than 12,000 SMEs. This comes after adjustments to the existing payroll tax deduction framework and according to budget papers, will minimize cost pressures on eligible businesses.

Currently, SMEs with annual taxable wages between $1.3 million and $6.5 million can claim a deduction which phases out at a rate of $1 for every $4 of taxable wages. With the new adjustment, SMEs with annual taxable wages up to $10.4 million will see an increase in the phase out rate of $1 for every $7 of taxable wages. 

There will also be an extension of the 50% payroll tax rebate for wages paid to apprentices and trainees up until June 30, 2023, providing additional support to businesses as they recover from COVID-19. 

According to the Treasurer, these cuts will mean that “only the top 1% of large Queensland businesses will pay more”.  

This 1% of big businesses in Queensland will pay a mental health levy which will fund the government’s investment in mental health services, under a similar model adopted in Victoria. This will see a 0.25% mental health levy on businesses with annual taxable Australian wages of over $10 million. Businesses with annual wages over $100 million will pay an additional 0.5%. 

Big retailers like Coles and Woolworths, as well as construction firms and mining companies, are likely to pay the most, according to Brisbane Times. The government expects this levy to bring in $425 million a year, and “will impact less than 6000 Queensland businesses, including 850 businesses with national payrolls of more than $100 million”. 

The government also revealed a new $39.1 million investment over four years that Small Business Minister Di Farmer says will “supercharge success for the small business community”. 

With $12.6 million in annual ongoing funding, the investment will provide small business grants and mentoring, supporting digital capability and upgrades, strategic business and marketing advice, staff management and future business development planning.  

Ongoing funding for the Mentoring for Growth (M4G) initiative has also been confirmed, allowing small businesses to access volunteer business experts free of charge. A $6.75 million Small Business Wellness and Support package was also rolled out, and will see six small business wellness coaches help businesses hit both by COVID-19 and the floods. 

The government also announced a royalty scheme for coal mining companies, which will kick in once the 10-year freeze on coal royalty rates expires. The Guardian noted the government was at “pains to make clear that the impact of the royalty measures is mild”. Three new royalty tiers will be introduced, with these changes forecasted to deliver $1.2 billion in royalties. 

Households will also receive concessions to alleviate cost-of-living pressures, with a $175 cost-of-living rebate included to help households manage energy bills. This could see energy bills reduced by $14.60 per month, although this is likely to be offset by a rise in energy prices starting July. 

More for jobs 

In keeping with the 206,000 new jobs created in Queensland since 2020, with 46,600 created in May 2022 alone, the Queensland government is promising more job growth in both traditional industries and emerging industries. This means more funding for high skilled jobs in hydrogen, renewables, critical minerals, advanced manufacturing, biomedical technology, aerospace, and defense. 

Around $3.5 billion will go towards new rail projects, which will see a “rail revolution” in Queensland supporting more than 5000 jobs and better rail services for the state. Queensland will build a new underground line and also roll out new ETCS technology that will run more services and improve rail safety. 

The government has committed 59.1 billion towards capital programs over the next 4 years. Around $48 million will go towards pumped hydro energy storage projects, while $150 million will be allocated over 10 years towards a new trade and investment strategy. Another $35 million was announced for a potential second hydro energy storage site, with the funds allocated for “detailed analytical studies that will consider the long-term benefits of this proposed large-scale storage project”.

The government will also scale up the National Battery Testing Center with a $15 million investment, building Queensland’s manufacturing capacity and supporting more secure, skilled jobs. 

A biomedical manufacturing facility will see the development of vaccines in Queensland, while supporting 500 industry jobs and building a job-ready biomedical workforce, with $35.5 million allocated for it. Around $50 million has also been allocated to support Queensland manufacturers over two years. 

To support Queensland’s growing population, $200 million will go towards building essential infrastructure and unlocking housing supply, creating jobs in construction and infrastructure such as new roads, public facilities and water and sewage infrastructure. 

A further $300 million was announced for the Toowoomba to Warwick pipeline, which will ensure water security and regional development, while creating 420 local jobs. 

Approximately $68.5 million over five years will go towards the Queensland Resources Industry Development Plan, while $66.4 million will go towards tourism recovery and development initiatives over four years. A further $20 million will make Queensland a music tourism destination, with events planned in 16 communities across four regions, giving the regional destinations a much needed local and international tourism boost. 

A far north Queensland film studio will also receive $13.8 million in funding, while a further $3.5 million has been allocated over three years to support reef tourism. 

With the budget big on healthcare spending, 9,450 jobs will be created for frontline healthcare workers, while the $23.6 billion investment in healthcare will include the construction and expansion of hospitals around Queensland, including a $750 million cancer centre. 

In the financial year 2022-23, 19.6 billion will go towards education and training, including TAFE services across Queensland. In more funding for regional water infrastructure projects, the government will invest $199.5 million, while $291.8 million will go towards resource recovery initiatives. 

The Queensland government also announced $31.4 million to prepare Queensland athletes for the Olympics and Paralympic Games in 2024 and 2028, as a lead up to the Brisbane 2023 Olympic and Paralympic Games.