Not having to pay payroll tax for three years has helped BlueScope pull through the dark days of the steel crisis.
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In 2015, as part of a move to keep the gates at Port Kembla open the NSW Government agreed to defer three years’ of payroll tax.
That adds up to around $60 million, and contrary to rumour, this was not a payroll tax holiday.
The steelmaker will pay that back starting from 2020, as well as resuming monthly payroll tax payments from December 1, 2018.
There has been criticism from some quarters that the government’s payroll deferral was a token response that would achieve little.
But BlueScope CEO Paul O’Malley said this week that the ability to put payroll tax payments on hold allowed the company to direct those funds elsewhere at a crucial time.
“That cashflow benefit has helped us fund some of the productivity improvement initiatives we needed to take, that was one benefit,” Mr O’Malley said.
“The second was it was very important for the NSW Government to demonstrate that they were committed to the plan to save the steelworks, in addition to the local community and the employees.
“I don’t think it would have been fair if all the heavy lifting had been done by the Illawarra community and the employees.”
Mr O’Malley said paying it back in a few years’ time was going to be easier than finding the money back in the “critical situation” of 2015.
“The cash benefit of having three years deferred payroll tax was good but the fact we have to pay it back over the next 10 years is probably more affordable than otherwise might be the case,” Mr O’Malley said.
However, Mr O’Malley didn’t like the concept of payroll tax.
“I would tell you categorically though that I am not a fan of payroll tax,” he said.
“Why should we be paying taxes to employ Australians, particularly when governments can import goods from overseas and they don’t tax the employment over there?”