Big Business Tax Break Costs Nearly $300 Million

The budget for a controversial state government tax-break scheme has more than doubled, with major corporations among its biggest beneficiaries, new data shows.

Previously unreported data released under freedom-of-information laws late last year shows a near tripling in a controversial state government payroll tax break for corporations hiring new employees.

The latest data shows that in 2015 a little less than $120 million was spent on the controversial Jobs Action Plan, designed to reward companies with $5000 cash bonuses for hiring new employees.

But in 2016 spending on the scheme ballooned to nearly $290 million.

Nearly $500 million has been disbursed to businesses since the scheme began in 2012, in the form of a $5000 rebate on payroll tax for each extra staff member they hired. It is paid in two tranches on the first and second anniversary of their hiring.

But analysis of the figures shows that over the life of the scheme nearly 60 per cent of the rebates, or some $300 million, went to big businesses (or those with more than 200 employees).

Only about 5 per cent of the funds went to businesses with fewer than 20 employees, which is the federal government definition of a small business.

The scheme’s largest beneficiaries included massive companies.

One received $13.2 million in tax concessions in little more than a year to 2016 and had a workforce of more than 375,000.

That is larger than any NSW-based employer and puts the company in the league of major multinationals such as McDonald’s, whose entire global workforce is the same size according to Forbes.

Labor’s acting Opposition Leader Michael Daley accused the state government of handing a tax break to big businesses.

“The Premier said she would govern for everyone in NSW but it appears her government is still acting in the interests of corporate NSW before ordinary people,” he said. “This is taxpayers’ money that should have been spent on services for ordinary citizens like teachers, nurses and police officers.”

A cap on businesses with fewer than 100,000 full-time employees applying for the scheme was lifted in 2013.

Accounting giant KPMG developed a fee-based service offering companies assistance to apply for the rebate early in 2016, the year it exploded.

“Since we launched the [tax break calculator] in February 2016, a growing number of Australian companies are using it,” a website for the company said.

Premier Gladys Berejiklian​ introduced restrictions on the scheme for the 2017 financial year limiting rebates only to businesses with fewer than 50 employees.

The change cut the amount the government paid out to businesses by two-thirds.

But a spokesman for acting Treasurer Victor Dominello said the government had created more than 100,000 jobs this year.

“The government makes no apologies for creating jobs and the growth of the scheme is reflective of its success,” the spokesman said. “The scheme has been progressively increased and extended since its inception in 2011 and refocused on small business in 2016.”

“Since April 2011, 338,600 jobs have been created in NSW, including 154,000 jobs since April 2015. In the last year 141,800 jobs have been created in NSW.”