Payroll Tax – A Disincentive for Business

Who does government think actually matters?

I’ve been thinking a lot about what government policy tells us about who society really values.Not what politicians say in press conferences, but what the rules quietly reward and punish.

Because when you strip away the slogans about “skills shortages” and “future jobs”, a very different story emerges.

Right now, an arts degree graduate can have up to $20,000 of their HECS debt wiped — courtesy of the taxpayer, no questions asked. No expectation that this produces anything measurable. No requirement that it fills a skills gap or contributes to productivity.

At the same time, if I hire an apprentice — a young person who turns up every day, learns a trade, and contributes real output while they train — my business gets taxed for it.

That isn’t rhetoric; it’s policy.

Under Victoria’s payroll tax system, apprentice wages are taxed at 4.85 per cent. That’s roughly $2,400 per apprentice, per year. If you train four apprentices, you’re paying close to $10,000 annually just for the privilege of building skills.

Over time, especially if the State Revenue Office decides to look back a few years, that can turn into tens of thousands of dollars — plus interest and penalties — even when you’ve acted in good faith.

So I’m left with a simple question: who does government think is more valuable to society?

The student who spends three years studying abstract theory, funded by debt that can later be forgiven?

Or the employer who takes on the cost, risk, and responsibility of training the next electrician, fitter, or fabricator — the people who actually build, fix, and maintain the country?

The message seems pretty clear.

One path gets a gift.

The other gets a tax bill.

Imagine applying that logic anywhere else.

It’s a bit like rewarding someone for ordering a meal, then charging the restaurant extra for cooking it — and acting surprised when fewer kitchens stay open.

And then we wonder why young people are nudged toward university and away from trades.

This isn’t about attacking higher education. We need universities. We need graduates. But we also need a sense of proportion — and some honesty.

If government genuinely believes apprentices are critical to the economy, then why are apprentice wages excluded from WorkCover calculations but included for payroll tax?

If they’re trainees for one purpose, why are they treated as revenue generators for another?

And if governments are serious about closing the skills gap, why does the tax system actively discourage the very behaviour they claim to want more of?

Manufacturers aren’t asking for grants, subsidies, or special treatment. We’re asking for consistency.

We’re asking government to stop penalising businesses that invest in people, skills, and long-term productivity.

Exempt apprentice wages from payroll tax.

Align payroll tax with WorkCover definitions.

Stop punishing employers for doing the hard, unglamorous work of training.

Because every policy choice reveals a value judgement. And right now, the system is telling us that theory is worth a gift — while practical skills are worth a tax invoice.

If that’s not backwards, I’m not sure what is.