One issue remains pressing for the industry
Ahead of the NSW state election, there are three ways the incoming state government could support the interests of the mortgage and finance broking industry, the two peak bodies say.
For both the MFAA and FBAA, the biggest priority is clarity around the application of NSW payroll tax, an issue that has become increasingly pressing for the industry.
On Saturday, NSW residents will take to the polls, their votes deciding whether NSW Premier Dominic Perrottet or Labor Opposition Leader Chris Minns will lead the state . The NSW Electoral Commission confirmed via Twitter on Wednesday that 638,484 early votes had already been cast and 28,788 postal votes returned.
MFAA CEO Anja Pannek (pictured above left) said that housing affordability and addressing the cost-of-living crisis were critical areas for the incoming state government.
“However, front and centre for us is for the new government to make a clear commitment to a moratorium on Revenue NSW’s application of payroll tax to the mortgage and finance broking industry,” Pannek said.
The MFAA’s longstanding position is that Revenue NSW has no legal basis to levy payroll tax on the industry. Mortgage and finance brokers are not employees of aggregators, and their commission is not a wage or a salary, Pannek said.
Pannek said that mortgage and finance brokers drove competition in the lending market, keeping borrowers’ costs low. In the current environment of rising interest rates, Pannek emphasised that brokers were critical to helping NSW borrowers whose loans were rolling over, by refinancing and repricing their loans.
“To impose a new tax on an industry that is so critical to the NSW economy, NSW homeowners and small business owners, will only exacerbate both housing affordability and the cost-of-living crisis in New South Wales,” Pannek said.
She said there were also concerns that applying the NSW payroll tax to the industry would put many small mortgage and finance broking businesses at risk.
“That means that customers who need help with their home loans and business financing needs will not get the support that they need to navigate this very challenging economic environment, especially in regional areas where bank branches are few and far between,” Pannek said. “We also anticipate that what happens in NSW will be adopted by other jurisdictions, making it crucial that a sensible and constructive outcome is achieved.”
The MFAA’s advocacy on the payroll tax issue has continued through the election period, and Pannek said that the MFAA had received “in principle commitments” to continue to constructively engage.
Both the Coalition and the Opposition are expected to follow through on their respective commitments, she said. Following a moratorium, the next step would be a change to the law to make it clear that payroll tax does not apply to the “hard-earned revenue paid to small mortgage and finance broking businesses” in NSW.
“Once the new government is formed, we expect resolution of this issue will be an immediate and urgent priority on the new government’s agenda,” Pannek said.
To assist with housing affordability, Pannek said that the MFAA would like to see policies lowering upfront transaction costs and earlier entry into the housing market, (for example, the new NSW property tax), and that growth of the industry was supported.
As one of the most systemically important industries in NSW, it is important that the broking industry continues to grow and that it remains well resourced to support consumers and small businesses to access credit, she said.
“We consider the NSW government should focus on ways to keep costs low for small businesses, whether it is through removing barriers to investment, reducing regulatory costs or through cutting regulatory red tape for small businesses,” Pannek said. “Focus should also be in investing in jobs and skills training to meet labour demand shortages.”
FBAA managing director Peter White (pictured above right) also said NSW payroll tax was the first and most important matter for the state government to resolve, adding that it should consider scrapping the tax altogether.
Additionally, White said that greater focus on achievable and affordable housing targets was a priority.
Shortly before the state entered into the caretaker mode of government, White said he had received confirmation that the industry’s concerns about NSW payroll tax would be carried forward.
“Both sides of NSW state politics have met with us and listened to our issues and have confirmed they will meet with us post the election as there is nothing that can be done or will change beforehand,” White said.
Acknowledging that there had been little or no consultation with the industry on how Revenue NSW was applying the tax, White said that a moratorium was the logical next step, allowing consultation with the industry to take place.
Acknowledging the far-reaching implications of NSW payroll tax on aggregators, White said that it was a “crazy and unwarranted tax”, and that the ongoing need for it should be questioned.
Uncertainty surrounding the tax – and the cost itself – holds small businesses back from expanding and taking on more staff, he said, noting that small businesses underpin the state’s economy.
“We also do not want to see other states try this false tax on, so this needs to be the example of the wrongful attack on our industry and squashed forever,” White said.
In reference to NSW housing, White said that there was a “significant undersupply” which needs to be addressed.
“Each state needs to do a lot more on this front as there is so much talk about affordable housing solutions and little outcomes,” White said.
Given laws pertaining to mortgage and finance brokers were regulated by the federal government, White said that outside of NSW payroll tax and affordable housing, there were no pressing issues requiring resolution at a state level.
With the cost of living top of mind for NSW voters, both the Liberal Party and the Labor Party have made pre-election promises around how they would help households and businesses.
Minns has pledged a $60 weekly tolls cap and has said he would reduce the cap on commuters’ Opal cards to $40 per week. Minns has also announced a $250 energy bill rebate, which he said would benefit small businesses, noting feedback showed energy prices were their biggest cost aside from labour.
Perrottet has challenged the energy rebate, telling voters in Penrith this week that the Liberal Party was offering the same rebate to every family and household in NSW, and that under Minns’ plan, 1.5 million families would miss out (46% of families in Western Sydney).
Minns is also undertaking to abolish stamp duty for first-home buyers who are buying homes up to $800,000 and said he would introduce a concessional rate to those buyers for homes up to $1m. He proposes to pay for the plan by removing land tax on the family home, part of the stamp duty reforms introduced by Perrottet in June 2022.
Minns’ pre-election campaign includes scrapping of the 3% wage cap for public sector workers, and changes to rental rules, allowing renters to transfer bonds from one property to another, and greater clarity around the grounds for ending a lease.
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