Victoria has been crowned the worst place to do business in Australia for the third year in row, according to a new report by the Business Council of Australia. An RMIT expert says while the state is good at starting companies, the problem is keeping them here once they start to grow.
Associate Professor My Nguyen, School of Economics Finance & Marketing:
"This ranking should worry anyone who wants Australia's next generation of high-growth companies built here in Victoria.
"Victoria's research and startup base punches above its weight, but the real test of an innovation economy is whether those companies can scale at home. Right now, our tax settings work against them at exactly the wrong moment.
"Cutting payroll tax for early-stage innovators, streamlining approvals through a single-entry point, and backing local startups through government procurement would help turn more Victorian ideas into global success stories.
"Payroll tax is a tax on hiring. A startup pays nothing until its payroll passes $1 million, but the tax-free threshold disappears completely once payroll reaches $5 million. That's precisely when a scale-up is hiring engineers, sales and regulatory staff, usually with investors' money, not profits.
"For deep tech, biotech and medtech companies, which can spend years in R&D before making a single sale, we are taxing the people building the product before there is any income to tax.
"Capital and talent are mobile. A founder deciding where to put the next 50 jobs will compare Melbourne with Sydney, Brisbane and Adelaide, and with Singapore and Boston. Our tax settings are giving them reasons to look elsewhere.
"Too many founders are buried in red tape when they should be building businesses. Victoria has built the ingredients. Now it needs the settings that let companies grow up here, rather than leave to do it."
My Nguyen is an Associate Professor of Finance and the Deputy Head of the Finance Department at RMIT University. Her research spans banking, corporate finance, and entrepreneurial finance.
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