The ACT should strive to have the lowest payroll tax in the country to provide a boost to small business, according to former chief minister Kate Carnell.
Ms Carnell, now the Australian Small Business and Family Enterprise Ombudsman, used her address at the National Press Club on Wednesday to also advocate for government to be obliged to award more contracts to small and medium-sized enterprises (SME).
A new report from National Australia Bank has labelled the ACT has one of the least favourable jurisdictions in the country to start and grow a small business. The territory ranked worst in the amount of payroll tax paid by companies of 50 people and the wait time for certain permits, such as liquor licences.
Ms Carnell said, ahead of the October territory election, both Labor and the Liberals should commit to having the lowest payroll tax in Australia.
"They can sort of do that by pushing up the [payroll tax] thresholds, making it so that SMEs don't pay it at all," she said.
"The bigger guys [companies] can end up, you know, continuing to pay, because they pay everywhere in Australia, but push up the threshold, push it up further.... and get businesses actually firing."
More than 90 per cent of businesses in the ACT don't pay any payroll tax because of the territory's $2 million threshold, which is the highest in the country.
The ACT government has pointed to its high tax threshold as proof the jurisdiction "unashamedly favours small businesses".
Ms Carnell noted the ACT's size presented problems as it had "fewer levers" at its disposal but said it should take advantage of the fact it was the only level of government for the territory and didn't have to manage local government regulations.
She also pointed to the concerning figures which showed the ACT had the second highest job losses, behind Victoria, after the resurgence of COVID-19 cases.
She said she was surprised the territory's high public sector employment rate had not cushioned it from these job losses.
"It's certainly true that federal government employment and ACT government employment is really important to the ACT," she said.
"But it's not where jobs are going to come from in the future. They're going to come from the SME sector in Canberra, which means we've got to make it one of the easiest places to do business."
Ms Carnell advocated for the establishment of a small business procurement panel to manage government contracts worth less than $10 million. It should be required that where a contract is not awarded to an SME the relevant department should explain why, she said.
Just 26 per cent of the more than 80,000 government contracts awarded in 2018/19 went to SMEs, despite more than half of those being worth less than $80,000.
"The [federal] government's procurement process is fundamentally flawed and it needs to undergo serious cultural change to support the creation of jobs in the small business sector," she said.
"The culture of risk-averse government departments handing contracts to big businesses needs to be a thing of the past."
Council of Small Business Organisations Australia chief executive Peter Strong also addressed the Press Club and highlighted several "job-killers".
Primary among those were payroll tax and superannuation as job-killers.
Mr Strong said superannuation should no longer be a SME responsibility and should be included in the PAYG system so it was an individual's responsibility to work it out with the tax office.
Ms Carnell's other recommendations included maintaining flexibility in industrial relations system, particularly the introduction of an opt-in small business award which would cover all small businesses rather than awards for different industries.
She also wanted to see changes to the childcare system with greater subsidies or making it more easily tax deductible to get more women working in and operating SMEs.