PNG’s tax breaks make a mockery of the salary cap. And you’re paying for it |
PNG’s tax breaks make a mockery of the salary cap. And you’re paying for it
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When Treasurer Jim Chalmers steps towards the dispatch box on Tuesday night to deliver his federal budget, he might be relieved the distance between him and the opposition isn’t shorter than that of two swords. But it’ll be a rough night regardless; robbing much from many isn’t pleasant.
But as a nation, we’ve all got to search down the back of the couch for our misplaced coins. Because we have to find $600 million for a new non-Australian rugby league team, whether we like it or not.
The Papua New Guinea Chiefs don’t yet exist in any meaningful sense. They have no jersey, no captain, no player who has taken the field.
What they do have is some directors, a coach, a “resort” to be repurposed for player accommodation, and a recruitment proposition no other club in the NRL can match: tax-free wages.
Which would appear to render the NRL’s salary cap an absurdity.
The salary cap only exists for two reasons, neither of them unique to rugby league. The first is to manufacture competitive balance: the spreading of playing talent, so the wealthiest clubs can’t just outbid the rest for the elite.
The second is duller, but more important: a cap restrains clubs from cannibalising themselves into insolvency in pursuit of premierships they can’t afford.
Both purposes are about restraining the consequences of unequal money. The Melbourne Storm scandal of 2010, when the club was stripped of two premierships and financial penalties of nearly $1.7 million, remains a portent as to what occurs when those disciplines fail.
A tax exemption by intergovernmental agreement on the players of one club is precisely the sort of selective intervention the cap was designed to prevent, and the mathematics are undeniable. On the 2025-26 Australian resident tax scales, a $1 million salary has about $436,000 siphoned off in income tax and another $20,000 levied for Medicare. The employee keeps the remaining $544,000.
But a........