The New South Wales government plans to have two cuts to payroll tax for next year to urge business expansions and growth in the region.

Treasury official said that the cuts are needed to support savings for the businesses and eventually promote developments in the region's economy.

A planned cut from 5.65 per cent to 5.5 per cent for next January will be brought forward to July.

The treasury office will have another cut in January 2011 to lower the rate to 5.45 per cent.

Treasurer Eric Roozendaal said that the planned cut will reduce payroll tax to its lowest rate in New South Wales for more than 20 years.

"We know around 10 per cent of businesses pay payroll tax in New South Wales so it's a reasonable number of businesses that are impacted," said Mr. Roozendaal.

"By the end of 2014 we would have delivered savings to businesses of more than $4 billion with the total number of payroll tax cuts that we've implemented."

Unions in the region, however, expressed that there are alternative programs that the Treasury office can implement rather than the proposed cuts.

Mark Lennon of Unions New South Wales said that he believes the government should be making better use of its surplus.

"We'd prefer the money to be spent encouraging young people to take up apprenticeships," Mr. Lennon said.

"Clearly there's an increasing demand in this state for bringing forward some of our infrastructure spending and if a surplus can be used in that regard, we think that would be a better way to go."