Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Hansard source

because I did in fact say that I would go through the results of the survey for the states, and I will do that. And right on cue, in relation to the performance perceptions of state governments, again, in this case more than half are dissatisfied with state government performance. That is why, in part, Kevin Rudd, as newly elected Labor leader, has put federal-state issues and the rationalisation of programs and processes high on the agenda and appointed the member for Fraser as shadow minister with responsibility for that task. I look forward to working with the member for Fraser and the Labor leader Kevin Rudd on ensuring that we do everything possible, when elected to government, to rationalise the red tape and other business regulatory requirements on all businesses, but especially on small business. So that is my response to the minister. If he had waited another 30 seconds he would have had his answer.

As to the issues that are of specific concern to small business, right there at the top is interest rates. Thirty-six per cent nominated that as a very negative or a negative influence on their businesses. It would be very difficult to ascribe the problem of rising interest rates to the states, although I am sure the Prime Minister would be keen to pass that particular buck to the states. But this Prime Minister did say in the 2004 election campaign that a re-elected coalition government would keep interest rates at record low levels. He has done nothing of the sort. There have been four interest rate rises since that commitment was given, and now Australia has amongst the highest interest rates in the OECD. This is affecting small businesses, with 36 per cent nominating interest rates as a major concern.

They are the sorts of problems that confront small business, but at the same time as the release of this general survey the MYOB organisation also released a special focus report on the red-tape compliance burden. That makes for equally interesting reading, because in that survey, in ranking the red-tape issues that are a burden on small business, of those different issues that are ranked in the top three, the first two of those—by a long way—relate to the GST. The first is the BAS reporting requirements and the second is allocating GST to daily transactions. So overwhelmingly small business is saying its biggest headache, the greatest burden that confronts it, is the GST. The Treasurer and the Prime Minister have designated that the GST is an orphan tax; it is a state tax. When something is really unpopular in small business circles, and in fact anywhere else, they blame the states. But I was in this parliament, Mr Deputy Speaker, as you were and as was the minister at the table, when a very long and heated debate occurred about the GST. It was a Commonwealth tax then and it is a Commonwealth tax now. The Auditor-General has designated it as a Commonwealth tax; the Australian Bureau of Statistics has designated the GST as a Commonwealth tax. Small business knows the GST is a Commonwealth tax, and the GST remains a big headache for small business, as confirmed in this survey on the red-tape burden confronting small business released just this month.

The report goes on to tell us something very enlightening about the attitude of small business to the Commonwealth in relation to red tape. The question is about whether the government is doing enough to reduce the red-tape burden, and an overwhelming 73 per cent of respondents said no, that the government is not doing enough to ease the red-tape burden. In the area of accommodation, cafes and restaurants, a staggering 91 per cent of respondents said the government is not doing enough to ease the red-tape burden. Indeed, around three-quarters of small businesses do not believe anyone actually cares about the red-tape burden.

That brings me to the point that, although this government talks about easing the red-tape burden, it does precious little. Back in 1996, the government made a commitment that it would seek to reduce red tape by 50 per cent. It in fact got Charlie Bell, from McDonald’s, on board to do a review and then basically buried the report. It was only last year that the Productivity Commission produced a report with a very large number of recommendations about reducing business compliance costs and the regulatory burden, in response to the government finally accepting that it had not done enough—as evidenced in the report by MYOB released just this month. Small business does not believe that the government has done enough. I acknowledge that the government then committed to implementing a majority of the recommendations of the so-called Banks review; however, when you look through many of those commitments of the government, they constitute yet again another review.

The problem is that the government is regulating faster than it is reviewing. While it reviews regulations, it brings in more regulations. Its compliance with its own regulatory impact statement processes in the last financial year was the worst since that process was established in the late 1990s. The situation that I am describing is this: the Howard government talks the talk of deregulation, calls upon the Productivity Commission to do a major review of business regulation and says it will implement a majority of those recommendations, but in many cases what it is actually committing to is a review—and, at the same time as it is reviewing, it is introducing new regulation.

The impact of this enormous burden of regulation comes in two areas. One is the compliance costs. Compliance costs are big enough for larger businesses in Australia but, as a proportion of sales and certainly as a proportion of profits, compliance costs for small businesses are very high indeed. The government seems insensitive to the difficulties confronting small business in managing the red-tape burden and, most particularly—as expressed in this survey—the burden imposed by the GST and the BAS reporting requirements. The compliance costs are very high proportionately for small business compared with big business.

The second impact of this regulatory burden is to stifle the very entrepreneurship—that great spirit of having a go out on your own—that Australia relies on. We need our small businesses and our large businesses to get out there, have a go, take some risks, apply a few new ideas and innovate. That is what a market system is all about. But, if there are regulations left, right and centre, that basically sends a signal to business that if it makes a decision that turns out not to have been a good decision but at the time was a risky decision made in good faith—which is necessary in a market economy—then those businesses can legitimately be concerned that the regulators will come after them to see if the decision that was made in the commercial interests of a company was made in compliance with all these regulations. Here we have the Liberal-National Party government stifling entrepreneurship. It is stifling that spirit which is so valuable in Australia and has been displayed for decades by the people who were found by Bob Menzies so many years ago but who have been lost again by the Howard government. They are the forgotten people yet again.

All of this reminds us that it is incredibly important for small business to survive for this country to remain internationally and nationally competitive. But that is not what is happening. The skills crisis in this country has been emerging since the late 1990s. Labor spokespersons, including the member for Batman back in 1999, warned of it, yet the government have not done anything effective to resolve that skills crisis. The government should have known that problem was emerging, but they had clay feet when it did emerge and it is now causing inflationary pressures and difficulties for small business as they try to find trained and skilled staff. That is part of a bigger picture, and that bigger picture is an overall decline in Australia’s competitiveness, as reflected in declining productivity growth.

Ordinarily when we talk about declining productivity growth we refer to a small positive number, but, in the six months following the introduction of the Work Choices legislation, productivity growth has not been a disappointingly small positive number—it has been a negative number. In fact, in the three months to September productivity growth was minus 1.5 per cent. That should be sending alarm bells right through the community and certainly through the government. But the Treasurer, upon the release of revised figures on productivity growth, chortled in the parliament and said that productivity growth was now at or marginally ahead of that of the last cycle.

He was referring to the last productivity cycle, which owed a lot to the reform program implemented by the previous Labor government, where productivity growth boomed. The Treasurer believes that current productivity growth is at or marginally ahead of the record productivity growth figures of the late 1990s through to the early 2000s. And yet it is minus 1.5 per cent in a single three-month period—not in a year, but in a single three-month period. He seems to think that that is satisfactory. It is not satisfactory; it is disastrous for this country’s future. That is why the Reserve Bank has had to warn that Australians are going to need to get used to a GDP growth figure with a two in front of it; whereas we have been getting used to a figure with a four in front of it and sometimes even a five in front of it. But that is the warning of the Reserve Bank.

The Business Council of Australia is onto this. Today it released a budget submission for the upcoming budget. I will refer to a couple of the statements in this submission, because they are alarming. It says:

Australia continues to run a significant current account deficit; exports outside of resources are performing poorly; infrastructure bottlenecks are limiting activity; we are failing to manage key resources such as water; and significant pockets of entrenched community disadvantage remain. Add to these challenges the impact of an ageing population and slower productivity growth as the benefits of past reforms fade, and many conclude that slower growth in the future is inevitable for Australia.

They are referring, among others, to the Reserve Bank. They go on to say:

More worryingly, labour productivity growth has slowed sharply in Australia.

The BCA know what is going on, but the Treasurer pretends that we are still in the heyday of booming productivity growth. The submission says:

... deterioration in productivity performance is a very real concern.

So we do have huge economic challenges in this country. This is a reform-lazy government because we have a reform-lazy Treasurer. It is not only larger businesses and all those who are employed by larger businesses who will bear the consequences; small businesses in this country will bear the consequence of this government’s policy sloth and reform laziness. That problem will only be dealt with by the election of a Rudd Labor government.

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