Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I rise to speak on the Tax Laws Amendment (2009 Measures No. 1) Bill 2009. This bill provides for a 20 per cent reduction for the December 2008 pay-as-you-go tax instalment quarter for businesses. The bill also contains three other measures, relating to, firstly, superannuation; secondly, income test reforms relating to salary sacrifice, contributing investment losses and fringe benefits; and, thirdly, eligibility for government means-tested payments.

I want to focus my remarks on the aspect of this bill relating to the 20 per cent reduction in pay-as-you-go tax instalments. We have nearly two million small and medium sized businesses in Australia that will benefit from this measure. Some 7,700 of those businesses are located in the Makin electorate, which I represent. Until I was elected to this parliament I was one of those small business operators, and so I understand and empathise with business operators around Australia. I understand the long hours they work, the financial risks they take and the amount of red tape and government regulations, from all three levels of government, that they must comply with.

Having operated a small business throughout the term of the previous Howard coalition government, I also understand just how little that government did for small and medium sized businesses. In fact, I say quite truthfully that I cannot recall one single measure about which, when it was announced, I thought to myself as a small business operator: ‘This is good for me or good for small business.’ I cannot remember one.

I want to say this with respect to the coalition’s track record as well: I have heard a number of their speakers come into this place today and criticise the regulations and laws relating to the way small businesses have to operate and how we should be doing this and we should be doing that. What I say to members opposite is: if you have any criticisms of the current laws under which small businesses operate then just remember that those are the very laws that we inherited and which you did nothing about for 12 years. So do not come in here after this government has been in office for a year and point to all the woes with the laws relating to small business and say the laws should be fixed, because you had 12 years to do that.

Perhaps even more importantly, I say to them: we all know that we are currently going through some tough economic times. I would have thought that, when it comes to supporting small business and, in turn, jobs and the economy and the future of this country, these would have been bipartisan matters, matters on which we could have worked together, because ultimately I would like to think that we all have the best interests of the people of Australia and the future of this country at heart. But that does not seem to be the case. Coalition members opposite talk a lot about the importance of small and medium sized business to Australia’s economy and they claim to be the friends of small business; however, their rhetoric is not matched by their actions.

Conversely, the Rudd government does recognise and does value the important role small and medium sized businesses play in Australia. The Rudd government has already implemented a number of measures to assist them. I will come to some of those a bit later but this bill contains one such measure, and that is to reduce the February pay-as-you-go tax instalment by 20 per cent. That will provide small business with a much needed cash flow boost during what we all know are very difficult economic times.

Pay-as-you-go tax instalments are based on the previous year’s tax returns and are estimates of the tax that the business is likely to pay for the current year. When the annual returns are lodged, any overpayment will be refunded to the business by the Australian Taxation Office or, conversely, if additional taxes are owed by the business, the shortfall will be paid to the Australian Taxation Office. For many businesses, that adjustment usually occurs some time after the end of the financial year. Most small businesses and, I would imagine, medium sized businesses do not run to their accountant on 30 June each year and sort out their tax issues. Most of them, from my experience, do so some time after. In fact, as you would know, Mr Deputy Speaker, the laws allow an extension of time for tax returns to be lodged when they are lodged by accountants and on behalf of the business sector. So it is usually some months after that those adjustments are made. That means that, if there is an overpayment of tax due to the estimates used for the pay-as-you-go instalments, the business forgoes the use of those funds for several months, sometimes up to a year.

If the business operates on a bank overdraft, as many of those businesses also do, then additional costs are incurred in the form of bank fees and interest charges that are made on the bank overdraft. So if during the year you have made tax payments of several thousands of dollars in excess of what you are liable for when the final assessment is made and you have used your overdraft facility to fund those payments, then clearly you are paying additional costs through those interest rates that the bank will charge, and, as we all know, additional fees are attached to an overdraft. For the business, it means not only reduced cash flow but increased costs. Therefore, reducing pay-as-you-go tax provides businesses with extra cash flow and possibly lower bank charges—money that, in these difficult times, can be used in so many other ways.

I said earlier that, since being elected, the Rudd government has taken a number of measures to assist small and medium sized business in Australia. The most recent example of that was on 6 March when the Minister for Small Business, Independent Contractors and the Service Economy convened a roundtable with small business organisations and representatives of the banking sector to resolve issues relating to the access of credit for small business during these times of global credit squeeze. With the banking sector having difficulty accessing overseas funds or having to pay higher interest rates for those funds, credit to small business has tightened and higher interest rates and bank fees charged for that credit are placing, again, additional strain on small business operators. In fact, my understanding is that around 40 per cent of bank wholesale funds are sourced offshore and that figure has been rising significantly in recent debt issues. So, it is difficult to get credit for these businesses to operate. If they can get it, it is becoming more expensive. Anything we can do to improve their cash flow will be welcomed by them.

With respect to cash flow, I make this additional point: anyone in small business, and medium sized business for that matter, would know that one of the biggest impediments to surviving in business is to ensure that those who owe money pay on time. In difficult times it is more likely that a business’s cash receipts will take longer, again placing more financial strain on that business, and that is why it is important to try to reduce the monthly outlays for businesses that are already in existence.

I will come back to the business roundtable convened by the minister, because there were some very important outcomes that came from that which I want to talk about. At the roundtable, the banks undertook to seek to maintain the levels of funds available to the small business sector and continue to make loans to viable small businesses. That is self-explanatory: continue to make funds available to them and provide loans to those businesses that are viable. It is the only way they can continue to operate. The banks also undertook to pass on to small business customers, to the maximum extent possible while maintaining prudential standards, reductions in the costs of funds to them—again, to try to reduce their overheads. Thirdly, on a case-by-case basis and with regard to the customer’s cash flows, and with their agreement, the banks undertook to consider loan restructuring and other options so that the business can continue to trade. These are all sensible practical measures that were instigated by the minister as a result of convening the roundtable and as a result of his interest and support for small and medium sized businesses in Australia. This is a practical, decisive step taken by a minister who understands the industry and understands the importance of these measures to the industry.

What this government has done goes further than that. I want to speak about one specific area where I have had many years of personal experience, and that is with respect to business enterprise centres, which I have been associated with for several years. Many small business operators have skills in the delivery of the services or goods of the sector they enter into. However, they do not necessarily have the business administration skills associated with successfully managing the business and the plethora of government obligations placed on them. Many small business operators also often lack basic accounting and marketing skills, which ultimately causes them additional overheads in having to pay for professional help, such as legal advice, accountancy or marketing. From my experience, the majority of small businesses that failed did so not because their business venture was unsound, but more likely because their business management skills were lacking. In this regard, the business enterprise centres that have been established around Australia in recent years provide an invaluable range of services to the small businesses operators around Australia. The services they provide assist with business planning, business networking and business marketing—a whole range of services that each individual centre tailor-makes for their constituency wherever they are in Australia. I commend them for what they do. In fact, they do what they do because originally most of these centres were structured by business communities coming together to look for ways to help themselves.

The Rudd government, in its first budget, provided $42 million of funding to support the activities of the 36 business enterprise centres around Australia. It is the first time the federal government has done that. It was not done by the previous Howard coalition government. Members opposite talk about how they support small business. Where was their financial commitment to these centres? It was not there. But it certainly came with the election of the Rudd government, and it came to most of the business enterprise centres around Australia.

In my own electorate, the Tea Tree Gully Business Enterprise Centre has received funding of a million dollars over the next four years, as has the Salisbury Business and Export Centre, which, whilst it is located in the neighbouring electorate of Port Adelaide, also provides services to many of the small businesses located in the western parts of the Makin electorate. As I said a moment ago, these business advisory centres are not new. They have been around for a long time. But it took a Rudd government to come in, recognise their importance to the business sector and provide appropriate funding. It is another good example of the difference between what you say and what you do, because the Rudd government came in and did what it said it was going to do. The coalition members opposite talk a lot about being friends of small business but, in fact, they did very little.

The support for the business enterprise centres and the measures in this bill reducing the pay-as-you-go tax by 20 per cent for the December quarter are only two of the number of measures taken by this government. I want to talk about some of the other measures because they are important. Since it came into office, this government has implemented a far-reaching program of cutting red tape in the 27 areas of state and federal regulation affecting businesses. Red tape is one of the most difficult problems that most small businesses operating face. This is because many of them do not have the management skills.

I turn to the on-time payment guarantee. Small businesses certainly appreciate being paid up front or within a short period of time after they carry out their work. All small business contracts up to $1 million with Commonwealth departments will be paid within 30 days, or penalty interest may be charged by the small business. These are significant steps.

With regard to selling to governments, the introduction of greater consistency and simpler processes will make it cheaper and easier for small business to participate in tenders to sell goods and services to government agencies. These measures help small business.

With regard to relieving the skills shortage, we all know that for years that one of the biggest barriers to small business prospering and growing was their inability to attract suitably skilled staff members. This government has invested in 701,000 new training places over the next five years. Those new training places will skill up the employees that businesses around Australia need. We have also implemented a simpler superannuation system. Small business will be able to send all of their superannuation payments to a single clearing house that will distribute the money to their employees’ various super funds, free of charge, as of 1 July 2009. The last point I make in respect to those measures is the reduction in taxes. Tax relief of up to $50 a week was provided for small business owners from 1 July 2008, with a commitment to reform the business tax system.

These are all practical, serious measures that have been implemented by this government in the short space of one year. Contrast that with the support given by members opposite. We know that there may be more work to be done. Particularly at this time, when we know that the economy is going through a global financial crisis and we know that we need to do whatever we should do, and are able to do, to cushion the Australian community—and Australia’s small business—from the effects of the global financial crisis, the Rudd government is acting decisively and it is acting sensibly.

I want to talk about the last series of measures that this government has implemented in order to support and assist small business. Again, in doing so, I contrast the difference between this government and the previous coalition government. I refer to the $10.4 billion economic stimulus package that was announced by the Rudd government prior to Christmas and, subsequently, the $42 billion package that was announced recently. Within those packages—and certainly within the $42 billion package, which I will start with first—$14.7 billion was allocated to building the education revolution and assisting 9,540 schools around Australia with a series of school improvement measures. Every one of those measures, every one of those schools and every one of those particular projects involves small and medium business. Every one of those projects means jobs, work and contracts for people in the business sector.

Secondly, there is the $6.6 billion allocated to boost the national stock of community housing by 20,000 homes around Australia, which includes the additional defence housing. Who are the prime beneficiaries of that $6.6 billion? Somewhere in the allocation of those funds, business will get a direct stake in that outlay. To roll out that construction work, you would need to depend on small and medium sized businesses. There is the $3.9 billion for energy efficiency measures for the 2.7 million homes around Australia that will get free insulation. Who will carry out that work? Small business—and I have already been contacted by a number of small businesses who applaud the government for what it has done in that area alone, because they can already see the jobs that it will create. In fact, I quoted some figures in a speech in this place last week where some 4,000 additional jobs are going to be created through the rollout of that home insulation program. Small business is right in the middle of that, as is medium sized business. And there is the $2.7 billion which will provide small and general business tax breaks for businesses in the future with the additional 30 per cent rebate for any investments made.

If you want to support small business and if you want to support medium business in this country, particularly during these tough economic times, the best thing you can do is give them opportunities to have ongoing work. You could not do that any better than with the $42 billion package that this government has committed to. You could not do it any better than with the $10.4 billion package that the government committed to prior to Christmas. That package also included money for first home buyers where it increased the first home buyers grant from $7,000 to $14,000 and for new homes to $21,000. Again, who is going to build all those homes? It will be small and medium businesses which are able to benefit directly from that.

I come to the very last point in respect of those packages, and that is the money given to families, the direct payments made to families. When those families spend the money it will be small business, whether it is in the retail sector or elsewhere, that will benefit from it. (Time expired)

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