Nick Champion (Wakefield, Australian Labor Party) Share this | Hansard source

In 2008 the Rudd government announced that it would take action to protect small business from the effects of the global economic crisis and provide relief to small businesses by reducing their pay-as-you-go instalments for the February quarter. The Tax Laws Amendment (2009 Measures No. 1) Bill 2009 gives effect to that announcement, amending the Taxation Administration Act to guide the Commissioner of Taxation in working out the pay-as-you-go instalments on the basis of a GDP adjusted notional tax for taxpayers who pay in quarterly instalments. The government wants to protect small business. We know that it is at the heart of the economy. Certainly it is at the heart of economic activity in my electorate of Wakefield.

This bill is just part of the government’s overall response to the global economic crisis. Our response is aimed at boosting the economy and, in particular, keeping demand ticking over for small business. Let us look at what the government has done. We have secured banking deposits through a guarantee. We have provided an economic stimulus package which provided payments to all pensioners—not just age pensioners but disability pensioners as well. We have introduced the Nation Building and Jobs Plan, with the first home buyers boost, the $950 hardship bonus for 21,000 drought affected farmers and the largest school modernisation program in this country’s history. All of these measures build and strengthen the economy and boost jobs in small business and trades, which are two vital sectors in the northern suburbs of Adelaide and in the country towns to their north.

There is a fair bit of evidence that small business is benefiting from these measures. Only yesterday the front page of the Adelaide Advertiser, under the headline ‘Families splash Rudd’s cash’, reported:

… retailers are reporting a surge in sales, only days after millions of families began receiving … payments.

Some rural outlets recorded a 100 per cent sales boost last Thursday …

Places like Elizabeth in my electorate recorded strong demand in their retail sectors. I commend Steve Lewis for such a good article on the front page of Adelaide’s Advertisera positive story about the economy. So there are plenty of examples of how families are spending and retailers are benefiting. Big W revealed that its national sales were one-third higher last Thursday than the same time last year. In the same week, Coles reported record sales of TVs and DVD players, and we know that Woolies intends to put on 7,000 new workers.

This bill is part of the government’s response to the global financial crisis. It is part of our way of insulating Australia and its small businesses from the global financial crisis. The bill provides for a 20 per cent reduction of the amount of the pay-as-you-go instalments for the quarter that includes 31 December 2008 for certain small business taxpayers. It also incorporates a regulation that allows that instalment rate to be reduced in the future, to take into account future circumstances. These measures will provide relief for hundreds of small businesses in my electorate, particularly around the area of Gawler, which is a hub of small business. There are many small business owners and a real entrepreneurial spirit in that town. It is a great town to live and work in. I lived on Tod Street in Gawler many moons ago. This measure, along with the economic stimulus investment, makes sure that small business can weather the economic downturn around the world in which 30 banks have either collapsed or been nationalised and in which many of our economic trading partners have gone into recession or have recorded one quarter of negative growth.

The current pay-as-you-go instalment system works well when the economy is operating in normal circumstances. It means that taxpayers do not accrue large lump sum tax debts annually. Obviously, the global economic situation over the last 12 months means that business is far from normal. This bill provides temporary relief from the taxation regime, which assumes a general rate of business income, adjusted upwards for GDP growth. That GDP uplift can, in a time of uncertainty, either overestimate or inaccurately represent the real expected profit growth of small businesses. In other words, they end up paying tax on expected profits which never materialise. This bill resolves that issue, which is a very important thing to do. It provides immediate and much needed cash flow relief to small businesses. It encourages confidence in the sector at a time when it is most needed. It makes the system far more flexible and far fairer. As I said before, this bill allows for regulations to make future adjustments much easier, building flexibility into the law. Small businesses are important to the country and schedule 1 of this bill certainly assists them.

Schedule 2 of the bill addresses the issue of unclaimed superannuation and makes the general unclaimed superannuation money regime more consistent with the temporary resident unclaimed superannuation money regime. It aligns those two things and, as I said in a previous speech in this place about temporary residents and superannuation, superannuation is the mechanism to deliver one of the great objectives of social democracy—that is, a dignified retirement for all Australians. Poverty amongst the elderly is a tragedy—it is one of the reasons we acted to give pensioners a bonus in last year’s package and initiated a comprehensive review of the pension scheme. These are critically important things for Australia’s pensioners and elderly citizens.

This bill supports the legislation passed last year which provides for better and more consistent treatment of temporary residents who work in this country. It is better for temporary residents and it is better for Australian taxpayers. These are simple, fair changes, and the bill before us amends various parts of other acts, including the income tax legislation, small superannuation accounts legislation and the super guarantee and co-contributions legislation in order bring our super acts into line. It allows the Australian Taxation Office to pay the superannuation guarantee amounts recovered from employers for temporary residents directly to the unclaimed money regime rather than to a super fund, which would then be required to return the amounts to the unclaimed money fund in any event. These amendments to the broader unclaimed money regime are intended to make the existing unclaimed superannuation provisions more compatible with the provisions inserted to support the payment of temporary residents’ unclaimed superannuation to the Australian government. In essence, they make things simpler and fairer. Basically, the legislation will negate the need for two very different unclaimed money regimes.

On this side of the House we believe that Australians have a right to live in retirement with independence, financial security and dignity. That is why we believe so strongly in superannuation, both as a mechanism to ensure a dignified retirement and to boost national savings—and national savings will be the key to future prosperity. We on this side of the parliament are the party of national savings. Unfortunately, that commitment is not always shared by those opposite. As the Prime Minister noted in his essay, the record of the previous government is not that good. He said:

The average ratio of household debt to annual gross disposable income more than doubled to 114.5%, up from 49.8% under the Hawke-Keating governments; household net savings to net disposable income fell to an average of 1.1%, down from an average of 7.9% under the Hawke-Keating governments; and the level of Australia's net foreign debt increased to 55.5% of GDP, up from 37.9% of GDP under the Hawke-Keating governments.

That was a comparison between the Howard government’s record on private savings and the record of the Hawke and Keating governments.

The Liberal Party’s solution to our current problems is to call on the government to pay small business superannuation obligations. Of course, they have not costed this policy. We have, and it would cost a staggering $43 billion over four years. That is more than the cost of the government’s nation-building plan, and all it really would do is add to profitability—it would just be a transfer of government revenue to company profitability. On the one hand they complain about debt in this place, and then on the other they run these mad, uncosted ideas designed to wreck both Australia’s budget position and our record on national savings up the flagpole. Most recently, John Howard, the former Prime Minister, proposed a payroll tax holiday for businesses which would have the effect of adding $16 billion to the deficit. Of course, Mr Howard had 10 years to eliminate payroll tax and did not act on that. Members opposite might remember that in 1993 the Fightback package proposed to eliminate payroll tax and pay for it with a 15 per cent GST. I think that probably Mr Howard is urging those opposite to get rid of payroll tax and jack up GST. That has always been their intention in the longer term. The measures outlined in this bill are responsible, they provide flexibility for small business and they are part of boosting our response to the global financial crisis. I commend them to the House.

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