Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts) Share this | Hansard source

The former member for Brand and former Leader of the Opposition Kim Beazley once remarked of the Australian Labor Party that they were not a small business party and they never pretended to be. And yet, we see a subtle change has moved across the benches of the government, because they are still not a small business party but the key difference is that they now pretend to be a small business party. When we look at the announcements that were made in last night’s budget, and in particular the bill that is before the House today, the Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009, we see the Australian Labor Party doing their best to pretend that they have the interests of Australia’s 2.4 million small businesses at heart.

We on this side of the House have a rich depth of people who have been involved in small business—in running their own small businesses and in working in small business. That stands in stark contrast to the Australian Labor Party, which simply does not understand small business, because, quite frankly, the closest the majority of the Australian Labor Party have got to small business is when they set foot inside one to buy a cup of coffee. That is the experience of the Australian Labor Party, which unashamedly is the political wing of the trade union movement.

The announcement made in last night’s budget was in effect a snowballing of an announcement initially made in December last year. On 12 December last year we had the first incarnation of the bill that is currently before the House. It was to provide a 10 per cent investment allowance for business. This morphed on 3 February 2009 into its second iteration, which provided a 30 per cent investment allowance for all businesses. Then last night the third incarnation was presented to the parliament: a 50 per cent investment allowance for small businesses. If we follow this same trajectory forward we can probably expect that by Christmas time, as this measure still fails to work, there will be something like a 125 per cent investment allowance for small business.

The Labor Party has a problem: the Labor Party does not understand small business but they are desperate to be seen to be doing something for small business. We know that Labor Party policy is going to make it very hard for small business owners and operators to continue to operate. We know that, under the Australian Labor Party, occupational health and safety compliance costs are skyrocketing. We know that, under the Australian Labor Party’s industrial relations reforms, the costs of the labour force are going to skyrocket. We know that, as a result of the Australian Labor Party’s policy of so-called modern awards, the costs of employing staff are going to skyrocket. The restaurant and catering industry, perhaps one of the most densely concentrated groups of small businesses in this country, have outlined that, thanks to Labor’s policy changes, about 8,000 jobs will go in their industry. In the retail sector we see that, thanks to Labor’s policy changes, the retailers are expecting a 15 to 20 per cent increase in business operating costs. The Pharmacy Guild is predicting about a 30 per cent increase in business operating costs thanks to Labor’s changes. We know the Newsagents Federation has said that they are predicting somewhere between a 50 and 70 per cent increase in operating costs thanks to Labor’s changes.

That is what this government is doing to small business at the very worst possible time. It is the worst possible time because small businesses are under cash-flow stress—sales are down and, thanks to Labor, business operating costs are up. Small business owners are doing it tough. But do you know what many are doing? Fundamentally, they are good people. They are good Australians and in most instances those small business men and women who employ the 3.8 million Australians who work in the small business sector are putting themselves second to the interests of their employees. That is the small-business culture that I have the opportunity and privilege of gaining insight into every day in my role as Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts. Small business owners are putting themselves second in order to keep people employed, because they know that, as an owner of a small business, as an employer, they have a responsibility to their employees to keep them on, help them to pay their mortgage and help them as much as possible to keep food on the table.

I applaud that tenacity, I applaud that compassion and I applaud that understanding that small business owners have. That is why I get so irate when I hear the Minister for Small Business, Independent Contractors and the Service Economy, who is meant to be the advocate for small business in this place and outside it, make comments like the reason we need a fair dismissal code is because one day a small business owner might go into his business in a bad mood and fire good people. That is the remark that the minister for small business in this Labor Party government made about those men and women across the country who own and operate small businesses, those 2.4 million small businesses that employ about 3.4 million Australians. That is the kind of casual disregard and the kind of ignorant understanding that the Labor Party have towards small business in this country.

I have outlined some ways that the government’s policy should reflect real initiatives to help small business in this country, and the coalition have done that on a number of occasions. Prior to Christmas we announced changes and reforms, albeit temporary, to the PAYG instalments system that we believed would assist small business. In addition to that we recently announced a detailed six-point small business action plan that was launched by the Leader of the Opposition and me to reinforce to those small business men and small business women how vitally important they are to Australia’s pathway to renewal and to economic recovery. Not one of those initiatives has been picked up by this government. Actually, I will correct myself. There was one initiative that was picked up by this government and amended. That was to do with the changes to the PAYG instalments payments. But the only other initiative that the Labor Party have come up with in 18 months, aside from all those initiatives which are pushing up small business costs, has been the announcement—in December, again in February and again last night—in different iterations for a 50 per cent investment allowance for small business.

Do not get me wrong; there are some small businesses that will benefit from Labor’s announcement. It is not all bad news. I am not going to be typecast in anyway as being someone recklessly opposed to Labor’s initiatives, because this is not all bad news, as there are some small businesses that will benefit as a result of this announcement. But the problem is that so much more could have been done to assist Australia’s small businesses by this Labor government had they simply understood the needs of small business a little better. The fundamental issue that Labor just do not get is that, when times are tough, when sales are down and when costs are up, what just about every small business is facing is cash-flow stress. That means they are not sitting there on a bank vault full of money with the tills full of cash. Rather, small business owners are working the telephone and calling in those debts that need to be repaid promptly. They need the cash, they are under stress, the payments are slow to come in and they are not as much as they used to be. The outgoings have increased and, of course, they have got to pay wages.

Cash-flow stress is the most fundamental feature of small business during these tough economic times. So what do the Labor Party propose as their panacea for small business? The Labor Party’s proposal is for a 50 per cent tax investment allowance. So how does this actually work in practice? The Labor Party say, ‘Well, what we’re going to do to stimulate the small business sector is we’re going to say to them, “Go out and buy small plant and equipment worth more than a thousand dollars and you’ll get 50 per cent back upfront”.’ As I said, there is some merit in that idea, but the fundamental problem is that if you are not sitting on cash, if you do not have access to credit and if you do not have a bank vault full of money then this kind of incentive is worthless. Unlike this government’s approach to finance, most small business owners do not just go out and get what they want now and to hell with how they are going to pay for it. They actually take disciplined, financially responsible decisions. They will look at plant and equipment that they would like to purchase and say, ‘I can’t afford it right now.’

I know that is a jarring realisation for the Australian Labor Party—the government that are putting us $188 billion in debt, the government that are driving up our deficit to a record $58 billion this year alone. I know that that is something that this government cannot comprehend, but let me inform the government that every small business owner out there knows this fundamental fact: if you cannot afford it, you do not buy it. A tax investment allowance of 50 per cent, as generous as it is, is useless if you do not have access to credit or are unwilling to use credit and you are not sitting on cash. That is why coalition representatives pleaded with the government to please look at what we have said in our six-point small business action plan and do something to assist small business with cash flow. We outlined a series of proposals that we thought would be very good. These included, as outlined by the Leader of the Opposition, a number of key commitments. I will run through them quickly.

As an alternative to Labor’s $42 billion cash splash, the coalition proposed that a more effective approach to support small businesses would be to reimburse a portion of the superannuation guarantee contribution for small businesses. We thought in the first year it should be three per cent of the nine per cent paid by small business. This achieves two outcomes. The first is that it ensures that the costs of employing staff are reduced. We would make it cheaper to keep people on the books. That is something that is important when this government’s forecasts are for there to be one million people unemployed. The second thing it does is help small business with cash flow. Because they are no longer required to make those payments to the ATO and the superannuation accounts, they can keep three per cent extra in their business to help them with cash flow. That would be a far wiser thing to do. A second thing that we outlined, a second initiative of the coalition, was for a cash loss and tax loss carryback. Again, this focused on bolstering the cash position of firms that have a solid operating history but are facing large operating losses in 2009 and/or 2010. The coalition recommended introducing a two-year window for businesses to offset the tax value of any losses they suffer in 2009 and/or 2010 against up to $100,000 of taxes that the businesses had paid over the previous three years, enabling those taxes to be refunded back to the small businesses.

Let me explain for union members opposite what that would mean. Those firms would be able to offset their operating losses and retain staff by claiming back the taxes they had previously paid. The measure would only apply for businesses with at least one employee in each year a refund claim was made and in each year the tax was previously paid—again, an incentive to keep people on the books. The carryback would be governed by the same rules that currently apply when companies carry forward tax losses to reduce their liabilities in future years. Since the carryback refunds would over time be offset by lower losses that were carried forward, the long-run budgetary cost of this measure would largely arise from the changed timing of receipts and in fact would basically be nil.

This is a measure that many First World countries are already instituting. Similar treatment of current losses to reclaim past tax payments is available to firms in the UK, Canada, Ireland, the Netherlands and the United States, where the Obama administration recently extended the carryback period from two to five years. However, again the Australian Labor Party has stubbornly refused to adopt this proposal. But it has not refused to adopt it because it would cost money—we know that the impact on the budget would be next to nil. It has refused to do it because it was a coalition initiative. That is the reason this arrogant Labor government, which does not understand small business, has not instituted this reform that would make a meaningful difference to the cash-flow positions of small businesses today and help keep Australians employed. I would dearly love to hear from members opposite why they will not adopt the tax loss carryback initiative that the coalition outlined. There is no budgetary reason not to; there is just the simple pride of a Labor government that refuses to acknowledge it is getting it so very wrong.

Another key aspect of our policy, because we are so often asked what the coalition would do, is to reduce the overall regulatory compliance burden on small business. We know the economic costs of meeting regulatory requirements are onerous for business owners. Time is money and currently time is spent and lost filling in forms and filing taxes. We recommended applying a comprehensive quantification to the full range of Commonwealth, state and local government filings that are required to start or expand a business. This regulatory burden needs to be reduced to at least match, and over the future years improve on, OECD best practice.

Another aspect is to cut red tape. We outlined our proposal to deliver a one-stop business regulatory portal for small businesses which would provide integrated online access to all forms and filings regardless of which tier of government was imposing them, forcing local governments and state governments to work with the federal government to make sure that there is only one place that businesses need to go for their regulatory requirements. Cutting red tape and bringing these functions together requires substantial cooperation and does heavily depend on the accelerated replacement of traditional reporting methods with internet based alternatives, something that surely the Labor Party would be supportive of, given their grand scheme for the National Broadband Network of some $43 billion. To make this one-stop shop for compliance and regulatory filings a reality, the coalition will create a small business service delivery agency expressly charged with delivering integrated online access.

Another key part of the initiative was the family business support. We identified that the new small business service delivery agency should also operate a program that can provide support and advice for family businesses on succession planning and family business professionalisation, working closely with a key advocacy group in the sector. This is not a large resource outlay, but it does represent an appropriate response to what is a vital issue for Australia’s small businesses, so many of which, of course, are small family businesses.

Of course, all of these initiatives have come about because the coalition, unlike the Australian Labor Party, has given small business a seat at the table where it matters. The shadow cabinet appropriately recognises small business’s importance to the national economy. Unlike the minister for small business in the Rudd Labor government, who is sidelined in the outer ministry—and, we know, whom the Treasurer despises—as shadow minister for the coalition I sit at the shadow cabinet table because we believe, front and centre, that small business policy must be at the epicentre of decision making for the coalition. This six-point small business action plan is focused on supporting small business to help them manage their cash flow and keep staff on the books.

There have been some very direct criticisms of this Labor bill. Indeed, there are many examples of businesses that might have participated but are excluded from doing so. That is one of the fundamental concerns that we have with the bill before the House. I encourage the government to run through the six-point plan that I outlined and use that information and those initiatives to bolster support for small business. It is clear that the measures in the bill will not do enough for the small business sector, not only because it is already under cash-flow stress but also because a raft of problems with the legislation as it stands have been outlined.

A number of groups have come to speak with me over past months in relation to this bill and its various previous iterations. The Australian Information Industry Association, Australia’s peak technology industry body, has indicated that the exclusion of software and related services from the investment allowance effectively nullifies the potential productivity upside impact of the tax break. This is a government that says so much about productivity. This is a government that says that, wherever possible, we should be providing incentive to boost Australia’s productivity. Yet in this very bill, when the government has an opportunity to provide an extension of this allowance to incorporate expenditure on things like software—which, of course, is a productivity boost—it does not take it. Again, the Labor Party is very quick to say one thing but very different when it comes to the follow-through.

The AIIA believes that the exclusion from the operation of this bill decreases the attractiveness of this allowance to business taxpayers. In addition, it also fails to act as a stimulus for the Australian ICT software sector, which is increasingly being impacted by a slowdown in business procurement. In addition, the association has indicated that computer systems, which are eligible assets, are frequently purchased with software embedded in them. The administrative burden associated with separating the cost of those tangible and intangible assets in such a purchase will involve additional red tape for small businesses intending to use the allowance. I would say to the minister: please, exercise some common sense—recognise that under your proposal those Australian small ICT software suppliers are excluded. A business that purchases equipment with a software program already installed is then somehow meant to split the cost between the eligible cost of the plant equipment—that is, the computer—but exclude the cost of the software. This is the kind of madness that we see from policy directions given by the Australian Labor Party.

I also know that Irrigation Australia have raised their concern with a number of members on this side, and possibly even with the government, that the bill specifically excludes water efficient irrigation equipment. Irrigation Australia has noted that such exclusion will not assist the irrigation sector to recover from the prolonged drought conditions across Australia. Notwithstanding this, the coalition accepts that this measure would be welcome by small businesses. Moreover, we know that some businesses have made capital purchases based upon this tax break and are relying upon it to help justify the cost of the investment. Again, I implore the Australian Labor Party: think about which assets are included and which are excluded, because at the moment there is a snub to the entire agricultural sector that would be looking at purchasing efficient water irrigation equipment in order to take advantage of the allowance as it currently stands.

In looking at the bill in toto, where do we actually see Labor’s approach to small business as reflected in this bill? As I said, it has been an interesting journey. Originally announced on 12 December last year and re-announced on 3 February and then last night reiterated once again, the bill is finally before the parliament for debate on 13 May. And bear in mind that prior to last evening, this allowance, as it was previously announced on 3 February, would have completed on 30 June of this year. After 30 June, the announced additional incentive as of 3 February would no longer apply. And the first opportunity that the parliament has had to debate this bill, to demonstrate its intentions with respect to this bill, is now on 13 May. So little wonder that so many small businesses started contacting the opposition and asking if this measure would go through. They knew that they needed to have some indication from the coalition as to whether the measure would be passed.

But the key point is that the coalition has done the government a favour. I took the decision to assist the government not because I was that interested in assisting the government, but because I wanted to assist those small businesses across Australia for whom this piece of legislation was an important aspect in their expenditure considerations. They wanted to know whether the bill would be passed, but despite the many sitting weeks between 3 February and 13 May, despite the many opportunities that the government had to introduce this legislation prior to now and to ensure that the debate was had, that it was taken to the Senate and a position determined, this government refused to do it. It is little wonder that small businesses were calling up and saying, ‘If the Labor Party can’t control their legislative agenda, how can we expect them to control the Australian economy?’ I agree, and that is why I took pity on this hapless minister for small business and indicated to the media that we would not frustrate the passage of this legislation. Because otherwise this so-called tax effective investment allowance would have been completely ineffective because businesses would not have dealt with the uncertainty that existed as a result of this government dragging its heels on this initiative and not even getting it into parliament for debate until 13 May. Talk about a government that has lost control.

So vital is this piece of legislation according to the minister—and the Prime Minister referred to it numerous times today—so crucial is it to the small-business sector of this country that the government could not even get it together to bring it into the parliament for debate ahead of 13 May. What an indictment on the priorities of the Australian Labor Party. No wonder small business has a question mark over it. In fact, the minister should come into the chamber and acknowledge and thank the coalition for making his job easier by indicating that we would not frustrate the passage of this legislation—notwithstanding the fact that the six-point proposal that the coalition outlined is vastly superior in initiatives and support for small business and their cash flow than this piece of legislation that is before the House today.

Finally, based on the amendments that the Assistant Treasurer has circulated, we know the bill will provide a 50 per cent tax deduction for assets costing $1,000 or more for small business with revenue of $2 million or less. As the Leader of the Opposition has said, such an allowance has some merit—I acknowledge that it has some merit—and it will be welcomed by some small businesses. However, this bill—and I should note that it forms the pinnacle in the Holy Grail of the Australian Labor Party’s approach to small business—does basically nothing for the vast majority of small businesses. You do not have to take my word for it because according to the March 2009 MYOB Australian Small Business Survey, and the minister referred to this number today in question time, only 30 per cent of small businesses intend to take advantage of this legislation.

For 70 per cent of the 2.4 million small businesses that employ around 3.4 million Australians, this bill will mean nothing to them. The reason it means nothing to them is to go right back to where I started in this debate that when times are tough small business owners know you cannot buy what you cannot afford. That is the fundamental issue that they have and that I have with this piece of legislation. Fundamentally we will not frustrate its passage but we recognise this bill will do very little for those small businesses that are struggling out there. This bill will do nothing for the 70 per cent of small business who simply do not have access to cash or credit to buy new plant and equipment.

I implore this government to not be arrogant about their policy approach to small business. The coalition understands that Labor just does not get small business. That is why we are doing our best to make it easy for you. That is why the coalition has outlined a six-point plan. I would encourage the Australian Labor Party to copy our six-point plan in exactly the same way that it copied our PAYG initiative. I would encourage the minister for small business, perhaps the only person on the Labor Party frontbench who has had some involvement in small business—albeit a consultancy back to the government—and the Australian Labor Party to copy these initiatives. (Time expired)

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