Jim Turnour (Leichhardt, Australian Labor Party) Share this | Hansard source

I rise to support the Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009. This legislation was announced as part of the Rudd government’s Nation Building and Jobs Plan. This bill puts in place an important mechanism to provide immediate and short-term stimulus to the Australian economy and support for small business. It was great news last night that the 30 per cent tax break will be extended to 50 per cent for small business.

Small businesses all across the country, including in my electorate of Leichhardt, are being impacted by the global recession. The Rudd government has had a stark choice: it could sit on its hands or it could act decisively to support small businesses to support jobs in the Australian economy. That is what we have done since the global financial crisis rolled out and impacted all across the developed world, creating a global recession.

We moved quickly last year with our banking guarantee to restore confidence and ensure that we have confidence in the financial system. The banks are not often popular with small business, particularly at the moment—they would like to see them pass on some more of the interest rate cuts that have come through from the Reserve Bank—but the small and medium sized businesses in my electorate understand how important the banking system is for a strong Australian economy and how important it is for them in their business operations. So supporting the financial system and producing confidence in that was the fundamental response that the Rudd government made.

Similarly, we acted early and we acted decisively to support business by introducing some stimulus last year through bonuses and some other measures. This was to support jobs in the Australian economy. My electorate of Leichhardt has a lot of retail and hospitality businesses. The area is strongly built on tourism. Those cash payments and bonuses, not only last year but also recently in the Nation Building and Jobs Plan that are flowing through now, are important to the retail and hospitality industries. Small businesses in my electorate have benefited directly from that stimulus.

The government acted decisively. It supported the financial system and it is supporting activities within the economy through the stimulus measures last year and this year with the $42 billion Nation Building and Jobs Plan. These have been important measures. Initially the opposition said they were supporting the stimulus measures, but then they sought to undermine them. The opposition’s small business spokesman today spoke for 30 minutes on this legislation. It took us 27 minutes to work out whether he supported the legislation or was going to oppose the legislation. He took 27 minutes of the 30-minute speech to say whether he supported it or opposed it. Small businesses in my electorate support this legislation. They are telling me that they are tired of the opposition opposing everything that the Rudd government puts forward to try to support them as they are dealing with these pretty tough economic times.

I see the member for Blair, the member for Makin and other members here who also have businesses in their electorates that are struggling. Those businesses want the opposition to support the measures the government is taking, particularly measures like this one that is particularly focused on small business. Many businesses in my electorate have said to me that they are really struggling finding the confidence to take up the 30 per cent tax break, and now we are going to see a 50 per cent tax break. They want to see this legislation go through the parliament before they are prepared to make that investment. All they hear from the opposition is opposition for opposition’s sake. The opposition is about opportunism. Businesses want this legislation to go through so they can have the confidence to make those investments.

Businesses in Cairns are under a lot of pressure. Rio Tinto has had to cut 100 jobs in Weipa. That directly flows through to the Cairns economy. We saw in the tourist industry Qantas make cuts last year. There were a significant number of jobs lost in Cairns as a result of that. The federal government and the Minister for Tourism responded by putting in place a $4 million tourism support package. That has been welcomed. It has been invested in marketing to bring tourists back to Cairns. A recent report done as part of that package by Access Economics demonstrates that the Cairns region is the most vulnerable area around Australia as a result of the global financial crisis and as a result of a downturn in the tourism industry. So we are hurting.

The construction industry is a very important industry in my electorate. We have introduced measures in our stimulus package—70 per cent of our stimulus is infrastructure investment—to support the construction industry. But the construction industry has some difficult times ahead. Just last week it was reported that CMC, a major construction company in Cairns, were looking at potentially going into receivership and liquidation. They employ hundreds of people through their subcontractors and there is real concern in the Cairns community. But they are looking to government to act, not to sit on its hands as the opposition would have us do. And they are looking for the opposition to support the government in our measures to build confidence in the Australian community and in the Australian business community.

There must be a concerted push from a range of angles to stimulate the economy. The government has carefully formulated and implemented a number of stimulus measures in recent months. Many of these have been centred on nation building or on investment in infrastructure. As I said, 70 per cent of our stimulus measure is investment in infrastructure. However, the small business and general business tax break is a critical element in this mix. The tax break was a big winner in last night’s budget as well. The tax break was expanded—costing $141 million over the forward estimates—to build on the previously announced tax break, which now totals $3.7 billion of tax relief for small businesses and larger businesses. This is significant and it is also very well targeted.

The expanded tax break will give small business an additional tax deduction when they acquire new assets or renovate an existing asset. Small business will now be able to claim a bonus tax deduction of 50 per cent, which is up from the 30 per cent that was announced in the February stimulus package, of the cost of eligible assets acquired between 13 December 2008 and 31 December 2009 and installed by 31 December 2010. An additional 50 per cent is a significant amount and, for example, should a business in Cairns, say, an engineering workshop, purchase a new welder that is valued at $12,000 and do this by the end of December this year, they can claim $6,000 thanks to the small business and general tax break. When lodging their tax return this engineering business would be able to claim this deduction in addition to the usual depreciation deductions in respect of the asset. It is clear that this will be a great benefit to businesses throughout Australia and in my electorate of Leichhardt.

The small business and general business tax break is a major announcement for small business—that is, businesses that have turnovers of less than $2 million annually. But it is also important to note that larger businesses do not miss out under this measure. They can continue to access the tax break at the 30 per cent rate for eligible assets costing $10,000 or more that are contracted for between 13 December 2008 and 30 June 2009 and ready for use by 30 June 2010. They may also claim 10 per cent for eligible assets over $10,000 that they commit to invest in between 1 July 2009 and 31 December 2009 and have ready for use by 31 December 2010.

The tax break has been carefully developed. It specifically targets and it has been developed in consultation with industry associations, businesses and the accounting profession. I see that the Assistant Treasurer is here today. I congratulate him and the Treasurer on these measures and the work that they have done in bringing them forward.

It is very important to note that second-hand assets are not eligible under this bill. I have had some inquiries about that in my electorate. They are not eligible under this bill, nor have they been eligible under previous investment allowances. This bill is geared towards new investment that will upgrade and extend our economy’s productive capacity as we are in the middle of a global recession. Clearly a recovery will not happen overnight. We need a clear long-term plan for the future, and new capital and new equipment are a fundamental part of gearing up for the future.

We want to support small business in these difficult times to bring investments forwards and to make those investments that improve their productive capacity so that they can take advantage of the recovery. We are investing in long-term, nation-building infrastructure because we recognise that at this time we need to invest in the productive capacity of this nation, build infrastructure—the roads, the ports and the railway lines. That was a central part of our budget last night, in which we proposed a $22 billion further investment in nation building. In the same way that the government is investing at this time to build the productive capacity of our economy through investment in infrastructure, through support for skills and training in universities and TAFEs, and all the way through our schools with investment to support modernising our schools and early childhood education, this is a good time for small business to also make investments, and that is what this business break is about.

Local small business representative organisations have supported this measure. The Australian Chamber of Commerce and Industry said the following about the tax break:

The extension of the investment allowance to 50 per cent for small business until December 2009 is an excellent initiative—and the stimulus measures first proposed by the ACCI and our members.

So they supported it and thought it was an excellent initiative. The Chief Executive of the Federal Chamber of Automotive Industries, Andrew McKellar, said:

The Federal Government’s Budget decision to increase and extend the investment tax break for small business provides a valuable incentive for new vehicle sales. The tax break will help stimulate the new vehicle market and support jobs in the industry.

So they too support it. We have also got the Master Builders Association supporting it. The Master Builders Association also welcomes the increase in the small business investment tax allowance from the current level of 30 per cent to 50 per cent. So we have got the Australian Chamber of Commerce and Industry, the automotive industry and the master builders supporting this tax break. They understand how important this measure is for their members and they want to see this measure passed through the parliament as quickly as possible.

I recently held a small business forum in Cairns. Over 80 local businesses attended to see how they could make the most of the government’s $42 economic stimulus package. I am very committed to ensuring that businesses in Cairns have every opportunity to access and to take advantage of our $42 billion nation-building package. This business tax break at a 30 per cent level was a very popular item of conversation and there was quite a lot of follow-up in the media in relation to it.

People want to take advantage of this investment. I understand from listening to the Minister for Small Business, Independent Contractors and the Service Economy in question time today that ACCI have done a survey showing that there are about 30 per cent or more people that are looking at taking advantage of this tax break. And that was at the 30 per cent rate. It has been increased to 50 per cent for small business, and no doubt larger sized businesses will also be taking advantage of it. So it is a welcome initiative by the small business and general business community.

The Pressure Pumps NQ owner attended the business forum that I ran to keep Leichhardt working. Owner Derek Ross, who I met at the forum, has looked the global financial crisis in the eye and cast it aside. He has taken the proactive approach. He is always looking for opportunities and is very positive about the future. He said that there were so many infrastructure projects in a number of government initiatives—just like the tax break—about at the moment that business can take real confidence and get a decent kick out of. So you have a fellow who is running a small business selling tools, compressors and other things to the construction industry, the other industry really taking benefit from this tax break and other measures and really supporting the work the Rudd government is doing to try and support business.

A local medical firm in Cairns has similarly spoken to me about taking advantage of the tax break. They are introducing a new telephone system and computers, and putting in place an elevator to enable patients to better access their clinics. There is a range of different areas.

PTS Traffic Management Services in Cairns has also moved on the tax break. They said, and I quote from a recent article in the Cairns Post:

It’s going to be a big saving and an enormous help.

They have already purchased two new utes to improve their fleet and may add another two more before the end of June. They quote:

Thirty per cent on $53,000 (for the new utes) is $15,900 and that’s a big help.

You have got medical industries, you have got small businesses selling tools, you have got people in the traffic management area all taking advantage of the tax break. They are going to go out and spend money in their local communities. I encourage people, when they are taking advantage of this, to spend money in their local communities and ensure that we, wherever possible, buy Australian and buy locally. The car industry definitely needs support, and this announcement is no doubt welcomed by the automotive industry, as I have already quoted.

I strongly support this measure. I say to the opposition: business wants confidence to undertake this tax break, to utilise this tax break. They are only going to get that if this legislation is passed through the House and the Senate quickly. It is very important for business to have that confidence. Get out of the way, stop opposing, stop being opportunistic about the way that you approach our stimulus measures. Support these measures and business will welcome that. I really commend this measure to the House and again congratulate the Treasurer and the Assistant Treasurer for the work they have done in bringing it forward.

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