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

I, too, rise to speak in support of the Tax Laws Amendment (2009 Measures No. 3) Bill 2009. This bill, firstly, reduces the GDP adjustments for the 2009-10 financial year from around nine per cent to two per cent for taxpayers who pay quarterly PAYG instalments on the basis of the GDP adjusted notional tax method. Secondly, the bill allows taxpayers who are voluntarily registered for goods and services tax and who choose to remit GST annually to also choose to make their PAYG instalments annually. Thirdly, the bill amends the Petroleum Resource Rent Tax Assessment Act 1987 to implement four minor measures to reduce compliance costs and provide certain concessions for affected taxpayers. Fourthly, the bill specifically lists three new organisations—namely, Diplomacy Training Program Ltd, the Royal Institution of Australia Inc. and Leeuwin Ocean Adventure Foundation Ltd—as deductible tax receipts.

I want to take a moment to speak about the Royal Institution of Australia Inc., which is based in my home state of South Australia. In October 2009 the Royal Institution of Australia will open its new premises in the converted former stock exchange building in Adelaide’s CBD. The institution’s mission is to bring science to the people. It will bring the findings of science to society and aims to foster informed debate about science and technology within the community. The Royal Institution of Australia in Adelaide will be the first international satellite of the world renowned Royal Institution of Great Britain, which has been the flagship of science communication in the UK for over 200 years. Partnered with the Royal Institution of Great Britain and any future affiliated organisations, the new Royal Institution of Australia will be an internationally linked hub that will bring science from around the world to the community. The current director of the Royal Institution of Great Britain is Baroness Susan Greenfield, who was a South Australian government Thinker in Residence in 2004-05 and who played a major role in the establishment of the Royal Institution of Australia.

There is another Adelaide connection with the Royal Institution of Great Britain. William Henry Bragg and his son William Lawrence Bragg were Adelaide physicists who, after returning to the UK, were both subsequently directors of the Royal Institution of Great Britain, the role currently held by Baroness Greenfield. The Braggs hold a unique place in Australia and world history as the only father and son ever to be awarded a Nobel Prize. Lawrence was just 25 years old when they were awarded the Nobel Prize for Physics in 1915, making him the youngest ever Nobel recipient. The Braggs’ contribution to science worldwide is celebrated in their home state of South Australia in many ways, including laboratories at the University of Adelaide and a state electorate both being named in their honour. South Australia has a strong scientific heritage through the contribution of people such as the Braggs, Howard Florey and Sir Douglas Mawson. The new Royal Institution of Australia will provide a permanent location to showcase this heritage and will display artifacts related to the Braggs and other items of relevance to the scientific heritage and contemporary achievements of scientists in South Australia and Australia. Science education and awareness is an area of need within our community, and I welcome the tax deductible status this bill delivers to the Royal Institution of Australia.

We face the most severe global economic downturn since the Great Depression of the 1930s. We have seen over 30 banks around the world collapse or bailed out by governments. We have seen major Western economies such as the US, UK, Germany and Japan fall into recession. We have seen economies around the world fall into negative growth and we are seeing governments around the world go into substantial debt as they inject money into their economies in order to support jobs and prevent their economies from plunging into deeper recession or further productivity losses.

Australia was not immune from the impacts of the global financial crisis and nor is it immune from the global economic downturn because Australia is part of and operates in a global economy. What the Rudd government has done is to act quickly and decisively with measures that will cushion Australia from the full impacts of the global economic downturn. An article in today’s Advertiser shows how those measures are working in the restaurant business in South Australia:

South Australians spent a record $100 million in restaurants and cafes in March as diners defied the economic downturn.

The $100 million figure was $15.1 million more than March last year and almost $20 million more than we spent in each of the preceding two months, latest figures from the Australian Bureau of Statistics show.

Overall, in the six months to April, spending increased 3.8 per cent to $536.6 million compared with the same period last year ...

It is good news for the South Australian hospitality sector, which employs about 32,500 people, including 15,000 in restaurants and cafes.

That is clear evidence that the stimulus package which this government has embarked upon is having the desired effect of cushioning Australia against the global economic downturn. This bill is another in a series of measures the government has taken in order to support Australian jobs and the Australian economy—measures which are working and which have the support of most industry organisations and economic analysts.

The measures in this bill are particularly beneficial to Australia’s 1.9 million small businesses, which in turn employ nearly four million Australians and, as I have said on previous occasions, will be critical to Australia’s economic recovery and future prosperity. Many of these businesses are finding it tough right now. Their turnover has dropped and whereas in the past they may have turned to their bank for temporary increases in their business overdraft, even that option has become more difficult because of the global credit squeeze. In fact, had the government not introduced the bank guarantee measures early on in the downturn, the situation for many Australian businesses would today be much more dire. It was another example of the Rudd government acting early and acting decisively.

Reducing the pay-as-you-go tax adjustment from around nine per cent to two per cent will assist businesses with much needed cash flow at a time when every bit of assistance helps. Pay-as-you-go provisions ensure that businesses pay income tax on a regular basis throughout the year. This is somewhat consistent—although not entirely consistent—with the requirement for wage earners to pay income tax as they earn their income throughout the year. The fundamental difference is that pay-as-you-go tax payments are based on the previous year’s income. In contrast to wage earners, business income can vary substantially from one year to the next. Particularly during this period of economic downturn, it is both realistic and fair to reduce the pay-as-you-go tax payments they are expected to make.

Businesses are not the only taxpayers who pay PAYG tax. Many self-funded retirees who derive an income from their investments are also required to pay PAYG tax. As a result of the global economic downturn, the income of self-funded retirees has also been savagely cut, in many cases by more than that of many businesses. Reducing the adjustment to two per cent will also provide some relief to them. In a similar vein, taxpayers who choose to remit GST payments annually will also be provided with a boost to their cash flow if they choose to make their PAYG payments annually.

I have spoken on other occasions about small businesses and the valuable role they play in job creation, skills training, innovation and economic growth. For most small businesses, it is always tough, even during good times. If business is going well, new competition inevitably springs up, greedy landlords impose steep rent increases or suppliers increase the costs of their products. On Sunday, 24 May 2009, the Australian Retailers Association released a statement relating to steep rent increases:

The Australian Retailers Association has called on the Rudd Government to bring retailers and landlords together at a Retail Tenancy Crisis roundtable to help restore the balance in leasing negotiation and break the retail code of silence.

ARA’s Executive Director Richard Evans said the ARA had called on Federal Ministers Craig Emerson and Chris Bowen to step in and facilitate an environment where retailers, who often remain tight-lipped about unviable leasing conditions, are provided a platform to voice their concerns.

And this is the critical point:

‘Many retailers, particularly smaller retailers, subscribe to an unwritten law to remain silent about spiralling occupancy costs and unfair leasing conditions out of fear they will be penalised by self-serving landlords who can refuse to renew their lease,’ Evans said.

On that very issue, it was only two weeks ago that I was approached by a person who advocates on behalf of small business operators in shopping centres. He spoke to me about that very crisis which tenants in a particular shopping centre were facing—huge hikes in rent, no option but to pay the rent or lose their investment, and being treated in a way which none of us would believe to be fair and reasonable. He was looking for assistance as to how we might be able to help.

Those are some of the issues which small business people currently face. As I said earlier, it does not matter whether it is good times or bad, they are doing it tough. That is what makes them very special. Small business operators are accustomed to doing it tough. They know how to get through hard times. Small business operators endure hardship from the day they set up their businesses. As someone who has been in small business for most of my life, I have associated with small business people and can speak not only from personal experience but from the many conversations and discussions I have had with small business people, particularly in Makin, the area I represent.

These are extraordinarily tough times for small business. The Rudd government recognises that and has responded with a suite of direct and indirect measures that will support businesses throughout the nation. Direct benefits to small business include the 50 per cent tax concession for asset purchases and the extension of that concession until December 2009 for businesses with a turnover of $2 million; $10 million for a small business support line; a further $10 million for an online small business support service; and the cutting of December PAYG instalments by 20 per cent. These measures will directly assist with cash flow to help small business to remain viable during these very difficult times. On top of that, we have seen the funding of small business advisory centres around the country and business enterprise centres. We are also right now considering a proposal to support motor vehicle financing. This again is a proposal which undoubtedly will be a direct benefit for the many small businesses around this country.

All of those measures will make a direct difference to the ability of businesses to remain viable during these very tough times. But the biggest support that the Rudd government has provided to small business around the country is through the budget announced last week and through the stimulus packages announced prior to that. The Rudd government is investing in 20,000 housing units around the country and increasing the First Home Owner Grant to $21,000 for newly constructed homes and $14,000 for other homes. There is the school modernisation program, which affects the 9,540 schools around Australia. There is the home insulation program, where up to 2.7 million homes around the country will be eligible for free insulation. There are all of the national infrastructure projects, in addition to the $22 billion worth of infrastructure projects that were announced in last week’s budget. All of these measures will have a direct stimulus effect on small business because the prime beneficiaries will be locally based businesses here in Australia, the 1.9 million small businesses that I referred to earlier in this speech.

This proposal will provide an additional $720 million of cash flow to the small business sector in this country. It will support up to 1.5 million taxpayers across Australia, 1.3 million of those being small business people. It is the kind of proposal that makes a difference to their viability, it is the kind of proposal that is needed in these tough times and it is the kind of proposal that I have no doubt is welcomed by the small business sector across the country. I commend the bill to the House.

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