Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Hansard source

I thank my friend and colleague the member for Werriwa for his strong advocacy of small business. During the global financial crisis we had a major forum in his electorate. It was very, very well attended and we were seeking to get tradies involved in the business of Building the Education Revolution and housing projects in the local area. I think that has been pretty successful. Regarding the Macarthur BEC and the other BECs, I met this morning in fact with BEC Australia and while I will not put any strong reliability on these figures—they are very, very preliminary estimates—the funding has enabled an increase in BEC activity of around 45 per cent. Interestingly, that is like a step-up increase. I also believe that the extended reach of the BECs is then built into their base ongoing growth because if you can reach further then more businesses will then seek to avail themselves of these one-stop-shop advisory services.

The member for Werriwa asked about small business tax breaks. Also provided in this budget are two major initiatives for small business in terms of tax breaks. One is the availability from 1 July 2012 of an instant write-off of the value of any eligible asset up to an amount of $5,000. The instant write-off provides a benefit compared with pre-existing depreciation schedules because by writing off the value of that asset in the year in which it was purchased you get a cash flow benefit. Your taxable income is reduced and that is more cash flow for the business and a strong incentive to invest in productive assets. That is for every small business in Australia—all 2.4 million small businesses.

The 720,000 small businesses that are companies would get a head start on the reduction in the company income tax rate from 30c to 28c in the dollar, starting on 1 July 2012. We know that those tax breaks are conditional upon the implementation of the resource super profits tax and, though I am probably whistling Dixie, I would urge the member for Dunkley to prevail upon his leader and change the coalition’s position on that matter, because small business deserves a tax break. It got a tax break from this government during the economic downturn, the small business tax break to which I referred in my earlier remarks, and we believe that as small business is moving gradually into the recovery phase it again deserves some support from the government in the extra incentive provided through tax breaks.

The member for Werriwa asked about small business growth. I think the member for Dunkley would probably agree with me that small business overall is still struggling. The recovery is well under way, but small business has not fully emerged from that, by any means. Hopefully, over time as the recovery gains pace our small businesses will recover. I know small business retailers have been doing it tough in terms of the number of customers coming through the door and, interestingly, the amount that they are prepared to spend. You hear anecdotally all the time that customers these days are looking for discounts, so the margins on small business retailing have been reduced as a result. I think the reduction in hours associated with the economic downturn worked. Small businesses and other business did not so much lay people off as negotiate reduced hours. Reduced hours mean reduced purchasing power, and so those consumers are becoming much more astute and discerning and therefore are seeking bargains—and that means lower margins for small businesses.

In order to give the member for Dunkley a bit more time, I think I might leave it there. I would go on to the R&D tax offset otherwise; but I think in fairness we should give the member for Dunkley a go.

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