Wayne Swan (Lilley, Australian Labor Party) Share this | Hansard source

I certainly welcome the small business package in the budget. It is badly needed. Confidence is low; growth is weak and anaemic. Private sector investment is well below what it ought to be so we are not making that transition from mining sources of growth to non-mining sources of growth. The consequence of that is that many small businesses are up against the wall. They are doing it tough. When it comes to small business, confidence is king, and confidence relies upon an assessment that there will be a continuous and sustainable level of demand in local communities and across our national economy which will enable them not only to continue to employ staff and to buy capital equipment but also to expand. Sadly, at the moment, none of those things are the case. The economy is far weaker than it ought to be, so I welcome the initiatives in this budget. They have been made necessary by actions of the government, which have damaged confidence and damaged future investment so much so that private sector capital investment is down dramatically and demand is down as a consequence. Confidence is down because the government has been damaging the economy by exaggerating a budget and economic emergency. The consequence of that has brought an about-face by this government in this budget because, whilst it will not admit it, it is really saying: 'We damaged the economy over the previous 12 months. We have to do something about it. There is a need for fiscal stimulus and the way in which we are going about it is to return to a Labor policy of an instant asset write-off'—a very good policy by the way, which was a recommendation of the Henry inquiry. So I am delighted to say that the government is reaching for a Labor initiative to try and stimulate demand in our economy.

But the real question is: why are we here this week having a conversation in the House about this measure, when it should have been in the Senate this week? We had the farcical situation in the last sitting week of the government voting against their own measures for small business, which they claim are the biggest package for small business in the history of the parliament. They voted against them in the last sitting week. It should have been in the Senate this week if we were really concerned about confidence. Confidence, as I said before, is king. We need this measure up and through the Senate. Instead of patting themselves on the back with rubbish like, 'This is the biggest set of measures ever for small business,' why aren't they getting on and just doing it, and why aren't they, for example, apologising for abolishing the instant asset write-off in the first place? Confidence has been down dramatically. Consumer confidence was down 13 per cent prior to the budget. Business confidence was down a staggering 22 per cent. That is why this measure needs to be put in place.

Certainly it is welcomed by the 12,000 small businesses in the electorate of Lilley, but it is only a shadow of the package that the former government had in place for small business. Loss carry-back, for example, put in place and abolished by this government, was one of the most significant business tax reforms of our generation. It was wiped away precisely at a time when disruption occurs in business models. It was absolutely needed. Loss carry-back should be brought back by this government if it is serious about economic reform. And, of course, there was accelerated depreciation for the purchase of motor vehicles, and so on. That package that was abolished was worth $5 billion over the forward estimates, when the deficit was far lower than it is now. According to the government, it was not affordable back then with a far lower deficit. There is a far higher deficit now, and the government comes forward with a small business package which is supposedly affordable.

So we did have a plan for small business and jobs. That is why unemployment had a 5 in front of it when Labour was in power, and now it has a 6 in front of it. This is a really big problem for small businesses—a very, very big problem. And the sad part of this package is that the instant asset write-off and the other changes are not enough to make up for the lack of demand in our economy at the moment. What this budget desperately required was a fundamental injection of funds into building economic capacity and infrastructure across the board, and most particularly into urban public transport. Those initiatives are what is required given how weak demand is at the moment, but for ideological reasons the government will not go there, so they have gone to an instant asset write-off. But it will be nowhere near as effective as it ought to be, because it is not a boost to underlying demand in the economy through investment in infrastructure—which the government claim they are making, but they are not. In making those claims they are damaging confidence.

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