Bruce Billson (Dunkley, Liberal Party, Minister for Small Business) Share this | Hansard source

The fantasy must end. The nonsense that we have heard from Labor has to come to an end, and that is going to be achieved by summing up this debate. To hear the gaggle of Labor members talking about these measures as if they were their own is just utter nonsense. It is an act of fiction and an effort to rewrite history, because we know that is not the case. If it were not for a coalition government with such a deep conviction and deep respect for the hard-working men and women of small business, we would not be having this discussion at all. That is why I am pleased to sum up this debate and to thank, particularly, the coalition members who have characterised our goal and our ambition. This package of measures is but another step towards our vision of creating the best economy in this country where you can start and grow a business. That is our mission, that is our vision and that is what we are working toward.

The government knows that hard-working men and women of the Australian small business community are the engine room of the Australian economy. They account for a vast majority of active private businesses in this country and employ over 4½ million people. We know we have work to do because half a million jobs were lost in small business under Labor. Half a million livelihoods, made possible by enterprising men and women, disappeared under the maladministration of the previous Rudd-Gillard-Rudd government. We are working hard to turn that around. You know what I am pleased to share with the chamber tonight? We are succeeding. The most recent figures show that there has been a growth in the number of people employed by small businesses by 146,000 jobs. That is 146,000 livelihoods made possible by enterprising men and women of small business.

There is also encouraging news. Prior to the election of the Rudd-Gillard-Rudd government the private sector share of employment made possible by small business was around 52 per cent. Under Labor that fell to only 43 per cent of the private sector workforce being employed by small businesses. That is recovering as well. It is now at 44 per cent, so we are getting things right by listening to and engaging with the men and women of small business, by acting in a very clear-eyed and purposeful way to support the entrepreneurial environment within which they operate. To listen to, get alongside and benefit from the impressive case studies, the great stories, you heard from coalition members is showing that we are getting this right and we are healing the harm and hurt the small business community had inflicted upon it by the previous Labor administration.

We have spent our time in government out and about, meeting with these enterprising men and women, hearing about the daily challenges and triumphs that are at the heart of their lives and are very much the dominant thing that occupies their waking hours. We are committed to ensuring that Australia is the best place to start and grow a small business, and we are getting there as evidenced by the examples that I shared with you. We are seeing signs of it.

Labor, for some reason, wants to run down the economy. They want to create a kind of economic funk. That is yet another example of the self-serving nonsense we hear from Labor. Do you know business confidence is at a plus-10 percentage point? It is at the highest level in almost two years. Even today there were some buoyant Westpac consumer confidence figures. There is lots to be positive and optimistic about. There is no risk of you finding positivity and optimism in the Labor Party. It does not suit their base political objectives.

We are getting on with the job. We are getting on with implementing our economic action strategy. We are committed to creating the best entrepreneurial ecosystem that we can. A key part of that was the very impressive small-business package announced as part of the 2015 budget, a historic $5½ billion package aimed to provide encouragement and incentive for enterprising men and women in our economy. It was the largest package of its type in our nation's history.

The government has already passed legislation for the 1½ percentage point company tax cut and the accelerated depreciation measures for small business that are a part of this package. It is an initiative originally implemented by Joe Hockey when he was the small-business minister, way, way back. But Labor wants to claim that as well. I know they like to attach themselves to our good work, but there is a fair amount of nonsense coming from those opposite. We know small businesses and family enterprises across the country are already making the most of these initiatives to build the prosperity of their enterprises and their capacity to employ. We heard example after example of field evidence and practical case studies from coalition members.

This bill includes three more of the small-business measures and provides a further $1.8 billion of cash flow benefits to these hard-working, enterprising men and women. Schedule 1 of this bill will provide a five per cent tax discount for approximately 70 per cent of small businesses which are not incorporated capped at $1,000 per taxpayer. We understand that two-thirds of Australian small businesses are not incorporated. That is something that Labor has failed to appreciate. Even in their budget reply speech, when we mapped this out in great detail, there was nobody home. I am not even sure if the lights were on, but there was nobody home to understand the true nature of the small business economy when Labor was trying to play catch-up footy to the coalition's measures.

The discount of five per cent is broadly mirroring the benefits of the 1.5 company tax cut for small businesses. With both of these measures in place all small businesses will be eligible for a tax cut no matter how their business is structured. This measure reflects our knowledge and understanding of how small businesses are actually operating in our economy. There is no 'one size fits all' because there is no single model and modality of small business and entrepreneurship in our economy.

Schedule 2 of this bill will provide immediate deductibility for professional expenses for small business. The cost of professional advice and payments made to government agencies will be immediately deductible instead of having to be depreciated over five years. Once again, this will improve the cash flow of small businesses, particularly in that start-up phase when cash is scarce and there is a need to improve that cash flow as best we are able. It is also about reducing the regulatory burden imposed upon these businesses.

Schedule 3 of this bill will reduce red tape within the fringe benefits tax system by expanding the FBT exemption for work-related portable electronic devices. Under this bill, small businesses with an aggregate turnover of less than $2 million will be able to access an FBT exemption for all portable electronic devices that staff are provided with for work purposes. At the moment, this exemption applies only where there is a single device with a single type of functionality. So if you gave your staff member a mobile phone, one of these technological devices, for their work, perhaps to monitor what is going on in the field, to get advice about the microclimate in a horticultural business or even to engage with customers, and you then gave them an iPad, you would risk an FBT liability, even though we are encouraging digital engagement of small enterprises in our economy—something we need to do more of. This measure is removing an impediment that needs to be dealt with.

This exemption will be available even if multiple devices with substantially similar functions are provided by an employer to their employees for work purposes. The government has acknowledged that with the development of new products and increasing overlaps in the functionality of these devices it is becoming increasingly difficult for employers to determine with certainty which devices can access the existing FBT exemption. This uncertainty is stemming the use and availability of critical tools of trade for small business—that is, portable electronic devices. We need to work in a thoughtful way to boost digital engagement of our small business community. That is another part of what the government is doing. With the evolving technology being used for work purposes, the legislative provisions that allow for an FBT exemption for portable electronic devices and computer software simply have not kept pace. That is what we are dealing with in this bill. We are resolving this issue, with the bill allowing the existing FBT exemption to apply to items that may have substantially similar functions. This will simplify the current rules and provide employers with more flexibility in the number and nature of items given to employees by disregarding overlaps in the functionality of these items.

As such, simplifying this exemption is expected to lead to a reduction in compliance costs for employers. There are around 30,000 small businesses with an annual turnover of less than $2 million who lodge FBT returns. This reinforces the government's position that the tax system should not impede innovations by companies hoping to grow and employ more people. This measure will reduce red tape and regulatory costs for small business. Such a step is crucial for small businesses, which tend to face a proportionately higher regulatory cost than larger businesses because of their inability to take advantage of economies of scale and the understanding and application of compliance with government regulations. Moreover, small businesses typically have fewer resources with which to specialise in meeting their compliance obligation. So this is about removing and simplifying an FBT portable electronic device exemption. That is going to provide great benefits to small business.

The government is out and about. We are listening to, collaborating with and learning from small businesses every day and sharing those insights in this chamber, as you heard so eloquently done by coalition members as part of this debate. We are committed to making it easier to do business in Australia, to make our economy and our country the best place to start and grow a business. There will be more in this budget package. We have work to do and legislation to bring forward about the capital gains tax correction in a situation where the ownership is the same and the business activities are the same but the owners feel they need to restructure their business to prepare it for the future. That risks a capital gains tax liability event, even though all that the businesses are doing is what we are encouraging them to do: to be ready and to get themselves in their best possible shape to succeed into the future.

There will also be some legislation coming forward in the spring session about a new funding framework, about crowd source equity funding as being another channel, another avenue, that small and growing businesses may be able to take advantage of to bring in much-needed venture capital, growth capital and equity into their business. That is an important measure. At the moment workarounds allow funding to come into those businesses, but linked to special offers. You might support the start-up of a new magazine and put your money in and get five years of free subscription. That is a workaround that we see in the current economy. But if you want to offer your investors a stake in that business, an equity position, the law currently does not provide for that. We see that as a shortcoming in the range of financing options available to small enterprises, and that is something we are going to fix.

I have released a discussion paper in recent days teasing out what those policy settings look like from the government's point of view, particularly for publicly listed companies, but also drawing in insights from those in the start-up community and looking at how we can support funding avenues for small business and growth businesses and how we deal with proprietary limited companies, as some of the disciplines of a publicly listed company are not actually part of a proprietary limited business's existence. How do you make sure that there are appropriate checks and balances, good governance arrangements and good disclosure requirements? This is something we are working through as well. I think that could put us at being world class, as most other countries where crowd source equity funding is available tend to limit that availability to publicly listed businesses. They have not dealt with the challenge of proprietary limited, closely held businesses. That is something that we are turning our mind to.

So there is more to come. My message to Australian men and women of small business is that we are continuing to work as hard for your success as you do. This package of measures, another third instalment of our budget package, is a continuing demonstration of our commitment. We know there is more work to be done. We are up for it. We are going to work as hard for their success as they do. I commend this bill to the House.

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