Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Hansard source

I rise to speak on the Tax Laws Amendment (Small Business Measures No. 3) Bill, which implements the government's unincorporated tax discount for small business. As a person who comes from a small business background; who has had skin in the game; who understands risk, reward and the opportunities and benefits of engaging and employing people in the workforce I support this bill. I wholeheartedly welcome these changes and the benefits that they will have for all of the small businesses in my electorate of Paterson.

The unincorporated tax discount is a reduction in the amount of tax you are required to pay on the income of a business that is not a company. That means that the income of small businesses that are run as sole traders, partnerships or trusts will be eligible for the tax discount. It is from these changes that small businesses in my electorate of Paterson will most benefit. Paterson is a regional and rural electorate. We are small business. Small business is the absolute engine of our economy. I am encouraged that as a government we are making these changes to benefit this engine room of our economy, our small businesses. This is because we understand that it is through these small businesses that jobs are created. We understand that, if you remove barriers for and provide opportunities, incentives and encouragement to small business, you will actually grow the employment market. You will build on the 380,000-odd jobs that have been created, the more barriers you remove for small businesses.

Generally, small businesses represent almost 97 per cent of all Australian businesses across the spectrum of business. As at June 2013, small businesses were employing around 4½ million Australians, which accounts for around 43 per cent of private, non-financial sector employment. As I said, small businesses employ round 4.5 million Australians nationally. Small business is huge and the value of small business to our economy cannot be underestimated.

In rural and regional areas, we are seeing some of the larger companies go, and they are not going to be replaced. When Hydro Aluminium left Kurri Kurri, we did not see other companies move in and employ another 500, 800 or 1,000. What we will see is a multitude of small businesses coming in—with 10, 20, 30, maybe 50 and, if we are lucky, 100 employees—coming in to fill those spaces to grow and create opportunities. That is why it is critically important that we do what we can to encourage small business investment, growth, expansion and opportunity.

In a regional electorate such as Paterson, the most common employers, as I said, are small businesses. As at June 2014, there were 8,955 small businesses in my electorate. This tax discount is a reduction of five per cent on the tax payable on business income, capped at $1,000 per taxpayer each year. That is called an incentive. That is called job creation. Even though it is a package for small business, as you take the burden off, as you increase the profitability of a business, you will grow the employment pie.

For sole traders in Paterson, this discount applies to the tax liability associated with their income from businesses that they declare in their annual return. For businesses run through a partnership or a trust, the discount of the tax liability is associated with any business income distributed to them from the partnership or trust and which they declare in their annual tax return. These amendments will leave small business owners in Paterson with dollars, dollars and dollars extra in their pockets.

In my electorate of Paterson, I saw how small businesses were crippled under the previous Labor government. With the red-tape burden and lack of confidence, they were crippled. I have been in consultation with small business owners in my electorate, particularly when they were struggling, as part of a campaign of over two decades now, and I was approached by an incredibly high number of small businesses who were practically drowning in unnecessary red tape that only escalated under the former government. The greatest growth curve under the former government, despite their promises, was in red tape. Small business people should have been putting their energy, their efforts and their resources into growing their business to earn an income—if they have the income, they have profitability; if they have profitability, they can actually employ people. Instead, they were putting their time, energy and efforts into addressing red tape and reporting requirements. That took away profitability and income and, therefore, reduced opportunities for employment.

It is because of this—and, through the regular meetings I have with small business owners, relaying their feedback to my coalition colleagues—that we have mapped out a very clear pathway that is a better deal for small businesses in this nation, including, I am glad to say, those in my electorate. As I said, the majority of employers in my electorate are small businesses.

So it is no surprise that I recently had the Minister for Small Business, my colleague Bruce Billson, visit my electorate. We sat down with the chambers of commerce and discussed the challenges and issues and, importantly, the opportunities that exist for small businesses to grow. These forums were held at Nelson Bay and near Maitland. I thank the Nelson Bay & District Chamber of Commerce, which hosted the first forum, at Nelson Bay; and the Maitland Business Chamber, which held the second forum. That forum was held at Mortels Sheepskin Factory—basically, across the road from my electorate—and coincided with the expansion of that small business. Under this government, Mortels have seen the reduction of red tape, have seen the opportunities and are expanding their workforce, creating local jobs in manufacturing, and they are to be congratulated.

What is important is that each of these chambers of commerce is a unique reflection of the broad spectrum of businesses within my electorate. They comprise lawyers, real estate agents, veterinarians, accountants, tourism operators, farmers, electricians and builders, for instance. They were all present. They all came to talk to the minister and each put to the minister issues that were concerning them. As I said, the overriding issues were red tape and government barriers to growing their business. The two different areas had quite unique issues—one being a largely tourism seasonal market and the other being the rather large regional city of Maitland. I congratulate the minister and his team for sitting down and discussing these issues but, more importantly, for taking on board and listening to all of the concerns that were raised. These forums were a success, because this is the government that is committed to removing those hurdles, those barriers, that small businesses encounter each and every step of the way through.

We want to grow small business. As a government, we have consulted widely on our package. We have engaged with small businesses. We meet with them regularly. We actively seek them out. We want to address the obstacles they are facing. We want to know what can be done to reduce red tape. As a government as a whole and across the spectrum of our colleagues, all the way through to the backbench, we have been providing the feedback to the minister so that he understands from a grassroots level exactly what is wrong. It is because this government understands the actual value of small businesses to a thriving economy that we need to support our small business men and women in our community.

The 2015 budget was a game changer for the hardworking men and women of Australian small business. The amendment of the unincorporated tax discount for small business is part of our Growing Jobs and Small Business package, which is the biggest economic recognition of the small business sector in Australia's history. Small business has been and continues to be the enduring focus and priority for this government. In taking steps to achieve this, we are reducing the corporate tax rate from 30 per cent to 28.5 per cent for small businesses with annual turnovers of under $2 million. It is estimated that up to 780,000 companies could benefit from this measure. I see our Growing Jobs and Small Business package as a package of practical measures designed to help small business to invest, to hire and to grow. We want to enable small businesses to thrive across our nation and to create the necessary jobs that we need in our communities—nowhere more so than in places like my electorate of Paterson.

In summary, the coalition's Growing Jobs and Small Business package is outlined as follows. It will be the lowest small business company tax rate in almost 50 years. The purpose of the bill is to provide tax cuts of 1.5 per cent down to 28½ per cent for incorporated small businesses with an annual turnover of up to $2 million. The unincorporated small businesses will get a five per cent tax discount up to $1,000 a year. Small businesses can claim an immediate tax deduction for each and every asset purchased up to $20,000 from budget night through to 30 June 2017. That, in itself, will have the flow-on effect of these purchases going across the whole of our community. Start-ups will be allowed to immediately deduct professional expenses, which will provide cash flow benefits immediately. We are expanding tax concessions for employee share schemes. These measures provide more incentives for Australian small businesses to create more jobs and to increase training opportunities for all Australians. Most importantly, they are designed to keep small businesses sustainable. We do not want to see boom-bust cycles. We want to see sustainability in business, because if we have sustainability in business we have sustainability in employment. Let me tell you, Mr Deputy Speaker, small business agrees with each and every one of the points that I have outlined under this Growing Jobs and Small Business package.

The provisions also generate changes to fringe benefits tax exemptions on portable electronic devices for small business. This measure will allow small businesses an FBT exemption for more than one qualifying work related portable electronic device in an FBT year, even when the device has substantially identical functions. It is essentially removing a previous restriction in relation to the pre-existing FBT exemptions. The amendments I speak on today will also generate immediate deductibility of professional expenses to small business with an aggregated turnover below $2 million. Previously, these expenses had to be depreciated over a five-year period.

I understand, and the government understands, that the costs of starting small businesses are often overwhelming and can be a deterrent for people taking the step into small business. So these measures will potentially affect two groups who incur expenses for professional advice, taxes, fees and charges from Australian government agencies—commonly known as 'black hole' expenses—in the process of starting a new business: small businesses and those intending to start a small business who are not connected with larger businesses. For those seeking advice on appropriate entity structures, the legal expenses in establishing the entity, stamp duty and the cost of preparing a business prospectus, for example, add up very, very quickly. They are front-end costs, when that money could be placed into helping start the business, grow the business and sustain the business. These are front-end cost, so their immediate deductibility is particularly important. As I said, they will be eligible for immediate deductibility, thereby assisting those small businesses, particularly in my electorate, through providing immediate deduction of professional expenses and increasing the cash flow for business start-ups.

These measures are going to be critically important and nowhere more so than in the agricultural sector of my community. I have around 1,145 small agricultural businesses in my electorate. Mr Deputy Speaker Vasta, you would be aware of the storm events that went through the Hunter Valley, particularly in the Dungog-Maitland-Port Stephens area, where people were put in a desperate situation. So anything that we can do to take the monkey off the back of small business and provide incentive opportunity for people to stay in business is nowhere more important than on the land producing the food and fibre that we need is to be welcomed. I know from my travels through my electorate and from discussions with my constituents that they encourage us to do even more, because they are hungry to be in business. They want sustainability. They want affordability. They have the determination. All they need is the encouragement that a minister like Bruce Billson and that a government like the Abbott government is giving them, which is to go forward to invest, to create, to grow and to deliver the jobs that we need in this nation. I support this bill.

See this speech in context