Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

Labor supports the Tax Laws Amendment (Small Business Restructure Roll-over) Bill 2016 because, as the member for Brisbane just said, these are common sense amendments. They are indeed fair and sensible, and they will help small businesses throughout this country. In fact, they are amendments that perhaps should have been brought in a long time ago.

In essence, the legislation will allow businesses with revenue below $2 million to defer gains and losses that would otherwise be made as a result of transferring business assets from one type of entity to another. In other words, when a business restructures for one reason or another, in the past there may have been capital gains taxes that would have had to have been paid which, under this proposal, can be deferred.

Labor understands the value of small businesses to the Australian economy. Small business employs some 4.7 million people around Australia and contributes $340 billion to the Australian economy. Indeed, small-business enterprises make up some 97 per cent of all Australian businesses. I note that of the small-business enterprises 61 per cent have no employees at all—that is, they are owner-operators, perhaps a husband-and-wife team, a father-and-son team or a mother-and-daughter team. Another 27 per cent have between one and four employees.

So 88 per cent of them are relatively small enterprises, but they are enterprises run by hardworking Australians who not only work long hours but also, quite often, take huge personal financial risks to get their businesses established. Once their businesses are established they are the people who ultimately pay their fair share of taxes to the Australian government. They pay all of them—the local government, state government and federal taxes that are imposed upon them. I suspect that collectively they would be one of the biggest contributors to tax across all three levels of Australian government, unlike many of the multinationals, who seem to always find ways of avoiding their taxes.

The coalition purports to be a party of small business, but the facts do not necessarily support that. It seems to be more a case of rhetoric than anything else.

I frequently speak to small businesses—indeed, I have spoken to several of them in the last week alone. Many of them are not only people I know as small-business operators, in my region, but also are people I personally know. I know their history within their business and the struggles that they have endured in order to keep their businesses viable through good times and bad. There are two clear messages that inevitably come back to me when I speak to them. The first is that the thing that they look forward to the most is a strong and stable economy, an economy that provides them with a degree of certainty so that they know, to some extent, what the future might hold for them and for their business. In fact, nothing matters more to any business than to know that you have a strong economy in which you are able to win a fair share of the work and increase your business turnover. If business turnover continues to increase, most businesspeople I speak to seem to be on a winner. For them, that is what their objective is. Whilst they might have other issues and concerns, inevitably it is all about business turnover. When the economy is not going well, then the reverse happens: business turnover starts to fall. Whilst business turnover and profitability fall, the taxes, fees and charges that are imposed on businesses do not fall very much at all, and so businesses become very difficult to run and, in some cases, those businesses simply cannot survive.

The truth of the matter is that, under this government, the economy is not doing well. The government has now been in office for over two years. It is into its third year, and there will be an election some time this year. It is a government that has no economic vision and no economic plan. We heard that again today in the responses to questions in question time today by the Prime Minister, where it was clear that everything is still to be determined somewhere down the track, sometime into the future. We had the Treasurer last week give a 48-minute address and again outline no clear vision for Australia's economic future. We have a budget deficit that is going to blow out to $38 billion. Even on the one thing that the government tries to continually promote as a win for it, the fact that there have been several free trade agreement signed in the last year or so, we have a balance-of-trade deficit that blew out to $32.7 billion for the year 2015. In fact, even in December we had a net deficit in trade of $3.5 billion.

These figures speak for themselves. The economy is not doing anywhere as near as well as it could or should be doing. The truth of the matter is that confidence out there throughout the business community is not good. We have heard other speakers talking about the government's record with respect to employment. The fact of the matter is that only last week we had employment figures released that showed that unemployment is now up to six per cent. That does not include underemployment. But unemployment figures have risen to six per cent. Youth unemployment is 12.7 per cent. We have 761,000 people unemployed and, of those, 268,000 are young people. When people are unemployed, they are not spending money. When they are not spending money, that is not good for the two million small businesses around the country, who rely on money going around in their local community.

The reason why the economy is not doing well is directly attributable to the policies of this government, policies which saw this government turn its back on the car industry in Australia. When the government turned its back on Holden and Toyota, what it really did was turn its back on thousands of small businesses across the country, small businesses which depended entirely on that industry for their survival, small businesses which ranged from component makers through to couriers and transport companies right down to the local snack bars, food manufacturers and clothing suppliers for the people that work in those factories. All of them are affected, because, when the primary industry no longer exists, other smaller industries fall as well.

It was a Liberal Premier in South Australia, the late Thomas Playford, who had the vision to support manufacturing and an auto industry in South Australia and invested appropriately in order to do so. He literally created a whole new city, the City of Elizabeth, around the proposed GMH plant in order to sustain it. And now we have a conservative coalition government doing the exact opposite and turning its back on an industry that was generated by a previous Liberal state Premier of South Australia.

It goes further than that. We see the same thing being applied right now to naval shipbuilding in South Australia. The government's procrastination, backflips and uncertainty are all bad for small business in that state. Again, I have spoken to many of the component suppliers, who, because of the uncertainty, do not know whether they should invest in upgrading the machinery within their plants—spend more money—or whether they should downsize. The are really left in limbo. We know that over the next couple of years, because of the government's procrastination, there are likely to be another 1,300 job losses at ASC in Adelaide. Again, job losses will mean that other small businesses will also close. The 1,300 jobs that I referred to are at ASC directly. There are other industries that hang off them. Recently I met with one of those industries, an industry that employs about 50 people. It is an engineering business. It produces very highly sought-after precision components for our defence sector. That business wants to invest new capital in a new plant and it wants to do that in the hope that it might win some of the contracts relating to naval shipbuilding in this country. But it does not know whether that will happen or not. It has got to borrow money from the bank. All of that uncertainty is making its business decision very, very difficult. I imagine that many other businesses are in the same mindset, where they really do not know what the future holds for them because of this government's procrastination and uncertainty with respect to naval shipbuilding contracts.

Right now we have a similar situation in Whyalla, South Australia. Arrium operations have seen some 600 jobs being lost in the Southern Iron project, south of Coober Pedy, and we are now seeing that the future of the Whyalla steelworks is also in doubt. If the Whyalla steelworks close down, the effects right through the City of Whyalla will be felt and felt very hard. If the Turnbull government fails to support the Whyalla community, it will be responsible for the demise of hundreds of small businesses. That is what small businesses look for the most in government—security that comes with government support of the business sector in this country. And yet they are not getting that from this government; they are actually getting the opposite. It is not just the commodity prices that are hurting Arrium and other industries; it is also the policies of this government.

One of those policies, which I have referred to time and time again, is the need to have a common-sense procurement policy for Australia. It is a matter that I have raised on other occasions, and I have gone through in detail the arguments for why we should do that. It is not always the case that buying the cheapest product from overseas is in the long-term interests of this country, and it is certainly not the case that it is always in the social or economic interests of Australia. Procurement decisions should take into account whole-of-life costs, product suitability and the tax losses and social costs to the Australian government that arise from job losses when Australian suppliers lose contracts. A terrific example that has been referred to on previous occasions is the Rossi Boots affair in South Australia. Those boots could have been made in Adelaide by Rossi Boots, but they were outsourced to a company in Indonesia. With that, there are job losses and the loss of the new jobs that might have been created had the company won the contract. It is the same when we see that the ministerial car fleet for the government is given to a car maker from outside of Australia. Again, that is jobs that could have been secured for people here in Australia.

The reality is that, in one way or another, most other countries have policies which support the manufacturers within their own countries. For example, the US has the Buy American Act 1933, which was updated in the eighties. S they have acts of congress that ensure support is given to local American industries. We know that China, one of the economic powerhouses of the world, has very tight controls as to who gets contracts and how they get them—not to mention that China still controls its own currency.

The notion that we should operate with no borders and that we should have free trade across the world would be fine if every other country operated on the exact same level playing field. The reality is that that does not happen right now, so Australian manufacturing industries and Australian businesses are losing out. I have had three or four examples in recent weeks of where local industries are able to provide a particular service or product that is required by government and our own government chooses to buy an alternative from overseas rather than buy an Australian made product which is fit for purpose. It is nothing to do with cost, it is just because the Australian manufacturer has not proven themselves on the market. Ironically, in one case brought to my notice, the product was purchased from a multinational company who in turn subcontracted to the company that was deemed unsuitable to supply the good in the first place.

We need to overcome that and give our own industries every chance of winning the contracts and work that arises from government expenditure. What we are seeing with cladding, with glass that has been used on buildings, with steel and with electrical cabling is that the products we are getting from overseas are not always fit for purpose. They might initially save us a few dollars but, in the long run, it often cost the community and the government a lot more in retrofitting. If we want to support small businesses, there are many ways of doing so. The government has the opportunity to do that by simply making their ability to win work in Australia a lot easier, and that is what it is failing to do.

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