Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Hansard source

It is great to follow on from the member for Swan. His was a captivating speech. And I see the member for Brisbane in the chamber as well. Certainly, those two understand small business and I very much appreciate and acknowledge the roles that they played before they came to parliament in the small business space. I would also like to thank those members who have contributed to this debate.

With 3.2 million small businesses employing 5.6 million Australians and contributing $380 billion to the economy annually the small business sector plays a critical role in the Australian economy. To make sure that the Australian economy ticks along nicely, the government is committed to backing small business each and every day. By implementing the policies that give small businesses the confidence to invest and grow and to employ—to hire more Australians and create more jobs.

This bill amends the tax law to extend the $20,000 immediate deductibility threshold for another 12 months, until 30 June 2018. This will allow small businesses with turnover less than $10 million to immediately deduct purchases of eligible assets, each costing less than $20,000 first used or installed, ready for use, by 30 June 2018. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter. This extended measure will improve small business cashflow, encouraging small businesses to invest in their business for another year. The Liberals and Nationals understand that, when small businesses get just a bit of additional money, they reinvest it back into their own business to enable them to grow and to, as I said before, hire more Australians and create more jobs.

This 12-month extension continues the government's strong record of backing small businesses, supporting them all the way; to grow, and to deliver more jobs and better-paying jobs, including by helping them replace or upgrade their machinery, their capital equipment. We know the benefit is felt economy-wide, in metropolitan cities, in the outer suburbs, in rural, remote and regional Australia. A small business recently informed us that the instant asset write-off had a chain reaction through the local economy. That was the lovely Alana Laliotitis in Parramatta. She owns Kouzina Greco restaurant, and she said it created a chain reaction when installed new kitchen equipment for her very popular restaurant—I visited that restaurant with Senator Marise Payne, the Defence Minister, after launching the two-dollar commemorative coin recently.

Alana told us how she went and bought new kitchen equipment. She used a local electrician to install the equipment and it created a chain reaction through her business. It created greater efficiency in the kitchen, which then created greater productivity. Her staff, she reported, even got a boost from it. 'Staff morale improved,' she said. But, most importantly, more customers came through the door. And that is what all small businesses want—more customers. The results from purchasing an asset locally, arranging for locals to install the asset and having happier staff due to the new equipment ultimately produces a better product for customers.

Over the past few months I have met with and heard from hundreds of small business owners who have told me how they have used the instant asset write-off to grow their business. The instant asset write-off has proved to be a very popular small business measure, and was the highlight for small business in this year's budget. Indeed, 9 May was a red letter day for small business. In fact, I would almost describe it as more black than red, because it is enabling them to get more profits, and all small business want to be in the black, not the red. Coincidentally, the morning of 9 May was when the 27½ per cent tax rate was installed for businesses with a turnover of up to $10 million. So those measures provided for in the previous year's budget were in fact enshrined in law. That enabled the instant asset write-off, introduced that night—and hopefully this bill will be passed tonight in the lower house—now enables businesses with a turnover of up to $10 million to take advantage of this instant asset write-off.

Another great example was Anna Mitsios, the founder of Edible Beauty in Sydney. She needed the instant asset write-off to be extended so that she could buy a forklift to keep up with the demand for her products in Asia. She is taking advantage of the free trade agreements that we have been able to broker with South Korea, Japan and China. She said:

We need to palletise our warehouse as we get bigger orders from Asia. I used the write-off to finance a car last year. It's been a huge help.

In the member for Swan's electorate, small business owner Dina Otley, who runs Nosh Gourmet Food and Gifts, told of how she has used the instant asset write-off to invest in a small kitchen and equipment, which led to her employing new staff. She said:

More than long-term tax cuts, this has an immediate effect of helping us to keep investing in the future of our business. As a small business it is always difficult to maintain a competitive offer against larger rivals with more resources and buying power.

A great quote. Mechanic Tery Wallace wanted to see the instant asset write-off extended this year. The owner of Boyd's Garage in Surrey Hills said:

We need all the help we can get in small business and that tax incentive was a great idea which should be continued.

I would be a bit worried if it wasn't continued to be honest—because we need people to invest in small business.

Through the passage of this bill, we are delivering the extension which Tery, stakeholders and many small business owners have called for.

These are real stories of the men and women at the forefront of small business, who have explained in practical terms how the instant asset write-off is benefitting their business operations, In conjunction with our plan to provide tax relief for small business—down to 27½ per cent; the lowest it has been for many, many decades—a and a turnover threshold of up to $10 million, this government is supporting small businesses to create new opportunities and boost productivity to secure Australia's future.

For those who have run a small business—and there are many on this side of the House—we know that every little bit counts, every little bit makes a big difference. We understand the daily pressures and demand in managing staff, balancing cash flow and meeting reporting obligations. That is why this side is also getting on with the job of cutting through red tape. The member for Swan mentioned the fact that $5.8 billion annually has already been cut from that burden which is such a pressure on small business. Of course, in the budget—that excellent budget produced by the member for Cook—$300 million was put on the table to incentivise states and territories to see where they could further cut through some of that red tape which is bogging down business.

The member for Reid, in his role as Assistant Minister for Industry, Innovation and Science, last year in Parramatta rolled out the national business simplification incentive, which helps the hospitality industry cut through that red tape between federal, state and local government—breaking down the silos so that, for instance, a coffee shop, rather than having an 18-month wait from go to whoa, would have that time reduced to just three months. We have listened to small businesses so that we could deliver the best support they need to get ahead and to get on with what they do best.

We know Australia's 3.2 million small businesses are central to keeping our economy strong. They look to this government for support and action. A strong small business sector means more jobs for Australians, more opportunities to build vibrant local communities across the country. We are extending the instant asset write-off so hardworking small businesses can continue to get ahead.

A few stakeholder quotes: Derek Shoen, the President of NSW Farmers, said on 9 May: 'The association is particularly pleased to see the $20,000 immediate asset write-off provisions for small businesses continue for a further year.' James Pearson, the CEO of the Australian Chamber Of Commerce and Industry, said: 'Extension of the instant asset write-off is terrific. We heard firsthand from small businesses during our roadshow tour with the Minister for Small Business and the Australian state and territory chamber network for the instant asset write-off to be extended as well as the call for more reductions to regulation and red tape.'

Innes Willox, the CEO of the Australian Industry Group said: 'Critically, the budget provides a substantial boost for smaller businesses by lowering tax burdens, extending asset write-off eligibility and cutting red tape.' Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, who is doing a fantastic job, said: 'It is great to see another budget focused on small business. This gives small business a level playing field with a capacity to grow.' Geoff Crouch from Wagga Wagga, the chair of the Australian Trucking Association, said: 'The government's decision to extend the instant asset write-off to 30 June 2018 will benefit many eligible businesses.' He would know, because he and his industry keep goods moving. They are the lifeblood of getting goods freighted across the country. Geoff certainly understands the instant asset write-off and its advantages.

Melina Morrison, who is the CEO of the Business Council of Co-operatives and Mutuals, said: 'Any assistance which is given to small businesses, such as the continued $20,000 capital write-off and small business company tax cuts, will be welcomed by BCCM members.' There you have it: very much appreciated by stakeholders and by real small business owners right across the nation. With that I commend the bill to the House.

Question agreed to.

Bill read a second time.

See this speech in context