David Coleman (Banks, Liberal Party, Assistant Minister for Finance) Share this | Hansard source

I'm really pleased to have the opportunity to speak on this important legislation that is addressing this very important issue of accelerated depreciation for small business, which makes a huge difference for businesses right around Australia. I'm also pleased to have the opportunity to speak to some of the issues raised by the absurd amendment moved by the opposition in relation to company tax more generally, and to highlight the very real contrast between this government, which is about lower taxes and more jobs, and those opposite, who are about higher taxes and fewer jobs. This is a very important contrast.

I want to turn my attention to the Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2018 that is before us. This bill is really important because, as you know, Mr Deputy Speaker Irons, in small business cash is king. If, as a small business, you are considering buying a capital item, then you've got to pay for it today. If you're going to buy a coffee machine or a bunch of computers or any other sort of capital item, you need to pay for it on the day. But the way the tax system works, you generally can't claim the cost of that expenditure immediately; you have to do that over a number of years. It can be three years or five years; it varies, but you can't claim that expense immediately. While you've got the cash going out the door today, the cost from the perspective of your tax accounting actually comes through over a number of years and effectively you're out of pocket in the short term in a cash sense. That's a really difficult problem for small businesses.

What this bill does is extend the accelerated depreciation for small business entities. What we say in this bill is that any incorporated business with turnover of up to $10 million will immediately be able to expense capital expenditures of up to $20,000. There are 3.3 million businesses around the nation who are affected by this, and those businesses will be able to go forward and invest with confidence, knowing that that capital purchase can immediately go through their account and that tax deduction for the cost associated with that expenditure will immediately return to them in the form of reduced tax on their next tax bill. That's a really, really important initiative, and it's absolutely tremendous that it's being extended for a further 12 months in this important bill.

This bill, of course, exists in this broader context of supporting businesses to go out there, to invest and to create jobs. We on this side of the House can speak on this issue with great authority, because in the last calendar year, 2017, more jobs were created than in any other year in Australian history. We can pick any year in the calendar in the nation's history and ask, 'Well, how many jobs were created?' Every single year will have fewer than 2017, with a huge 415,000 jobs created across this great nation in that year. A big part of the reason those jobs have been created is the pro-business and pro-investment policies of this government, and tax is an important element of those policies. Mr Deputy Speaker Irons, as you know, this government has moved very strongly to provide tax relief to businesses to ensure that they can invest, to ensure that they can compete and to ensure that they can put their best foot forward, go out there and create jobs.

But those opposite have done everything they can to oppose tax relief for Australian businesses. This isn't a theoretical thing; this isn't just what people like the Leader of the Opposition say on the daily news. This is about what they actually voted against. It's a very important point: this isn't theoretical; this is real. The opposition voted against tax relief for businesses with a turnover of $2 million or more. We hear those opposite talk about the 'big end of town' and multinationals. Those are favourite rhetorical devices for them. But they voted against tax relief for businesses with a turnover of $2 million. As you know, Mr Deputy Speaker, a business with turnover of $2 million is in fact a very modest-sized business. It may well be a small suburban manufacturer, it might be a distributor of goods in rural or regional areas or it might be a farm. But those opposite say that business shouldn't have any tax relief and that that business should pay one of the highest tax rates in the world, some 30 per cent. Again, that's what they voted for. It's very important that people understand this.

With the tax reductions that we've seen for those smaller businesses and that have filtered through into the economy—helping those businesses to be confident, helping them to invest and helping them to create good jobs—all of that good work happened despite the vehement opposition of those opposite. It's very important that the Australian people understand that for a small- or medium-sized business with $2 million in turnover or more, the policy of those opposite is to increase their tax. They voted against tax reductions for those businesses. They want to increase their taxes—that is their policy, and that is a shameful policy.

In contrast, we know that jobs are created by the private sector. The overwhelmingly vast majority of Australians work in the private sector. They benefit when their employers invest, because you can't work for a business that doesn't exist. You can work for businesses that are investing and you can work for businesses that are creating jobs. You can't work for a business that isn't out there investing. That's why it's so important that we support small- and medium-sized—and, indeed, larger—businesses to be competitive internationally.

Oxford university recently found that Australia ranked 27th of the 33 OECD nations they looked at, with one being the lowest tax rate and 33 being the highest. Australia ranked 27th in terms of the competitiveness of our corporate tax rate. We've seen very significant movements in the tax rate in countries like the United States and the United Kingdom, with tax rates going to less than 20 per cent. Corporate tax rates are less than 20 per cent in the UK and in the low 20s in the United States. Those opposite say: 'Oh, well, just leave the Australian tax rate at 30 per cent. It will make no difference.' That's what they say. It's an absurd argument, because it basically says that business does not respond to incentives to invest and that the cost of doing business is irrelevant to business. That's what those opposite say, and that's just an absurd argument. Anyone who thinks at the most basic level of common sense can appreciate the bankruptcy of the position of those opposite.

As I said, this isn't theoretical. They actually voted along these lines. They voted for it. They voted to say a business worth $2 million should pay 30 per cent tax. They did. It's a very inconvenient truth, but they voted to seek to ensure that a business with $2 million of turnover maintains a 30 per cent tax rate, which is one of the very highest in the world. That's what they think is good for Australia. It's very important to remember this. The member for Kingsford Smith, no doubt seeking to make some sort of contribution to the debate, moved this amendment, but it's pleasing in that it gives me the opportunity to reflect on the absolute failure of those opposite.

But that's not all. There's quite a bit more to talk about on this topic of tax and the failings of those opposite. They say that capital gains tax should go up by 50 per cent for everyone. The policy is called 'housing affordability', so that might make you think it's just about housing. It turns out it's not. It turns out it's actually about every form of investment in the entire Australian economy. So, in order to encourage investment and in order to encourage jobs, they say: increase tax on capital gains—50 per cent on everything!

Someone might say, 'I want to invest in getting a new factory off the ground,' maybe in suburban Perth, and they might seek some investment from people to get that factory off the ground so they can go out and employ 20 or 30 people to get that factory happening. What those opposite say is that the person who invests in that factory should pay 50 per cent more tax on their investment. That is just an absurd policy. This just shows the paucity of understanding of the most basic economic principles over there. If you want people to invest more—and we do want people to invest more because we want more jobs—you don't say to them, 'Well, hey, here's what we're going to do. We're going to make you pay 50 per cent more tax.' But that's what they've done.

I suspect that, when their so-called housing affordability policy came out, some of the members opposite didn't actually realise that the 50 per cent capital gains tax increase would apply to absolutely everything in the economy. But, if they have any confusion about that, they should consult with the shadow Treasurer, and he will confirm that their plan is to increase tax by 50 per cent. So, if you've got a small business in Braddon or in Longman, or perhaps you're involved in some sort of business in the Adelaide Hills, and you're seeking investment, it's very important that people understand that under those opposite those investors who come forward to invest in, to help that business, would pay 50 per cent more tax. It's an absolutely ridiculous policy!

We say less tax means more investment. We say that the money in the economy is not the property of the government. It is generated by the hard work of individuals. It is generated by the hard work of businesses all around Australia. It's their money. It is not the government's money. Now, of course, government must charge some tax in order to manage the operations of the government and provide those essential services upon which we rely, but it is not our money; it is their money. We must respect the fact that it is those individuals and businesses who have gone out there and created that economic activity. The last thing we should do—the last thing any sensible government would do—is seek to penalise those people who are going out there and investing and creating jobs by hitting them over the head with more and higher taxes. It's the wrong thing to do. Certainly, on this side of the House, we will never behave in that way.

The proof of the pudding is 415,000 jobs created last year—the greatest number of jobs in Australian history. Those opposite should be celebrating. They should be saying to the government, 'We will back your economic policies because they're working.' It's the logical thing to do, isn't it? If something is working, you do more of it. The economic policies of this government are very, very successful. We have very strong job creation, and that is great news because it means more opportunities for Australian families, more opportunities for people to pursue their dreams and a greater sense of wellbeing across our community. These are all very, very good things.

But Labor want to increase company taxes by $59 billion. They want to talk about the so-called 'big end of town' whilst they're hitting over the head basically everyone, even retirees who have done the right thing: they've worked hard, saved and put away for their retirement. Labor come along and say, 'Oh, gee, there's a very attractive pot of money over there with those retirees. How do we get that and how do we get it straightaway?' The retiree tax is not grandfathered. There's no phasing in. No—bang; it's straightaway, under those opposite. They will take billions and billions of dollars from the retirement savings of ordinary Australians who have done nothing wrong. They've played by the rules, they've worked hard, they've supported their families and they've put a little bit away for their retirement. The shadow Treasurer and the Leader of the Opposition want to come in and take billions and billions of dollars from those hardworking, ordinary Australians. You can see a massive contrast.

The member for Kingsford Smith, in his perhaps misguided enthusiasm, has invited us to talk about the big contrast on company tax and tax in general. We created a record number of jobs last year. A big part of that is our support for small business through tax relief. This bill will provide more tax relief. It's absolutely the right thing to do. I'm pleased to speak in support of the bill. (Time expired)

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