Andrew Charlton (Parramatta, Australian Labor Party) Share this | Hansard source

That's your question? It's a great question. The instant asset write-off—the one policy that was referred to by those opposite—is actually a policy that was introduced by Labor in 2008, and it has been copied and perpetuated by the opposition. So far, their ideas are: back to basics on fiscal policy—snore from the small-business sector; some bizarre obsession with quantum computing—totally irrelevant to the small-business sector; and a policy that Labor began and the coalition perpetuated. Terrific support there for small business from the coalition! They're a dollar short and a day late when it comes to actually understanding and helping small businesses with the realities they face every day.

Let me tell you a little bit about the challenges that small businesses really face, that they're really struggling with. They're struggling with the regulatory burden of hiring new workers. It is true that the hardest worker for any business to hire is the first worker. Going from having no workers in your business—a start-up just run by you—to employing your first worker is an enormous challenge and a big hurdle for many small businesses. The research suggests that it can take more than 20 hours just to set up the basic administration: paying the worker, providing superannuation, meeting OH&S requirements, record-keeping obligations and tax.

The truth is that most small businesses, when they start out, do not have the systems in place to make those early employment decisions and to employ people in a way that is efficient and simple for them. Most of those businesses have an enormous regulatory and compliance burden when it comes to hiring that first worker. Whether it be their legal status, their contract, their pay-as-you-go withholding or their understanding of the award rules, these are real challenges that businesses face when they hire their first employee. It is a big impediment to small businesses in Australia when they take that step forward towards growth and they start to open up the doors, grow their business and take on their first workers. For a small business, the compliance cost of making those early employment decisions can be five times higher than for larger businesses. That's a real burden that small businesses face and a real constraint on employment in this country, because small businesses employ two-thirds of all Australians. That's a real issue that small businesses are grappling with.

Another issue that small businesses grapple with is red tape. Small-business people are busy serving their customers, running their business, managing their workforce and controlling their cash flow. On top of that, they have a significant compliance burden from government. A recent study found that excess red tape was costing Australian businesses $9.3 billion every year. That's just small businesses. More than two-thirds of this compliance cost was tax compliance. That's $6.2 billion for small businesses just on tax compliance activities. That cost, per business, is more than 200 times larger than for large businesses in Australia. Even though that small business has a much smaller workforce and a much smaller P&L, it still has to do many of the same things that big businesses have to do, albeit with much restricted financial capacity.

The regulatory burden that we place on small businesses is something that we must be deeply conscious of. It is a real issue that keeps small-business owners away from their customers, keeps them away from their business and keeps them away—in many cases—from their families. That's where that time comes from—it comes from the time at the end of the day or early in the morning, when they should be going home and living their lives. The doors of the shop are closed, the business is finished for the day, but they have to start their compliance activities for government.

This is another real challenge, a challenge the opposition has presented no solutions for. Of course, the biggest problem every small business faces is the daily grind of cash flow. Knowing that money is going to come through the door so it can pay its workers, keep the lights on and pay its bills—that's the stress that every small business in my electorate lives with every single day. A recent study found that one of the biggest issues that small businesses face in terms of cash flow is late payments from larger businesses. This has a massive impact on small businesses. With all the services they provide to larger businesses, they end up waiting 30 days, 60 days or, in some cases, 90 days for the money to come in. A recent study found that 60 per cent of small-business owners across Australia had experienced cash flow problems last year. In order to get through a period of poor cash flow, 27 per cent of small-business owners had resorted to using their personal savings for their business. They dipped into their own savings, extended the mortgages on their homes, and borrowed from family and friends. A third of small-business owners are doing that because of the cash flow challenges they face today.

One of the biggest issues—one we can be addressing in this parliament—is late payment and trade credit terms from large businesses. A recent study from Xero found that $216 billion paid by large firms to small firms was late—that's $200 billion of money owed to small businesses that is not being paid to them on time. That is a creating a cash flow crunch for those businesses. Half of that money was late. Half of that money was due to the small businesses under the contractual terms provided by the big businesses, and it was late. That's $115 billion in late payments, meaning that small businesses are losing $7 billion in working capital every single year. In 2023, the situation hasn't improved. Xero's report Money matters indicates that 24 per cent of small businesses find themselves spending time chasing overdue payments, having to call up the big businesses—recognising a huge imbalance of power between the small business and the big businesses—begging those big businesses merely to pay on time the money that they owe. This is the crunch that small-business families face every single day. They're worrying about getting that money in just so they can pay it out to the workers and the bills that are rolling through the door.

There are lots of opportunities for us to support small businesses, and this bill contains a lot of them. One of those opportunities is supporting small businesses with digital capability. This really is a revolution in the way that small business works. As we get into the detail, I note that the interjections have wound down because I think we have exhausted the knowledge of the member opposite. But I'm still going to go through some of this detail because I think it's important.

An opposition member interjecting

There we go, I've provoked you. Terrific—it's good to see you wake up. The key opportunity here for small businesses is the digital economy. It used to be the case that IT systems that supported business were available only to large businesses. They required big mainframes, large IT investments, big network investments, and those were simply out of reach of most small businesses. But today, with the benefit of cloud computing and a range of new apps, suddenly a lot of those technologies are available to small businesses. Technologies that enable small businesses to engage in online marketing, to do e-invoicing, to run their accounting in the cloud, to manage suppliers and HR in the cloud—all of this means is that digital technologies which were once not available to small businesses now are available and can help them with all of the tasks they have to do in the management of their business. That's why this bill is so important.

This bill provides a lot of support for small businesses. It provides incentives to help small businesses save on their energy bills, and, under this proposal, small businesses with an aggregate turnover of less than $50 million per year will be able to claim an additional 20 per cent tax deduction for eligible assets that enhance electrification and energy efficiency. This is real support for the cash flow of businesses when they're trying to do the right thing. They're trying to support the energy transition and reduce their own energy bills, and this bill gives them the help they need to get over the upfront hurdle of that cost. Right now, at a time when energy bills are so high, I couldn't think of a more valuable support for Australian small businesses, which are struggling with their cash flow and struggling to make ends meet in a difficult environment. This initiative will help restauranteurs, manufacturers, tradies and hairdressers. It will enable up to 3.8 million small businesses to share in the energy transition that is now underway.

Of course, there are many more challenges that small businesses face. They face the challenges of cash flow and red tape. They face challenges in hiring and managing workers, particularly when they employ their first worker, whose compliance, in many cases, can be so burdensome to control. This bill doesn't address all of these challenges, but it contains a series of important and concrete steps to take us forward. These concrete steps have been no more important at any time than they are today, at a time when small businesses are struggling with so many of the elements of a difficult and complex financial and economic environment. That's why I commend this bill to the House.

Sittings suspen d ed from 13:02 to 16:0 2

See this speech in context