Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

As I was saying, businesses with zero to 19 employees are defined as a small business, and they account for 97.3 per cent of businesses in Australia. If we include medium businesses—those with 20 to 199 employees, which can be your average IGA—the total number of small and medium businesses represents 98 per cent of all businesses in this country, of which 98.3 per cent have an annual turnover of $10 million or less. One distinction we always need to make, when talking about turnover, is that turnover is not profit. When we're looking at businesses and we're defining a small business, we shouldn't just look at turnover. As I mentioned before, service stations and IGAs—those with very small profit margins—can tip over that $10 million. Ninety-two point seven per cent have an annual turnover of less than $2 million, and it is this economic metric that I wish to pay most attention to. As shown by the ABS figures, most businesses in Australia have a relatively small turnover. Hence, if we apply the Australian Taxation Office definition of 'small business'—those businesses with a turnover of $10 million or less—we can safely say that more than 98 per cent of all businesses in Australia are indeed small businesses.

This bill seeks to increase the instant asset write-off from $1,000—which was really just embarrassing—to $20,000. It's a temporary measure to support small businesses to improve their cash flow and reduce compliance costs. This is a targeted measure, and while I support it and recognise the significant impact it will have on thousands of small mum-and-dad businesses that struggle with cash flow, I do have some reservations. Firstly, $20,000 is really a very small amount. I have a lot of small-business food manufacturing in my electorate, and just one machine in that area can be well over $100,000. The COVID response threshold lifted it up to $150,000, and that was later lifted again, providing small business with the opportunity to acquire what they needed, without limitation, to move into the next century. I've got to say that many businesses in my community really scrimped and saved and got some loans to be able to afford to buy that equipment. Secondly, the measure is only available for assets acquired between July 2023 and June 2024. Again going back to my food manufacturers, many of their pieces of equipment are just not made in Australia. They're made overseas—Germany, Italy and the like—and so there's a very long delay in getting that equipment, once ordered, into Australia. I think this is quite short-sighted, given our current environment, and the time frame really should be extended.

To be frank, businesses are finding it incredibly challenging. I've talked to so many small businesses right across Mayo—those in viticulture, food production and construction. Right across the board there are huge challenges felt because it is tough doing business in Australia. The Australian Securities and Investments Commission reported that 7,942 Australian companies entered external administration in the 2022-23 financial year, and this represents a nearly 50 per cent increase on the previous year. That should be ringing alarm bells in this place. In the construction sector, some jurisdictions have reported a 73 per cent increase in companies entering external administration or having a controller appointed. Importantly, ASIC identified inadequate cash flow as a leading cause of company failure. Given this, I urge the government to reconsider both the threshold and the time limit in providing those instant asset write-offs. We really want small businesses to thrive in our nation. We want to give them every opportunity and every environment to do so.

Schedule 2 of the bill will provide small and medium businesses with access to a bonus deduction of up to 20 per cent of the expenditure on assets—or improvements to existing assets—that support electrification or more efficient energy use, with a maximum claim of $20,000. Like the instant asset write-off, I support this measure and acknowledge the positive impact it will have on small-business cash flows, extending beyond the initial expenditure. We know that small businesses and consumers more generally are struggling. Increased cost and, in particular, rising energy costs are having a profound effect on the sustainability of businesses and households. I visited a small business in my electorate just a week and a half ago, and I asked, 'How are your power prices going?' They said they were in negotiations for a new contract; their three-year contract was just expiring and they were not sure what they were going to do, because their new contract was 50 per cent more. How can a business absorb that? We've got to do more in this place. We're just driving people out of business with those sorts of energy prices.

I have raised my concerns about the cost of living and energy prices on several occasions in this place. When we talk about the cost of living, we're talking about the cost of covering all of your bills. We're talking about the cost of buying food and putting petrol in your car. Everything has gone up. It's a crisis, and I just don't think there are enough of us talking about it. This needs to be a matter of public importance every day. I will support any policy that will mitigate some of the increased costs experienced by businesses, because those small businesses employ people in my community. When people have a job, they can take some steps towards covering the cost of running their household. Without those small businesses, there are no jobs.

As with the instant asset write-off provisions, I urge the government to consider increasing the maximum amount of the bonus deduction and making that initiative ongoing. And let's not forget that, again, we need to have a longer lead time. One year is not enough if you're a small manufacturing business and you're ordering in equipment from overseas. We don't manufacture a lot of large-scale commercial stuff, such as fridges, freezers, ovens and stills for distilleries; all of that generally needs to come from overseas. I support the schedules in this bill and implore the government to do everything within its powers to work towards reducing the cost of energy and other spiralling costs that are hurting businesses in our community.

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