Allegra Spender (Wentworth, Independent) Share this | Hansard source

The tax system, like the legal system, is a fundamental structure that underpins Australia's modern society. It raises the revenue we need to pay for government services, it redistributes national prosperity and it has the power to promote or stifle investment and activity in our economy. But Australia's tax system is no longer fit for purpose. While there are many aspects that require reform, the impact that the current system is having on small businesses requires urgent attention.

Like the members who have spoken previously, I grew up in small business, and I've run a number of small businesses in my time. This group of people who are driving the economy, who employ 42 per cent of private sector workers, are an incredibly important part of my electorate and our community, but small businesses represent a declining share of Australia's GDP. They currently represent around 33 per cent of economic activity, down from 40 per cent in 2006, and it's getting worse. ASIC data shows that insolvencies have risen by 40 per cent over the last 12 months, and half of those small businesses that have managed to stay afloat have considered closing their doors.

This chimes exactly with my experience over the last few weeks, talking to small businesses in Wentworth. Many of them are questioning whether they should go on. This is a major concern for the Australian economy, as small businesses are also a wellspring of innovation and productivity. Private investment in Australia, as a share of GDP, is at its lowest level since the early 1990s, with corporates choosing to distribute profits to shareholders rather than reinvest in innovation, and that innovation is what we all need. From my discussions with small businesses, they are asking for three things from our tax system. They want the ATO to partner with them when they hit hard times. They want policy certainty—that once the government announces a policy, particularly a tax policy, it will be followed through. And they want tax reform that builds resilience and innovation in the economy. Frankly, we're not getting any of those.

Firstly, let's talk about our central tax agency, the ATO. It's a hindrance rather than a help. In a recent survey released by ACCI, the ATO was listed as by far the most difficult agency to deal with in terms of meeting compliance requirements for small to medium businesses, with over half of businesses saying the government could be doing a better job—and it should be. But, secondly, even when the government is explicitly trying to use the tax system to help small businesses, the politicisation and the back and forth in this place mean that the wedging opportunities stop creating that certainty for small businesses.

We saw this with the small business instant asset write-off that Labor promised to deliver in last year's budget but only managed to pass the legislation for in the dying days of last financial year. The uncertainty created by the government's inability to pass a core budget measure that was promised to the small business community exacerbated confusion and frustration in the business community. I was hearing stories of small businesses from my community whose owners were stuck in limbo waiting for confirmation that they could upgrade equipment, or, worse, of owners who, assuming that, because the government had announced it, it would go through, had made investment decisions without realising that it hadn't passed the houses of parliament and was stuck in the Senate. This sort of uncertainty is anathema to what businesses need in order to make the decisions and the investments that drive the economy, that employ 40 per cent of the private sector workforce and, frankly, that provide the livelihood and opportunities for so many Australians.

It's not just the ATO and it's not just the politicisation of policies here in parliament; it's also that the government and, frankly, the parliament—both this parliament and previous parliaments—have not addressed the major tax reform that this economy needs and that small businesses need. Tax settings are preventing young Australians not only from getting into the housing market but also from getting into businesses. When I talk to the business community, there's a plea: harmonise things like the payroll tax; make it simpler for us. They still don't understand, and I don't either, why there is a tax on employing people in this country. Why is stamp duty holding people back from making efficient economic decisions and proper investment decisions? How can we drive a tax system that actually rewards innovation and investment rather than holds it back?

It's not just the business sector where this matters. This is also in the community sector. This affects young Australians who can't get into the housing market and don't see the prospect of ever owning their own home. Urgent tax reform is needed, and it's much more comprehensive than either of the major parties have contemplated because of their political wedging. It's time for change.

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