Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The Labor Party supports the Tax Laws Amendment (Small Business) Bill 2007. The burden of regulatory compliance on small business is huge, and governments of all persuasions must work actively to reduce that burden. The burden of tax compliance is one of the biggest issues that needs to be addressed. An OECD paper, Business views on red tape: administrative and regulatory burdens on small and medium-sized enterprises, six years ago identified tax compliance as the largest regulatory burden on small business in Australia. This was confirmed by a survey by the Institute of Chartered Accountants in Australia, which found that the complexity of tax legislation is the No. 1 issue that the federal government needs to address. That is the view of accountants servicing small business around this country. The chair of the Institute of Chartered Accountants’ small and medium enterprise division, Sue Prestney, said:

These repeated frustrations expressed by small businesses, year after year, over Federal tax legislation sends a clear message to the government: reduce red tape ...

She goes on to say:

... until this changes, tax legislation will continue to impose onerous compliance costs for small businesses ...

I was drawn to an article by Peter Switzer, a well-respected commentator, in the Australian on 9 May 2006. The lead item in the article was:

Treasurer Peter Costello has served up a decade of disappointment for small business owners, who hope that each budget night will deliver some relief from excessive regulation.

‘A decade of disappointment’. That article went on to quote a Sydney electrical contractor, Matt Ryan, who talked about how his business could not expand because of the burden of tax regulation: that it just did not make sense to put more staff on and expand because the amount of time that was devoted to compliance with tax laws was just so huge. This is a real-life example of what we are talking about.

We welcome the alignment of definitions for tax purposes contained in this bill. Myriad definitions are throughout the two tax acts and other acts, and there is little consistency or transparency about how those definitions are reached and why there are different criteria for different tax measures.

And on behalf of the Labor Party I welcome the move to a single criterion for receiving small business tax concessions of a turnover of $2 million and an additional assets test for some particular measures. This is a step in the right direction. I would say two things in relation to that. Of course, this aligns definitions in the tax act but, across government, there are a range of other definitions of small business and other criteria that small business have to meet either to gain concessions or to meet legislative requirements. For example, the Corporations Law says that a business must comply with two out of the following three: it must have gross operating revenue of under $10 million, assets under $5 million or fewer than 50 employees. The Privacy Act defines a small business as a business with a turnover of less than $3 million, as opposed to $2 million in this act. And, of course, the Workplace Relations Act defines a small business as a business with fewer than 100 employees.

It could well be the case that there is good reason for those different definitions. It could well be the case that it is appropriate that different government concessions and different programs have different criteria. I am not saying it is not the case, necessarily; I am pointing out that this is simply an alignment of definitions for the purposes of the tax acts. It does not align the definition of small business across government. Should we form a government later in the year, something we would be interested to look at is whether there could be a more broad alignment of the definition of small business across different acts. I stress, that may or may not be the case. But it is something that we would have a look at, and I am sure my colleague the shadow minister for small business would be looking at that with me should we form the government later in the year.

I also note that this bill sets a threshold for turnover but does not index that threshold. If that threshold is not indexed then from time to time the government of the day is going to have to come back with refreshed legislation to increase that threshold to ensure that, as businesses grow, we are not stopping businesses which are, under any definition, small businesses from accessing tax concessions. Again, indexing the threshold is something that we would examine. It is something that we would look at to see if that makes sense. It may or may not make sense. It is something that we would examine and that we would be interested in. It may be that it is more appropriate for the government to come back with regular increases in the threshold every couple of years, but it may be that an indexation is the right way to go. That is something that we will consult with small business on and will look at, should we form the government.

While this bill is a step in the right direction, it needs to be stressed that there is still much more to do in reducing the compliance burden on small business generally, including reducing the compliance burden on small business in relation to tax. The simplified tax system was introduced, as the name suggests, to simplify the tax arrangements for small business. This bill in part relaxes some of the eligibility criteria for the simplified tax system. The amendments reflect that the simplified tax system has not been overly useful to many businesses.

The Certified Practising Accountants examined this issue last year. The major reasons provided by the respondents to their survey was that the simplified tax system was ‘too complex’ and ‘of little value’. The Institute of Chartered Accountants, a separate organisation, estimates that only 20 per cent of eligible businesses have become involved in the simplified tax scheme. Clearly there is a need to further examine simplification of the STS to ensure that it is open, accessible and available to as many small businesses as possible.

I also note that, as Mark Pizzacalla of HLB Mann Judd has pointed out—and as an aside I would like to compliment him on the quality of his work on small business tax issues; I think he makes a good contribution to the debate—the tax consolidation regime has meant that it is likely that many small and medium enterprises have not consolidated, due to the complexity of the regime and the cost of seeking specialist advice on tax consolidation. Again these are two areas that perhaps the government needs to look at to ensure that the tax system is as simple as possible for small business, who do not have the resources that big business have to engage outside advice—to have a constant stream of accountants on tap—but are often trying to run their small business and do the books at the same time, who from time to time will engage outside accountants but often are not able to engage full accounting advice on how they should structure their operations.

The biggest compliance burden in relation to tax is the GST and the BAS. The Ralph review of 1999 noted that small business would suffer the compliance burden of the GST but in many instances would not gain the benefit of the reduction in the corporate tax rate because many small businesses are unincorporated. And of course the Labor Party has been releasing policy on reducing the compliance burden of the GST and the BAS.

In his address to the National Press Club, the Leader of the Opposition announced that a Labor government would increase the threshold from $50,000 to $75,000 for GST reporting purposes, as recommended by the Banks review of regulation. The government responded in the budget by matching that policy. As I have said previously, I am not sure that would have occurred had not the Labor Party announced our policy of increasing that threshold, something which has been welcomed by small business and small business groups. At the same time, the Leader of the Opposition flagged BAS Easy. In the same speech he announced that Labor would move down the road of introducing BAS Easy. The government, I have to say—if I dare say it—have been walking both sides of the street on this issue. On 26 April this year an article appeared in the Financial Review headlined ‘Costello sour on Labor’s BAS sweetener’. It said:

But Mr Costello said the government had already introduced simplified accounting methods to restaurants, cafes and caterers ...

But what it did not point out is that Labor’s policy is that this should be applicable to all businesses who have a mixed GST regime between GST being taxable and GST not being taxable. So first of all they said, ‘We’ve already done it,’ and then in the budget they came out and said: ‘We’ve already done it but we’re going to do it again. We’re going to now apply it to all businesses which have a mixed product regime between GST being taxable and GST being free.’ The announcement from the Treasurer said:

The Government will allow more simplified accounting methods for small businesses. This will give more small businesses the option of using a simplified method to calculate their GST obligations if it suits their requirements. From 1 July 2007, any small business that makes mixed (taxable and GST-free) supplies or mixed purchases will be able to approach the Australian Tax Office (ATO) to discuss the development of a simplified accounting method for their use.

I must say that on budget night I thought, ‘I’ve heard that before.’

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

Sounds familiar.

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

It sounds familiar. I went and checked the writings of the honourable member for Rankin, who had been saying exactly the same thing: that a Labor government would introduce BAS Easy for all businesses which have a mix of GST and non-GST products. But the devil is in the detail. The last line in the Treasurer’s statement is:

... will be able to approach the Australian Tax Office (ATO) to discuss—

to discuss!—

the development of a simplified accounting method for their use.

They are going to have a chat. That is the government’s policy: ‘We’re going to have lots more chats with small business. We’re going to discuss the use of a simplified accounting method for their use.’ Is the government really committed to this? They have announced discussions. Why don’t we just do it? You cannot be half-pregnant. Why don’t we just introduce BAS Easy? Why don’t we get on with it and introduce BAS Easy? The Council of Small Business Organisations certainly thinks we should. COSBOA has backed BAS Easy. I quote Mr Steven, not always somebody who supports Labor policy—not a card-carrying member of the ALP, I hazard a guess. He says:

Taking an opt-in approach will allow those businesses that are working with few or no staff to adopt the new BAS Easy system—

we should have copyrighted that—

and save time and effort should they so wish.

The Council of Small Business Organisations of Australia has backed BAS Easy, particularly by extending it to independent contractors and small business owners. COSBOA wants it, small business wants it, the Labor Party wants it and the government sort of want it—they are not sure. They thought they had done it. Then on budget night they said: ‘Well, we thought we had done it but actually we are going to extend it to more businesses. However, it is only going to be for discussion.’ Let’s just get on with it. Let’s just do it. My colleague the honourable member for Rankin, the shadow minister for small business, will move a second reading amendment in his contribution to this debate calling on the government to introduce BAS Easy. Let’s just get on with it. Government members will have the chance to stand up for the small businesses in their electorates by walking into this chamber and sitting on this side of the House to support Labor’s proposal to introduce BAS Easy. I suspect there will not be many.

As I said, this is a step in the right direction, but there are a number of regulatory burdens on small business which still need to be dealt with. This bill deals with federal tax, but small business not only pay federal tax; they also pay state taxes. The lack of harmonisation between state systems is of concern to many small to medium sized enterprises as well as to large enterprises. There are many businesses now—you do not have to be too big—operating across state boundaries. That is something that, again, the Labor Party has tackled—not just in relation to tax but in relation to regulation generally. In the same speech to the National Press Club, the Leader of the Opposition announced:

A Labor government will adopt a system of incentives to states to harmonise their regulations.

There has been some movement on a payroll tax basis. That is welcome, although I do not think it goes far enough. It makes no sense to have different payroll tax bases from state to state. It would be much easier for small businesses and medium sized enterprises, as well as big business—this affects them as well—to have consistent payroll tax bases across the nation. This is just one of many areas right across business regulation. It would make so much more sense to have harmonisation across the states wherever possible so that you do not have to have a different type of first aid kit in Sydney and Brisbane, so that bandages in a first aid kit in Adelaide can be the same length and width as they are in Perth, so that we can have some decent, consistent business regulation across the board.

One of the biggest contributions to the economic growth and the economic prosperity that this nation is enjoying, and that we hear about on a daily basis from the government, has been national competition policy. That, amongst other reforms, planted the seeds for the economic prosperity we are enjoying. This proposal is based on those same national competition principles. I will express the view—I do not think I will be controversial; I think most people would agree with me—that national competition policy would not have worked without incentives built into the system. The only reason the states got on board national competition policy was that the Keating government made it in their best interests to do so—and so it is with regulatory reform. The time for reviews is over. The time for reports has been and gone. The time for more reports about how states should reform their regulatory burden and harmonise across state borders has been and gone. It is now time for action. It is time for the federal government to show some leadership, to work cooperatively with the states, to disengage from the blame game and say, ‘Let’s sort this out.’ I have a suspicion that it will take a Rudd Labor government to achieve that.

Other things were announced by the Leader of the Opposition in his address to the National Press Club. He announced that under a Labor government there would be a ‘one in, one out’ policy. If the Commonwealth government introduces a new regulation, we find another regulation for it to replace. There has been lots of evidence that the amount of legislation—pages of legislation—and regulations passed by this parliament, if I recall correctly, has been bigger in the last 10 years than it had been in all the other years of our Federation. Something is going wrong. We need to have a system whereby, whenever a new regulation comes in, there must be an attempt to remove another regulation so that the regulatory burden, not just on small business but on society generally, does not continue to grow. It is not, in fairness, an Australian phenomenon; it is happening throughout the world. But we can do something about it in Australia by adopting Labor’s policy.

It was also announced—and it is relevant to this debate—that Labor will introduce a superannuation clearing house. You would think that would be welcomed. The government introduced Super Choice. That debate has passed and Super Choice is in. But small business, as we warned they would, are facing the burden of implementing superannuation choice. They are facing the massive paperwork burden of administering the superannuation choices of all their employees. Labor says that a clearing house will do it for them, if they wish.  The Minister for Revenue and Assistant Treasurer raced out a press release about this proposal. He said two things. Firstly, he said:

The Labor Party should not be directing small business to put their superannuation funds into a superannuation clearing house.

And he is right; I agree with him. The Labor Party should not be directing people to do that, and we never were. The Leader of the Opposition’s announcement was clear—the press release was clear—that this would be optional. Small business could choose to use the service. The Assistant Treasurer, in the first line of his press release, said, ‘The Labor Party will direct small business.’ The Assistant Treasurer needs to be more careful about the facts. He needs to be more careful when he criticises Labor policy. We can disagree about the impacts, but let us not misrepresent the facts. He also said:

This is a policy that has been thought up by the union bosses.

The Assistant Treasurer really needs some new material. We hear this day after day.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

It is the shell press release, obviously.

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

It is the shell press release, a template—it doesn’t matter what it is. The Labor Party comes in here with an amendment which has been welcomed by every financial business group and some of the biggest financial operators in this country—AMP, CGT and Barclays Bank have endorsed Labor’s policy—and the Assistant Treasurer, not 15 minutes ago, says that the Labor Party is just dominated by union bosses. Why would he say that, when it has been endorsed by every major business group in this country? He really needs new material. The business community in Australia is looking for more substance than that. You cannot come in here and, during debate on every bill and in every press release, say that this is all about the trade unions, because not everything is. 

He changes the words—sometimes it is ‘union masters’, sometimes it is ‘union task masters’, sometimes it is ‘union bosses’—but the principle is the same. He really needs to get more substance. He needs to start talking about the issues that Labor is setting on the agenda. He needs to start explaining to people why, for example, they do not support a superannuation clearing house, why they do not support BAS Easy, why they do not support the Australian managed funds industry. I say to the Assistant Treasurer: justify your position. Explain why you are not responding to Labor’s agenda and picking up some of Labor’s ideas. You cannot constantly rely on saying that the Labor Party is controlled by the trade unions. You need new material.

There have been a series of reviews in relation to small business regulation and small business tax. This has been going on for some time. Indeed, in 1990 a committee of this House—the Beddall committee—looked at these issues. In 1996, when the current government took office, they appointed the Bell review of small business regulation, presumably in an attempt to meet their commitment to cut red tape for small business by 50 per cent. I have yet to find a small business who thinks their red tape has been cut by 50 per cent over the last 11 years. The member for Rankin may correct me, but I have yet to find one who would say, ‘Yes, the government has implemented that promise.’ It was clearly a non-core commitment.

The Bell review was quite limited in the work it could do. Its terms of reference were to maintain revenue neutrality and to not consider taxation measures. We had a situation where for a long time, under governments of both persuasions, taxation regulation had been identified as the biggest regulatory burden on small business, and the Bell review did not deal with it. But the Bell review did make certain recommendations. Time went by and 10 years later we had the Banks review which, it is fair to say, was like a carbon copy of the Bell review. The Banks review made similar recommendations to the Bell review’s recommendations some 10 years earlier which had not been implemented. There is a lot of rhetoric from the government about small business regulatory reform. There are lots of reports and reviews, but we do not see much change. In fact, we had a situation where a review made similar recommendations to a review commissioned by the same government 10 years earlier. The time for reports has passed. The time for action is here.

This bill contains some sensible measures which we support. We will be voting in favour of this bill. We will also be proposing a second reading amendment which will provide relief to small businesses who are operating under the burden of administrative paperwork created by the GST and the business activity statement. We would invite government members to support that amendment. We would invite government members to join with members on this side of the House in standing up for small business and not walking on both sides of the street. On the one hand they say: ‘We’ve already done it. The Labor Party’s got it wrong; we’ve already done that,’ and, on the other, a couple of weeks later they introduce a similar policy to the Labor Party’s and say that the tax office will discuss with small business the ratio method. We say: let’s introduce the ratio method; let’s have fewer reviews, less discussion and more regulatory reform.

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

I rise today to address the Tax Laws Amendment (Small Business) Bill 2007. There are currently separate eligibility tests for the goods and services tax, the simplified tax system, the capital gains tax, the fringe benefits tax, pay-as-you-go instalments and small business concessions. This bill is about making things easier for small businesses in Australia. The bill will standardise the eligibility criteria for small business tax concessions from 1 July this year. It will create just one eligibility test to access a range of small business concessions. Any business—subject to satisfying existing eligibility criteria, not related to business size—with an aggregated annual turnover of less than $2 million will be eligible. The bill will allow small businesses to choose the concessions that meet their business needs. Businesses will not be obliged to adopt any concessions not suited to their requirements.

The concessions are: a 15-year asset exemption from capital gains tax, a 50 per cent active asset reduction of capital gains tax, a retirement exemption from capital gains tax, rollover provisions for capital gains tax, simpler depreciation rules and trading stock rules, immediate deductions for certain prepaid business expenses, the choice to account for GST on a cash basis and the choice to pay GST by instalments. The concession is also an annual apportionment of input tax credits for acquisitions and importations that are partly creditable. The bill provides for a car parking exemption from fringe benefits tax and pay-as-you-go instalments based on notional tax. There will be a two-year amendment period for the implementation of this bill.

The bill includes other elements. The existing eligibility thresholds for accessing capital gains tax, fringe benefits tax and pay-as-you-go instalment concessions will be retained. The bill will increase the maximum net asset value test for accessing capital gains tax concessions from $5 million to $6 million. It will extend the rollover relief available under the uniform capital allowance regime to any business with a turnover of less than $2 million that chooses to deduct amounts for depreciating assets. It will increase the GST cash accounting threshold from $1 million to $2 million. It will standardise the eligibility criteria, resulting in a reduction of compliance costs for up to two million Australian small businesses. This bill demonstrates the coalition government’s continued commitment to reducing red tape and compliance costs for small businesses. The mining boom is creating wealth, but small business is the driving force in many regional communities across my electorate.

In the last decade, the coalition government has recognised and supported small business. Australia’s small businesses are vital to our economy, accounting for 58 per cent of employment growth in the past six years. There are more than 1.2 million small businesses in Australia and they employ 3.3 million people. Over the past decade, the number of small businesses has grown 3.5 per cent each year on average. This sector generates 30 per cent of economic production. Forty per cent of all Australian small businesses are in regional areas. In my electorate, there are an estimated 18,000 small businesses operating and 67 per cent of all small business owners operate from home. This sector provides economic opportunities for women, who represent around one-third of small business operators.

The small business sector is very diverse. In 2000-01, the majority of small businesses were in the areas of construction, property and business services, retail, manufacturing and health and community services. The entrepreneurial culture of Australia’s small businesses is well known, although very difficult to measure. There are a number of innovative, growing small businesses in my electorate, including a Carnarvon based company, Abacus Fisheries, run by Peter and Sandy Jecks, who catch, process and market whole blue swimmer crab from Carnarvon. The Abacus facility is the largest, most technologically advanced, purpose-built crab-processing facility in Australia and is geared to one thing—producing a culinary superior crab. The company recently secured a grant from the Australian government’s Food Processing in Regional Australia Program to purchase and install processing equipment to grow their business.

Rosemary McGuigan and Gerri Ranieri are the directors of Kimberley Events Management. The company provides personalised conferences, holidays, events and weddings for visitors to Broome and the surrounding area and to countless farmers, hoteliers, restaurant owners and tourist operators.

Small businesses are also becoming increasingly export focused, with presently 41 per cent of all goods exporters being small businesses. Wildlife crusader and crocodile hunter Malcolm Douglas established the Crocodile Farm in Broome in 1983. He has grown it into a world famous tourist attraction and is now an export success. Around 40 per cent of the farm’s revenue comes from its exports. Crocodile skins are in great demand from fashion houses overseas. Of course, they want the very best quality and that is produced in Broome, Western Australia, in my electorate.

The economic environment in which small businesses operate has changed dramatically over the last 10 to 20 years, but small business has embraced change and grown with it. For example, small businesses have shown they are able to adapt to new technologies, with 62 per cent of small businesses using the internet for a range of uses such as research, email and making or receiving payments. Small businesses are essential to the future sustainability of regional and remote areas and must be supported. The most significant change we have legislated for the future of small business is abolishing the unfair dismissals law for companies with fewer than 100 employees.

We are supported by the Small Business Coalition, which is opposed to any changes to the current exemption from unfair dismissals. The Small Business Coalition is a coalition of 26 small business representative groups, including COSBOA, the Franchise Council of Australia, the Motor Trades Association, the Newsagents Federation, the Real Estate Institute, and the Master Plumbers and Mechanical Services Association of Australia. The SBC considers:

... retention of this fundamental exemption as absolutely essential to ongoing growth and success of small businesses. Any moves to roll back or water down these reforms would be against the interests of small businesses.

The election of a Labor government would put all these positive changes at risk, a risk that small businesses cannot afford to take. The exemption from unfair dismissals is absolutely essential for small business. The exemption creates jobs and cuts red tape. Small business knows it but the opposition does not. Labor’s decision to reimpose unfair dismissals on small business will cost thousands of jobs. Since small businesses were exempted from unfair dismissals, 276,000 new jobs have been created, a benefit to all those Australians and a benefit to the nation’s economy. Small business groups have credited the removal of unfair dismissal impediments as being a major reason for new jobs growth across Australia.

Now Labor is promising to throw away this strong jobs growth with a costly, bureaucratic system. Small business operators will waste hundreds of hours and thousands of dollars as a result of this draconian change. Labor will force us back to the bad old days when small businesses were reluctant to hire staff for fear of having to pay ‘go-away’ money to ex-employees threatening legal action for trumped-up unfair dismissal charges. Labor has not listened to or consulted small business. Labor has only listened to the unions because union leaders dictate to Labor lackeys in the Australian parliament. Reintroducing unfair dismissal laws and then trying to disguise it by offering an extended probation period will not fool small business. Small businesses have made it clear they want no change to unfair dismissal laws. Small business can only rely on the coalition for present legislation to remain in force. We have supported them in the past for greater employment opportunities for all Australians. We support them now and will support small business into the future.

We have heard a lot from the opposition leader about the unfair nature of AWAs, but I quote from today’s Sun-Herald which has a headline on the front page ‘Harsh Labor’:

A COMPANY owned by Kevin Rudd’s wife put workers on individual contracts that stripped them of key award conditions.

A common law contract, obtained by the Herald Sun, removed penalty rates, overtime and allowances for an extra 45c an hour.

The deal offered a $30,000 annual salary, or $576.93 a week.

This is only marginally better than the $29,219 legal minimum ($560.11 a week) applying to the most junior class of worker in the industry.

The offer did not include meal and travel allowances or loadings for work performed outside normal hours.

Mr Rudd’s wife, Therese Rein, is a multi-millionaire businesswoman whose companies employ 1400 workers in Australia and Europe.

Her firm Ingeus is a global player in the employment and recruitment sector and last year achieved revenues exceeding $170 million.

But the sting in the tail of the article is that:

The June 2006 contract noted that workers were covered by the Community Employment, Training and Support Services Award.

Employers would be forced to return to those sorts of situations if the Labor Party were successful in the election this year. The changes proposed in this bill will remove red tape, simplify the tax accounting process and cut costs for small businesses. I commend the bill to the House.

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

The Tax Laws Amendment (Small Business) Bill 2007 provides some welcome relief for small business by simplifying the tax system in a number of significant respects. It introduces a standard eligibility criterion of $2 million in annual turnover applied across small business tax concessions. Prior to this legislation, the criterion for small business to gain access to a concession could have been $5 million or $6 million and in other cases $1 million or $2 million. The purpose of this legislation is to allow small businesses to access some of the concessions that are in the tax system for small business by standardising that criterion, wherever possible, to $2 million in annual turnover.

Labor understands and accepts that sometimes standardising criteria is simpler in theory than in practice. We recognise that we cannot necessarily standardise every definition of small business within tax legislation, but this legislation makes very substantial progress. The legislation also increases the capital gains tax maximum net assets threshold from $5 million to $6 million and introduces a number of other measures. The legislation removes the $3 million depreciating assets test from the simplified tax system eligibility requirements. That sounds technical, but essentially the purpose of this is to allow small business greater access to this simplified tax system. I will have more to say about that in a few moments.

Another provision of the legislation increases the turnover threshold for eligibility for the simplified tax system from $1 million to $2 million in annual turnover. Again, that will substantially increase the proportion of small businesses that can gain access to the simplified tax system. That is important because the simplified system offers benefits to small businesses by enabling them to group small assets and write them off either immediately or faster than would otherwise be the case. The purpose of that measure is to allow small businesses to keep more of their cash flow in the early years. It will not necessarily change the total amount of tax paid over the lifetime of those assets, but it will reduce the amount of tax payable in the early years and commensurately increase the amount of tax paid later, if the business is still operating. Small businesses want and need positive cash flow in the early years if they are to survive and thrive. Australian small businesses experience a high failure rate during their first two years of operation, and that is why the simplified tax system is attractive in principle.

However, there is a quandary. The shadow minister for revenue, the member for Prospect, pointed out that the accounting profession has estimated that only 20 per cent of eligible small businesses are availing themselves of the benefits of the simplified tax system. In response to questions during Senate estimates hearings late last year, government officials estimated that figure at 28 per cent. That is a similar order of magnitude. It makes one wonder why 72 per cent of eligible small businesses do not choose to access the system. While the government’s lifting of the eligibility threshold from $1 million to $2 million is welcome, it is well worth asking why so few small businesses are availing themselves of the opportunity to access a simplified system that includes accelerated depreciation and immediate expensing of some assets.

I do not believe we have any clear answers, and there were certainly none in the Senate estimates hearings last year. I note for the record that the government officials who were asked to provide more detailed answers on notice never did so. I fear that is part of a pattern of officials being instructed by the government not to provide basic information. I foreshadow that we will ask similar questions in the estimates hearings in the next fortnight. We do hope and expect that this time government officials will be more forthcoming so that we can get a better handle on why so many small businesses do not avail themselves of the simplified tax system.

There is a further measure in this bill, and that is to increase the goods and services tax cash accounting turnover threshold from $1 million to $2 million—again, this is meant as a simplification measure. This certainly does bring me to a discussion of various proposals for simplifying the GST bookkeeping burden on small business. Those proposals have quite a history, and most of them come from the Australian Labor Party. Back in 2000, as a backbencher I developed a proposal called ‘the ratio method’. The ratio method would allow small businesses to apply to the tax office for a ratio based on their historical financial GST performance and to have that ratio apply to future financial transactions, thereby quite dramatically simplifying the GST paperwork.

The government condemned this proposal at the time and said that it would not work. As a government it had just gone through a process of making some simplifications to the BAS bookkeeping requirements. You might recall that, around that time, there was a lot of small business anger and anxiety about the huge new paperwork burden being imposed upon them, and so some simplifications were made. This was a far more dramatic simplification, and I was amused when the then small business minister elicited a minute from the then Department of Employment and Workplace Relations and Small Business. I have managed to dust that off and I have it here today. It was not necessarily the minute that the minister wanted to receive. The minute commented on the ratio method:

A ratio by turnover method is a reasonable option for calculating GST as long as the ratio continues to be an accurate reflection of the net GST position of the business. As the actual turnover figure in a quarter is the basis for the calculation, it can be a sound means of reflecting seasonal or abnormal fluctuations provided the basic composition of a business’s trading circumstances does not change.

Hear, hear! Good on the department for making those observations about the ratio method. In fact the ratio method did contemplate circumstances where the business’s trading circumstances do change, in which case a new ratio was to be sought from the tax office.

In responding to this the Treasurer condemned it and said that it was a shocking idea and that small businesses would be forced to pay more in GST, even though this was an option—and it still is an option. It was always an option. But the Treasurer warned, ‘Watch out for the ratio method, because small businesses will have to pay more GST and there’ll be a loss to the revenue.’ So we had the Treasurer making claims in two breaths: in one breath he was saying, ‘Small businesses will pay more,’ and in the other breath he was saying, ‘The revenue will be adversely affected.’

While the government was condemning the ratio method it was quietly assembling the simplified accounting methods. The simplified accounting methods are a good concept and Labor supported simplified accounting methods. But we pointed out that simplified accounting methods are limited to mixed-food retailers. Mixed-food retailers are those who have some items for sale that attract GST and others that do not attract GST and/or have some purchases that attract GST and others that do not attract GST. Those are exactly the circumstances where the ratio method would apply. Those simplified accounting methods were limited to those circumstances of mixed-food retailers—small grocery and corner stores, fish and chip shops and so on.

The Banks report, commissioned by the government, said, ‘Why not extend the simplified accounting methods to small restaurants, cafes and catering businesses?’ What a good idea—and the government has indeed done that. We have called for the government to go further and extend it as an option to all small businesses with a turnover of less than $2 million. That is highly relevant because the government is standardising the definition of small business at around $2 million in this legislation. We called for that. There would be two broad ways of doing the calculations under what we were proposing. What we were proposing comes under the terminology of ‘BAS Easy’. BAS Easy would extend these simplified accounting methods to other businesses. In one approach under BAS Easy you would take two snapshots a year for a month: one in the first half of the year and one in the second half of the year. You would then apply the resulting ratio to GST sales for the rest of the year, hence the ratio method, hence BAS Easy.

We thought that was such a good idea and the Labor leader, Kevin Rudd, thought that was such a good idea that he announced in his National Press Club speech that Labor was circulating a proposal called BAS Easy. In response to Labor’s proposal was a story in the Financial Review of 26 April 2007 headed ‘Costello sour on Labor’s BAS sweetener’. So he did not seem to like it. Let me cover some of the statements in that article by Fleur Anderson. The article says:

Labor’s election sweetener to small business, to lift the burden of GST paperwork under its BAS Easy plan, was introduced by the coalition last year, Treasurer Peter Costello said.

So the Treasurer apparently does not like BAS Easy. He criticised it for five years but then he said, ‘I introduced it last year.’ The proposal that he condemned for five years the Treasurer said he introduced. The Treasurer said:

The simplified accounting method is available to businesses  with an annual turnover of up to $2 million, the same threshold that Labor says it will implement. It was developed in close consultation with industry and makes it easier for these businesses to meet their GST obligations and reduce their compliance costs.

Here is the Treasurer saying, ‘We’ve never liked this ratio method, we don’t like BAS Easy, but we implemented it a year ago.’ How amusing is this? COSBOA took a different position to the Treasurer, because COSBOA is full of praise for BAS Easy. In a release of 20 April, Tony Steven, the CEO of COSBOA, said that he welcomed the ALP proposal, called BAS Easy. He said:

For all small businesses working under a revenue threshold of 2 million dollars a year the BAS Easy system is a simple and practical answer to the current BAS red tape.

Taking an opt-in approach will allow those businesses that are working with few or no staff to adopt the new BAS Easy system and save time and effort should they so wish.

So there we have a small business organisation, COSBOA, welcoming BAS Easy, and the Treasurer condemning BAS Easy but saying that he had implemented it already. There was other praise for BAS Easy, too, but time will not allow me to go through all that praise. But here is the conundrum. The government did not in those changes in response to the Banks report extend BAS Easy—our proposal; the simplified accounting method, if the Treasurer wants to call it his proposal—to all businesses with a turnover of less than $2 million. However, in the budget, the Treasurer put out a press release which said:

The Government will allow more simplified accounting methods for small businesses. This will give more small businesses the option of using a simplified method to calculate their GST obligations if it suits their requirements. From 1 July 2007, any small business that makes mixed (taxable and GST-free) supplies or mixed purchases will be able to approach the Australian Tax Office (ATO) to discuss the development of a simplified accounting method for their use.

That is the ratio method. That is BAS Easy. This is the point: how could the Treasurer condemn BAS Easy for five years and then say he has already introduced it and then go to the budget saying, ‘Now I’m really going to introduce it,’ when what he has in fact introduced is a discussion, a chat, where a small business can go to the tax office? My concern is this: if this government were re-elected and a small business were to go to the tax office and say, ‘What ratio would you issue me?’, the government may well instruct or allow the tax office to issue a completely unfavourable ratio—one that no small business would go anywhere near with a barge pole. So what the Treasurer wants to do is have the benefit of being seen to simplify, or the appearance of simplifying, the GST bookkeeping burden and paperwork requirements for small business but not actually doing it. Only this Treasurer could design a GST that raises $185 billion in order to collect $37 billion. It is a very complex GST and one that imposes a disproportionate burden on small business.

In a special MYOB survey in January on the red-tape burden on small business—

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

Mr Cadman interjecting

Craig Emerson (Rankin, Australian Labor Party, Shadow Minister for Service Economy, Small Business and Independent Contractors) Share this | Link to this | Hansard source

The member for Mitchell has joined us; he may well have read that survey, but I bet he forgot to bring it into the chamber, because small business declared in a loud voice that the No.1 red-tape bugbear that they confront is completing the GST paperwork requirements. It is often, in the case of an independent contractor, the contractor’s spouse who does that work on weekends or at night. These are the unpaid bookkeepers; they are the unpaid tax collectors for this government. They have better things to do—have a better family life, grow their businesses—instead of doing this BAS paperwork all the time. If the government were truly listening to the voice of small business in their own electorates and to the representative organisations, they would know that this is an ongoing problem, a huge problem, six years after the introduction of the GST.

The time of BAS reckoning is with us. I am moving a second reading amendment that will allow every member of this chamber to affirm its support for the BAS Easy proposal. We will know then whether the government is fair dinkum about BAS Easy or it is not. The Treasurer said he had already introduced BAS Easy last October. Then he says in the budget, ‘This time I’m really introducing BAS Easy.’ Labor is saying, ‘Here’s the opportunity.’ It is unlikely that there will be a division on this particular piece of legislation and the second reading amendment that I am about to move before we adjourn here this afternoon, having examined the speakers list. In those circumstances, government members have several days to have a think, have a look, get across this issue and come and support Labor’s second reading amendment. Therefore, I move:

That all words after “That” be omitted with a view to substituting the following words:“whilst not declining to give the bill a second reading, the House calls on the Government to implement Labor’s BAS Easy option for simplifying GST bookkeeping requirements on small business with an annual turnover of less than two million dollars.”

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Laurie Ferguson (Reid, Australian Labor Party, Shadow Minister for Multicultural Affairs, Urban Development and Consumer Affairs) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

I would like to deal with the proposed amendment later on in my comments on the Tax Laws Amendment (Small Business) Bill 2007. Firstly I would like to outline to the House and those listening some of the great benefits that small business gives to Australia. Businesses with less than 20 employees in Australia is the usual definition for ‘small business’, and there are approximately 1,888,000 small businesses in Australia. Ninety-six per cent of all businesses are small businesses with fewer than 20 employees. It is estimated that 39 per cent of Australia’s economic production is generated by the small business sector—almost 40 per cent. Small businesses provide employment for almost 3.7 million people. Almost half of all private sector employment is in small businesses. Those figures exclude small business employees in the finance and insurance industries, of which there are large numbers.

The growth in small business was approximately 25,700 in 2005-06—the last year for which I have figures—so roughly 25,000 new small businesses year after year. Since June 2003 the number of employing small businesses has grown by 31.7 per cent. In New South Wales the total number of all businesses is approximately 671,000, of which 643,000 are small businesses. The rate of small business exits during the last financial year was 15 per cent, so there is a constant growth of businesses. Some of those exits should not necessarily be put down to bankruptcies or problems; a huge number are for positive reasons and possibly only 2.5 per cent are exiting due to lack of financial success. That is a very good result: small business growing fast, having great success, employing about half of our population and having a positive result on the economy.

About 62 per cent of small businesses are non-employing and 26 per cent employ between one and four people, so the tiny businesses comprise a substantial proportion of small business. Almost 70 per cent of small business operators are male, but there is a massively increasing number of females who are running their own businesses—often franchise businesses and often doing exceedingly well. These are very positive results from women who are taking up small businesses. Sixty per cent of small business operators are aged between 30 and 50 years, which is not an unusual figure. Ninety-six per cent of small business owners have a computer and 90 per cent of small businesses are connected to the internet, so there is a high degree of dependence on technology in small business. They are innovators and hard working.

Let us now look at the proposals contained in this legislation to simplify and bring together a whole range of measures that make it easier for small business to comply, and this is within a framework which was announced by the Treasurer on 13 November 2006. There are five different small business tests. One is on the simplified turnover provisions, one is for the goods and services tax, one is for the capital gains tax, another is for the fringe benefits tax and another is for the pay-as-you-go—that is, the BAS payments. These have now been changed. The simplified tax system is for businesses under one million; for GST, $1 million to $2 million turnover; for the capital gains tax, active assets of $5 million; for the fringe benefits tax, statutory income of less than $10 million; pay-as-you-go for less than $10 million—they have now all been brought in to an area where an annual turnover of $2 million or less is the criteria. That will cover 96 per cent of businesses.

The small businesses, so classified with a turnover of less than $2 million, will be eligible for the simplified trading stock rules, simpler depreciation rules, two-year amendment periods, intermediate deductions for certain prepaid business expenses, the entrepreneurs tax offset, choice of accounts for GST on a cash basis, choice to pay GST by instalments, annual apportionment of GST input credits, simplified accounting methods for the GST, capital gains tax 15-year asset exemption, capital gains tax 50 per cent asset reduction, capital gains tax retirement exemptions, capital gains tax rollover provisions, fringe benefits car parking concessions and pay-as-you-go instalments based on notional tax. Those have all now been brought together for the simplified system. It will be much easier for 96 per cent of small businesses.

The Treasurer has certainly moved in accordance with the provisions that were announced on 13 November last year. There is a single definition for small business of $2 million annual turnover for GST, the simplified tax system, capital gains tax, fringe benefits tax and pay-as-you-go instalments. This will cut taxes for small businesses by approximately $277 million per year and save small business time and compliance costs. That is a twin win for small businesses: time saved and a tax concession at the same time.

Under this new framework, the separate eligibility test for these measures will be replaced by a single test. Any business with an annual turnover of less than $2 million will be able to access any of these concessions. They will not need to make any further decisions to enter into the new arrangements. If they earn under $2 million, they are in. A single definition of small business will result in significant compliance savings for the businesses and, as I have said previously, they represent about 96 per cent of businesses in Australia. They will not be obliged to adopt any of the measures not suited to their requirements, but will be able to choose the ones that they want. So there is the choice for small business—an easier process—which is often made with their financial advisers or accountants. Small businesses will now be able to adopt the measures that suit them provided there is the one test, the single test, of less than $2 million per year.

The Australian Chamber of Commerce and Industry has welcomed the change, as has COSBOA, that the new definition replaces a set of complex and hard to understand rules with each tax having a different test for small business. I have read out the tests; there is a multiplicity of less than $1 million through to $10 million. They are all consistent now. And the Institute of Chartered Accountants, a very excellent organisation, I have found, which recently published its own research on this area and the small business definition in tax law, has welcomed the change. The institute has said that these changes would improve access to tax concessions and reduce compliance costs, which will also have flow-on benefits to business.

The new definitions build a strong platform of tax initiatives that this government has delivered for small business. This strong platform includes the entrepreneurs tax discount, which is delivering $1.2 billion in tax cuts for more than 500,000 small businesses, enabling them to reinvest in their business or take a well-earned dividend. The government also has directed the Board of Taxation to inquire into where small business compliance costs can be further cut. So the government is on the job—moving ahead, changing tax law, simplifying the process and requiring the Board of Taxation to make further inquiries where further improvements can be made. The board is a consultative board—it is not owned by the Commissioner of Taxation—and it is comprised of people who have a knowledge of small business and can assess whether the changes are beneficial.

There were some additional measures within the budget which I need to mention. The 2007-08 federal budget contained other measures in addition to the simplification factors that we are dealing with today. Businesses with an annual turnover of less than $75,000 will no longer be required to register for GST. The current annual turnover is $50,000 and this has been pushed up to $75,000. But if businesses who wish to register have a turnover of less then $2 million and make a mix of GST-taxable and GST-free supplies they will be able to approach the ATO for a simplified accounting system. The expenditure threshold for which tax invoices are required will be raised from $50 to $75. This test threshold will also apply to the no ABN withholding requirements, and the government will provide $40 million over four years to the tax office to assist it in educating businesses to understand their GST requirements. It is not an auditing process, a scrutiny process or a standover process but a cooperative arrangement so that small businesses are not punished but understand their requirements.

The government will align the pay as you go instalment requirements for those entities which have voluntarily registered for the GST. This will apply to businesses with an annual turnover of less than $75,000. The new measure will allow those entities to lodge one business activity statement per year and satisfy their PAYG and GST obligations. Those are further amendments to the tax law and changes in its administration that were implemented in the last budget.

The Australian Labor Party and the Leader of the Opposition have put forward proposals that have been proclaimed by speaker after speaker in the House today. Coming from a small business background—and none of the speakers so far can claim that—I had a look at what they are proposing and thought how practical their proposals were. You have to run a small business and sign the cheques to know whether or not this thing—GST easy or whatever it is called—is going to work. But I saw in the Financial Review a few days ago some comments by two practising accountants who deal with small businesses every day. I noted comments by Greg Hayes, the Senior Partner of Hayes Knight accountants, who said:

They say the right things but in meaningful terms I don’t think they will produce a result for small business.

PKF partner Helen Argiris says it is a vain attempt to gain the small business vote:

… with what sounds like a wonderful idea, when in fact, no one has sat down and thought of the potential implications and pitfalls.

I want to bring to the attention of the House and the Australian Labor Party that what they are going into could cause dangers and more problems than they are considering. They think it is a wonderful change that they are proposing, and to look at it superficially there may be some attractions. But when you look at the details of how it is going to work you see it uses a method of ratios determined by the Australian Taxation Office instead of calculating the GST liability for individual items, and it applies the ratio to sales, to purchases or to both. Mr Hayes of Hayes Knight has said that with so many types of businesses often running on fine profit margins owners are reluctant to rely on a statistical approximation in case they fall outside the norm and end up with a refund that is lower than if they had calculated all items individually. You could finish up with a refund that is lower but you could also finish up with an expenditure greater than you expected. So in depending on a tax-generated ratio there is huge risk for businesses which are running close to the margin. I draw that to the attention of the House. Mr Hayes is quoted in the Financial Review of 1 May as saying:

Most businesses I talk to prefer not to take the risk.

So they would prefer to do their own calculations on the exact turnover in their businesses rather than relying on an estimation or a ratio applied by the tax office.

Under the Labor Party proposals, businesses can opt for the business norms or the snapshot method. Under that method, dealt with by a previous speaker, two snapshots are taken—one in the first half of the year and one in the second half of the year—and the ratio is calculated on those two snapshots, thereby, it is proposed, getting an accurate picture of what is going on in the business. But many businesses are cyclical or seasonal in their activity and Ms Argiris said she was concerned that the apparent ease of the snapshot method could cause a tax flow problem for uneducated taxpayers. For instance, if the snapshot ratio were calculated during a brief period of low turnover and applied for the rest of the year when business was high, the operator would not be putting aside sufficient cash flow to cover the GST on actual sales.

So there is an additional problem here that is not obvious, because all of these factors are required to be reconciled under the current system at the end of the year. If that reconciliation does not take place, as proposed by the Australian Labor Party, in an audit two or three years down the track a business could find that the reconciliations are all out of whack because they have relied on a ratio for their expenditure which is going to cause them either to pay too much tax or to have a detrimental or advantageous imbalance. The fact of the matter is that according to two experienced accountants—not according to the Treasurer or me—the uncertainty of what is being proposed could create difficulties that are unforeseen by the business at the time and where a day of reckoning some three or four years later could be quite damaging. According to the AFR article, Mr Hayes says:

“You would see that businesses which have not gone through reconciliation have wide variations between their accounting and tax reporting.”

The article continues:

Unravelling those differences could take three or four years to sort out.

So, whilst the system has become more complicated, these efforts by the government clarify and simplify tax for small business. I really do welcome them and think that they are long overdue. I particularly like the change now allowed to small business from $1 million to $2 million for cash accounting processes. Many businesses prefer cash accounting rather than the accrual system. That measure alone is very significant, but I warn small business—and I warn Tony Steven of COSBOA—that these matters need to be looked at very carefully. Mr Steven was not quite as glowing as was suggested by previous speakers. There was a degree of caution in his comments when he said he thought the proposals by the Australian Labor Party ‘might be an improvement’. But Mr Steven’s role is really to give a tick to anything that sounds as if it is going to make life better for small business. That is his job; that is the role of the CEO of COSBOA, so he would welcome anything that appeared to make things look better. However, the Treasurer sounded a degree of caution when he indicated that we have moved well in applying the ratio system where necessary. We are not going to go down the non-reconciliation line. Small businesses need to know that, at the end of their period, they are going to be right on the button and not have some unexpected bill or be running short of cash when there was no need to because they have overestimated what they should be paying. I think that the process that the government has adopted while holding open the prospect of more changes in the future is very sensible.

The Work Choices changes and the getting rid of unfair dismissal laws for small business have created job after job after job. Australian Labor Party MPs need to walk around their electorates and talk to small businesses to find out how damaging those laws were and how they impacted on employment opportunities. Employers were not taking the risk—making their staff work longer hours, with unnecessary overtime in some instances, to cover the needs of their businesses under pressure to produce, when in fact getting extra people onto the floor or into the business was a much better solution. The unfair dismissal laws allowed that to happen. (Time expired)

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

I can indicate to the member for Mitchell that, prior to coming into the parliament, I was a small business owner and operator, so I have a great fondness and appreciation for small business operators, particularly those who operate in my neck of the woods in the south-west of Sydney. I do not need to take a walk around my electorate to talk to small business owners; I know on a first-name basis the ones who beat a path to my door as they try to work through the various regulations of this government as they continue to produce the goods and services ever so necessary to the proper functioning of our economy.

Small business is a critical section of our economy. It is the employment generator. In the south-west of Sydney I have never made any bones about the fact that employment generation will come through expanding the role of small business and providing suitable incentives for them to invest further funds to grow their businesses. Through such measures in our suburban communities, local jobs and economies grow, which is obviously a very good thing for those local economies and for the economy generally.

It is easy for members of this House to stand up and profess their deep and abiding affection for small business operators, and we have seen much of that so far in this debate. But, quite frankly, it is a lot harder to back those words up with action that really does assist the lot of small business. Over its 11 long years in office, this government has often professed its affection for the entrepreneurial spirit of small business operators but has systematically failed to back that up. It has left many small business operators shaking their heads and calling for a little less conversation and a little more action when it comes to dealing with their concerns in running their businesses in the community.

From the outset, I would like to make it clear that Labor is supporting the amendments to the tax laws contained in the Tax Laws Amendment (Small Business) Bill 2007. Labor supports improvements to the relative position of small business operators because Labor support small business. I also support the amendment proposed by the shadow minister for small business, the member for Rankin, and I will speak more about that amendment later. But let there be no confusion: Labor has always supported small business. Labor knows how important small business is and is willing to take appropriate steps to assist it—not the half-hearted steps that occur around election time. And what are seeing here? Once again we are seeing steps being taken by the government around election time.

This government’s position on small business has been all about industrial relations so far. The one big thing that small business people locally constantly say to me is that they take umbrage at the fact that, as small business operators, they are now classified by this government as employers of anywhere from zero to 100 people. That is something that this government has brought on small business. It has used small business as the stalking horse for the GST and as a Trojan horse for industrial relations. It surprised me to hear that one of the main spokespeople on the industrial issues facing small business was Peter Hendy, the once personal adviser to the former minister for industrial relations, who runs the largest employer based organisation in the country. He has a vested interest in small business industrial relations laws because he knows that employers of from one to 100 people covers 98 per cent of all Australian companies. That is why this bogus position has been put out by small business operators. Everyone spoke about small business in terms of industrial relations except nobody really took the time to talk to small business.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

What do you think the number should be?

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

There is one small business issue that keeps coming through. I am sure the member for Moncrieff has heard this in his local community, provided that he walks around that community.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

Regularly.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Most small businesses want to see the cutting of red tape. I challenge the opposite side to see how many of their members come from a small business background, because we have been challenged to do so. As I said, I am one of them. I know personally the problem of red tape for small business. This government made a promise back in 1996 to do something about cutting red tape. They even introduced the $50 million Regulation Reduction Incentive Fund to streamline for small business the red tape at local government levels.

Mr Deputy Speaker Scott, you will no doubt recall that in the lead-up to the election in 1996 the then opposition leader made the bold promise that he would cut red tape by 50 per cent upon taking office. In coming to office, he engaged Charlie Bell, who ran a McDonald’s at that stage, to lead a task force to look at the methods that could be put in place to cut red tape and seemingly make the plight of small business a little easier. Of course, the government did not manage to do that. I do not think they ever really had any intention of doing that. It was just something they wanted to say to small business operators, who are a growing part of our community. It is something they have put out, once again, just before an election.

The Prime Minister made big promises to help out small business operators but, quite frankly, those big promises did not ever seem to materialise. In a sign of absolute arrogance, this government have now decided to repeat the promise to cut red tape by 50 per cent some 10 years later. They commissioned Gary Banks, the head of the Productivity Commission, to once again go through and do what Charlie Bell did and give us a heads-up on what we can do to reduce by 50 per cent the red tape that affects small business. They did not keep their promise the first time; why would we think they would keep it this time? On both occasions, this promise was only rolled out in the lead-up to a federal election.

I mention this broken promise, and the government’s repeated disingenuous commitment to small business, in the light of the tax bill we have before us today, which purports to implement some simplicity, improvements and assistance for small business operators. Before members opposite take me to task, this bill does that to a degree. To the extent that those improvements are made, the bill is certainly welcome and will be supported by Labor.

The Tax Laws Amendment (Small Business) Bill 2007 implements the tax arrangements announced in the budget by the government. Under the existing tax law, there are a number of special arrangements for small business and each of those concessions has its own set of eligibility criteria. It seems a little nonsensical but that is the procedure which was in place. Of course, the multiple eligibility criteria for small business concessions is not only legislatively confusing; it is also confusing for small business operators. To date, I have found six different definitions for small business contained in various Commonwealth acts, let alone the definition in the Workplace Relations Amendment (Work Choices) Act which refers to small businesses as employers of anywhere from nought to 100 people. That is not an issue that I want to dwell on in the debate today, but I think it is certainly worthy of some further investigation to find a true definition of a small business operator.

The bill before us today seeks to overcome the confusion and complexity of the eligibility of small business for various concessions. Different definitions under the simplified tax system are used to determine eligibility for concessions for the GST, the capital gains tax, the fringe benefits tax and the pay-as-you-go instalments. And people wonder why small businesses complain about the complexity of red tape. Under the framework introduced in this bill, all of these eligibility tests will now become one. Small businesses will be able to access their concessions provided that any additional criteria that relate to the specific nature of the concessions are satisfied. Their entity is considered a small business if it is defined by the criteria that (1) it carries on a business and (2) it satisfies a $2 million aggregated turnover test.

Meeting these requirements will become known as satisfying the small business entity test. That is good stuff. I support that and I know that it will make a significant difference for a lot of small businesses operating in my area. However, satisfying the aggregate turnover test is a little more complex. There are three ways to satisfy the $2 million aggregated turnover test: firstly, that the entity’s aggregated turnover for the previous income year was less than $2 million; secondly, that the entity’s aggregate turnover for the current income year is likely to be less than $2 million, calculated as at the first day of the income year; or, thirdly, that the entity’s actual aggregated turnover for the current income year was less than $2 million, calculated as at the end of the income year.

In order to arrive at the aggregated turnover, the entity must first calculate its annual turnover, which is the total of ordinary income that the entity derives in the income year in the ordinary course of carrying on a business. There are a number of complexities in this calculation in relation to the consideration of wages and salaries, and dealings with associates not considered to be at arm’s length from the entity. The entity must then determine whether the turnover for the year needs to be aggregated with the turnover of other entities to arrive at an annual turnover for the test entity.

I would suggest that for many small business operators this is starting to get relatively complex, and this is after we have tried to demystify the laws to make them easier. Some would have accountants on board for this. And I suppose in ordinary circumstances an accountant would not be considered necessary in a small business; that they would be able to work their way through this. But for the average small business, I think this area will prove to be complex.

The test goes on. If they do have another entity, it must be added to the first to form the test entity. If an individual or a company is an affiliate of the entity where the individual or company’s business acts or could reasonably be expected to act in accordance with the entity’s directions or wishes, it then must be treated in concert with the first entity.

I thought this was all about trying to make the lot of small business easier. There must be a more reasonable test of small business. There are about six separate definitions of small business in Commonwealth legislation and the overarching definition is provided by Work Choices—that is, a small business will be any organisation of less than 100 employees. That is 98 per cent of all Australian companies. This is why small business is actually reeling. Small business really does need some assistance in streamlining the red-tape and making it more comprehensible so they can actually take care of their business as well as satisfy the reporting obligations of the Commonwealth.

That is why I support the amendment moved by the member for Rankin which states:

whilst not declining to give the bill a second reading, the House calls on the Government to implement Labor’s BAS Easy option for simplifying GST bookkeeping requirements on small business with an annual turnover of less than two million dollars.

That is a sensible proposition being advanced by the shadow spokesman for small business and independent contractors.

In moving that amendment, the member for Rankin certainly draws the attention of the parliament to the real concerns that affect the genuine small business operators in this country. The BAS Easy proposal would provide a simpler and faster way for small business to be able to estimate their GST obligations. It would leave more time for small business to do what they do best: concentrate on their businesses and take what steps they can to grow and mature within their market. Rather than spending hours and hours fulfilling their reporting obligations, this proposal would reduce the time required to minutes.

In the south-west of Sydney—and I am not sure whether you are aware of the demographics of the seat of Werriwa, Mr Deputy Speaker Scott—independent contractors is a large and growing group. They are small business operators that cover a range of industries, including truck drivers and whole host of things. A lot of people work from their homes or from small business locations and they are a growing part of the economy of south-west Sydney. That is why I am very conscious of the position of independent contractors when we have a debate concerning small business owners. It is beyond doubt that independent operators form the majority of small business operators in my electorate of Werriwa, and I am sure that would be common in most of the electorates of members of this House.

A lot of the reporting required of independent contractors, whether they be owner-drivers or just a small family business, actually falls to women to undertake. Wives and mothers take care of a lot of the microprocessing from home based operations. I am not being demeaning of truck drivers in this regard. Owner-drivers are out there driving their vehicles and unfortunately, in many cases, it is their spouses and the mothers of their children who are taking the time to comply with the Commonwealth’s BAS reporting requirements. That is a significant burden. I do not care what anyone in this place says, if you have gone through the rigours of completing these BAS requirements—as I have done, as a small business operator—you would not say that this is just a simple, non-time-consuming exercise. Most of us retain accountants to fulfil a lot of that reporting, but I am sure that those organisations that have not done that or cannot do it would understand what I am saying. If those opposite talked to small business people, they would know that what I am saying in this respect is right.

The steps that have been advocated in the amendment by the member for Rankin, in BAS Easy, try to make the lot of small business more manageable in terms of reporting requirements. This will give them the incentive to sharpen their edge, doing what they do best—that is, serving their communities and producing the goods and services they do in running their businesses. I think the government should have a very clear look at BAS Easy. This could be something that would assist the government in terms of making it look more palatable to small business. (Time expired)

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

If ever there was a time to be grateful for a 20-minute time limit on speeches in this chamber, I think we just witnessed it. The Australian Labor Party have a great deal of gall coming into the chamber to speak about the Tax Laws Amendment (Small Business) Bill 2007. Speaker after speaker from the opposition benches walk into this chamber and tell the coalition about how Labor’s plans for small business are better than the coalition’s plans for small business, about how the Labor Party is more in touch with small business than the coalition and about how the Labor Party is not interested in tokenistic gestures but is actually interested in meaningful reform for small business. The amazing thing about it is that they stand there and do it with a straight face. It is no wonder that the member for Werriwa stuck so closely to his script. If he had ventured off, I dare say he would have broken that poker face and started smiling as he was professing his great love and great interest in small business.

The fact is that there is no greater enemy—and I used that word advisedly—of small businesses across Australia than the Australian Labor Party. The record of the Australian Labor Party, when it comes to small business, is abysmal. It was this government which, on 42 separate occasions, tried to remove the shackles of unfair dismissal for the small businesses across Australia, and on 42 separate occasions the Australian Labor Party voted against it. That was one of the biggest single initiatives, which has had a positive and beneficial impact on the small business sector, and the Australian Labor Party stood in its way each and every time. On 42 separate occasions they exercised the muscle that they used to have up in the Senate to prevent an initiative that was ultimately in the best interests of the small business sector. That is the Labor record, and that is why small business should be very afraid if that mob ever gets back into power.

We have started to see already the ambitions of the Australian Labor Party. I would be slightly concerned if the ambitions that Labor has with respect to small businesses in Australia were a function of the thinking of the Australian Labor Party, but I am more concerned because it is not a function of Labor Party thinking. The real puppet masters in the debate on small business are the unions across Australia. The Australian Labor Party is 100 per cent owned and controlled by the trade union movement in this country. Each of the people who sit on the opposition benches is accountable back to their respective union. Each of them is required to do the bidding of their respective union. That is the reason we see the Australian Labor Party floating the balloon of reducing the number of employees that a small business can have and remain exempt from unfair dismissal laws. That is the reason the Australian Labor Party is talking about reining those numbers back. It is the bidding of their trade union masters. And their job in this place, like puppets on a string, is to make sure that they carry out the will of their trade union masters. Australian small businesses recognise the direct threat that would flow to them if the Labor Party were elected.

I come from the Gold Coast, and I have said on many occasions that it is the small business capital of this country. On a per capita basis, no other part of Australia has a higher number of small businesses than the Gold Coast. It is a city of entrepreneurship. It is a city of wealth creators. It is a city of people willing to roll their sleeves up and give it a go. To every single one of them I say, ‘Congratulations for taking the initiative, for taking the risk and for chancing your arm to realise a better future.’ But there is something else I know about the small business sector. I have a wife who is intimately involved in small business. She has her own small business. I come from a family that has had a number of small businesses.

Teresa Gambaro (Petrie, Liberal Party, Assistant Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

Hear, hear!

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

I note that the minister at the table, the member for Petrie, has a very strong and proud small business tradition in her family as well. In the Labor Party, there might be one or two members who have some loose connection to the small business sector. On occasion one of them may have walked into a small business to purchase an ice-cream or something, so they stand up here and boast about their small business connections. Unlike that lot who sit on the other side of the chamber, on this side of the House there are a number of people—the vast majority of people—who come from various backgrounds in the small business sector and who are proud to be advocates for the small business sector.

Collectively, this government knows one key truth about Australian small business people—that they are a pretty good mob. We know that small businesses, as employers, recognise that one of the greatest assets they have is their people. They recognise, as employers, that they have a responsibility to their employees. All they ask in return is that their employees have the same sense of regard for them as employers. When it comes to unfair dismissal, this is one of the lightning rod issues for the small business sector. Small business people know that if they have a good person they do not simply dismiss them. They would not flick them away; they know that that person adds value to their business. And any good employee is going to be looked after, rewarded and encouraged in a small business environment.

The Australian Labor Party travel around Australia stirring up trouble for the small business sector. They say to employees, in some kind of 1970s reference to class warfare, ‘You should be careful; you’ll be exploited by your small business bosses.’ That is the rhetoric that the Australian Labor Party like to throw about the place as they travel through the community trying to poison the minds of small business employees: ‘Be aware, be afraid and be very curious when it comes to your employer because they’ll exploit you.’ We see time after time the Australian Labor Party in question time trying to paint employers as some kind of negative force in the economy. The fact is that small business proprietors and the employees that they work closely with are the backbone of the Australian economy. If that is a cliche, it is because it is a universal truth that all Australians recognise—small businesses are the backbone of the Australian economy. This government is very proud to stand in their corner and say to small businesses, ‘We will be in your corner and undertake initiatives that make your lot easier.’

The rhetoric from the Australian Labor Party does not wash. Their feigned concern for the small business sector does not wash because, when the rubber hits the road, we know the Australian Labor Party would stamp down on small businesses and roll back its unfair dismissal laws across all small businesses. There was even a hint of that from the member for Werriwa. He said, when he was talking about unfair dismissal laws, that this government has it wrong because this government’s unfair dismissal laws will go for businesses with one up to 100 employees, and that covers 98 per cent of businesses. Those were the member for Werriwa’s words. I invited him to make further comment about his thoughts but he stayed clear of it, inviting the implicit assumption that in some way it should not be businesses with 100 employees but maybe with 50, 25 or only 10. The criticism that was implied in that comment was that covering businesses with one to 100 employees, therefore covering 98 per cent of businesses, was in some way a negative thing. We see, masked in the language that was used by the member for Werriwa, the desire of the Australian Labor Party to roll that number down. Who knows where it would be? We know that, traditionally, the Australian Labor Party have remained steadfastly opposed to any exemptions from unfair dismissal. I do not think they have actually settled their policy with respect to what they would do for small businesses. I raise that as a significant point of caution to the small business sector in Australia.

On a more positive note, I wanted to address comprehensively the concerns that were raised by the member for Werriwa, so I am pleased to talk in some measure about the benefits in this bill. This bill is just another step down the path that this government has been taking for nearly 12 years to improve the lives of small businesses owners in Australia. We do it on a macro scale through our good governance of the Australian economy. This government have been able to pay off $96 billion of Labor Party debt and create the right economic conditions to ensure that Australians have more disposable income and a greater ability to accept risk, in a low interest rate environment. Those are the building blocks that this government has put in place for Australia’s small business sector.

Again, I reinforce that on every single one of these measures the Australian Labor Party has opposed us. When it came to paying off the debt, the Labor Party opposed us. When it came to reducing the tax burden on Australians so that they had more disposable income, the Labor Party opposed us. When it came to introducing the GST as part of the meaningful reform we needed to have to ensure that this country continued to grow strongly, the Labor Party opposed us. We recall that for years they ran around Australia saying, ‘We’ll roll back GST,’ and then they promptly dumped it. The Labor Party do not have any kind of philosophical compass when it comes to these things. Instead they dip their toes into the public pool to try to determine where the tide is going—that is their only measure on these kinds of philosophical issues.

This government put in place in a very constructive and thoughtful way the building blocks and reforms that were necessary to get Australia to where it is today—the key ingredients for making the small business sector as vibrant as it is today. The benefits of that are enjoyed by all Australians. We have the lowest unemployment rate in 32 years. That did not happen by accident. Unemployment has not accidentally dropped to 4.4 per cent. It was at 11 per cent under the Australian Labor Party. Interest rates were at 17 per cent or, if you were in small business, 22 or 23 per cent under the Australian Labor Party. It is not by accident that unemployment is now down to 4.4 per cent and interest rates are down to around seven per cent. It is a consequence of the building blocks this government put it place, opposed at each and every step by the Australian Labor Party. That is how this government has been helping the small business sector at the macro level.

At the micro level, I have been pleased that this bill follows a long list of beneficial changes for the small business sector. In this bill we see what at law is perhaps slightly complex but in reality, when it comes to the compliance framework that small businesses have to follow, has a very beneficial impact for all small businesses. This law brings into alignment a whole spate of separate eligibility tests that currently exist with respect to the goods and services tax, the simplified tax system, capital gains tax, fringe benefits tax and the pay-as-you-go instalments. Each of these small business concessions as they exist under each of these different laws is now being brought into alignment.

I am pleased the Australian Labor Party are supporting this initiative, as well they should. I have a hint for the Australian Labor Party: you should back any initiative this government puts forward for small business. I assure the Australian Labor Party that there is not a single idea that they could come up with that would actually be beneficial for the small business sector, so I would suggest they back this government’s initiatives each and every time. The shadow Assistant Treasurer boasted that government members should join the Labor Party on this bill. I would say to him that that would be one of the worst mistakes that any government member could make. I doubt that any government member would make that mistake, because passing this law will have a beneficial impact on small businesses and, more importantly, will help, as I said, in the journey of making the lot of small business owners, risk takers and entrepreneurs in Australia a lot better.

With respect to some of the local initiatives that I am talking about on the Gold Coast, I have been particularly proud of two key initiatives that were taken that will improve the small business sector. The member for Werriwa spoke about the Regulation Reduction Incentive Fund. On the Gold Coast the RRIF, as it is commonly referred to, has seen a Seamless Borders project put in place to try to cut through the Labor Party duplicity at a state level that sees one set of laws applying to small businesses in Queensland and, just across the Tweed Heads border, a different set of laws under a different state Labor government. Here is a fictitious example: if you were Joe’s Potting, based at Coolangatta, you would need to comply with one set of laws that applied in Queensland and a second set of laws in New South Wales. The headaches that causes for business are profound. Under the Regulation Reduction Incentive Fund I have been very pleased to see the Seamless Borders project—which the Minister for Small Business and Tourism, Fran Bailey, launched recently on the Gold Coast—rolled out to make the lot for Gold Coast small businesses much better.

The other key initiative that this government took—which I was pleased to announce recently on the Gold Coast—was full funding for a small business field officer based in the area consultative committee on the Gold Coast and working directly with local Gold Coast small businesses to improve and provide information to them and to develop relationships with small business up and down the Gold Coast. Again, the area consultative committees are bodies that the Australian Labor Party would abolish. The Australian Labor Party has said it does not believe in the area consultative committees and that they would like to abolish them. So I can say directly to small business operators on the Gold Coast: if the Labor Party were elected, you would lose your small business assistance officer, your small business field officer, currently based—together with the area consultative committee—on the Gold Coast. Again, this is another direct threat of the Australian Labor Party to small businesses in my city.

With respect to the steps that this government has taken for small businesses, I highlight the fact that, in bringing these various eligibility tests into alignment in this bill, we are not making small, tokenistic changes, but substantial changes. In fact, the bill will amend the income tax law to create a single definition of small business based on an aggregated turnover of less than $2 million per year, which is effectively a doubling of the current threshold test that applies under some of the various measures that are currently in existence. We are doubling that, basically, to an aggregated turnover threshold of $2 million and applying it in an even and consistent way across each of these various taxation regimes. Of course, there still will exist various qualifying criteria that are taken into account when obtaining these small business concessions, but in broad terms—and I do not intend to get into all the detail of the bill—this will make it a lot simpler for small businesses.

The final point that I would like to touch upon is the GST. I have seen members opposite get quite animated and excited when I have spoken about the GST. I have seen members opposite talk about how, in some way, the GST was a negative for business. Not only is the opposition not going to make any changes there; I remind you that it was the Australian Labor Party that introduced complexity in the GST from the outset by refusing to have one blanket rate that applied across the board. Because of the Labor Party’s opposition, this government, in order to secure the passage of this much needed reform back in the year 2000, had to sit down with the Australian Democrats and try to knuckle out some kind of deal—and that is when food was exempted. If there has been anything that has had an impact on complexity for small businesses, it is the fact that we have exemptions under the GST, which leaves a number of small businesses with all sorts of headaches when it comes to compliance. Over the years they have worked through that. Over the years accounting packages have taken these different measures into account, but you still cannot escape the root cause of this added complexity, which was the Australian Labor Party’s stubbornness in accepting this reform as being necessary, crucial and fundamentally important.

If you scratch a little deeper, you discover that the Australian Labor Party actually believed in the GST, but the reason it opposed it back then was that it thought it was politically opportunistic to do so. That is the ultimate indictment on the Australian Labor Party when it comes to the small business sector. The ultimate indictment is that, even though the Australian Labor Party knew it was good policy, it opposed it because it was politically opportunistic to do so. As a consequence of that politically opportunistic barrier that the Australian Labor Party put up, the small business sector is now cursed with this additional compliance burden that they have to meet. But, as I said, over the last six years they have come to meet that burden and to do so in a sterling way. I would say to the Australia Labor Party: I certainly hope that it does not make it any more complex.

In summary, I commend this bill to the House for being a very positive step forward, for nearly doubling the threshold amount up to $2 million, for bringing into alignment the goods and services tax, a simplified tax system, the capital gains tax and fringe benefits tax and the pay-as-you-go instalments thresholds for the small business sector. I remind small businesses of the very direct and real threat that the Australian Labor Party presents to them with the changes to the unfair dismissal laws that they would like to reintroduce at the bidding of their union masters. I say to them that I will continue to be a strong advocate of the small business sector and for a city that truly is the small business capital in this country.

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I rise to commend and support the amendment moved by the member for Rankin to the Tax Laws Amendment (Small Business) Bill 2007 before the House this afternoon. This bill is one of at least seven tax law amendment bills being introduced into this House for the purpose of either reducing taxation burden or reducing what is known as the ‘shoe leather costs’ on small business owners and operators in complying with the massive taxation law red tape this government created when it dreamt up the so-called A New Tax System legislation.

Indeed, it must be said that the A New Tax System legislation of 1999 has been an unmitigated disaster for small business. The A New Tax System legislation included some 40 pieces of legislation, kilograms of legislation—and I well remember the member for Rankin coming into this House with acres of paper, because I was sitting immediately in front of him. He had a set of weights and measures, and you just could not deal with the volume of legislation, so complex was it, thanks to this government. Clearly it needed a systematic overhaul. So the bill today is but part of the big picture of necessary amendments to a badly flawed and ill-conceived taxation overhaul that led to the outcry from the small business world particularly.

As members of this House are aware, this bill is the result of the findings on the new small business framework which, if this bill is enacted, will be established in divisions 3 to 8 of the Income Tax Assessment Act 1997. The most significant effect of the new small business framework will be to amend the definition of what is known as simplified tax system, or STS, taxpayers to an inclusive single definition of small business entities.

There are a large number of amendments to the existing legislation, all of which are reportedly designed to lessen the administrative burden on small businesses. Members of this House and the general public have had drawn to their attention various aspects of this bill, which implement the findings of the Banks task force report of 2005, named after the Prime Minister’s appointment Mr Gary Banks. I cite from Bills Digest No. 156 of 23 May the job of Mr Banks. It was:

... to identify practical options for alleviating the compliance burden on business from Commonwealth Government regulation.

Given that we as a parliament are at this time so preoccupied with fiscal policy, it is timely to remind ourselves again of what is meant by fiscal policy. On 23 May in this House I spoke on another of the fiscal policy bills presently before this House, that being the Tax Laws Amendment (Personal Income Tax Reduction) Bill 2007. In that bill, as here, I found it necessary to remind us of what fiscal policy is chiefly concerned with. I reminded this House that fiscal policy is essentially concerned with taxation and public expenditure. The honest end of fiscal policy is—as was identified in the Commonwealth Parliamentary Service’s Budget Review of 2007-08, published on 21 May 2007—commonly known as the three Ps: population, participation and productivity. I further noted on this point that a key aspect of a successful criterion in any fiscal policy in the context of the three Ps is (1) economic stimulation, (2) increase in real disposable income and (3) relation of fiscal policy on net inflation, including wages growth.

As I noted during the debate on the personal income tax reduction bill, so too the bill before us this afternoon, measured in purely utilitarian terms, looks good superficially. However, fiscal policy can never be measured purely in utilitarian terms such as tax deductions and reduction in red tape. Theoretically, the anarchocapitalists will argue that good government is no government. If any government were to proclaim zero taxes and no regulation of business affairs—in other words, a policy of absolute laissez-faire—then, for a time, no doubt the general public would be jumping for joy, for no business or natural person likes to pay any tax any of the time, nor do businesses like to be regulated at all. But we all know that that is not sustainable, and we all know the immortal words of United States Supreme Court Justice Oliver Wendell Holmes: ‘Taxation is the price we pay for civilisation.’ The quote draws succour from the book of II Corinthians at chapter 9, verse 7:

Every man according as he purpose in his heart, so let him give; not grudgingly, or of necessity: for God loveth a cheerful giver.

The various fiscal bills before us today, in my view, smack of the usual fistful of dollars and release of regulatory burdens cynically just prior to a federal election, which we all know is only months away—probably 13 October. The Prime Minister will fire the starting gun.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

Mr Martin Ferguson interjecting

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I reckon straight after APEC. Maybe I will get confirmation when the Prime Minister walks into the chamber, but I think 13 October. He will call it straight after APEC—

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Link to this | Hansard source

Mr Martin Ferguson interjecting

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Well, 33 days. He can go to the Governor-General on Monday, 10 September and say: ‘I want an election. I can feel an election coming on.’

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

Why don’t you make the call for him!

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I did make the call here, back in December. I said during the valedictory speech that I think the election will be held on 13 October, and he said, ‘Yes, you’ve heard it first from the member for Lowe.’ He said, ‘There you are, it’s the’—and I said, ‘Are you ruling it out?’ and he did not rule it out.

I am very pleased to see that the Prime Minister has come into the chamber now, and I invite him to tell the House. We all want to know, Prime Minister, when the election is, because I suspect that straight after APEC—

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

Mr Howard interjecting

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I know you’ll tell me! You’re my friend; I know that. You will tell me, and I will tell Mr Rudd immediately you tell me! We know it will be 13 October, because, as soon as APEC is finished, that will be a launching pad for you. I can assure you that your friends up here who look down on us every day will not allow you to go any longer than 20 or 27 October. You know that in your heart; that’s the truth! I think you would do us all a great service to put us out of our misery—and tell Wilson Tuckey too when the federal election will be held. It seems obvious to me that you will not call it earlier; you will call it for 13 October. Are you ruling it out? Through you, Mr Speaker, I ask the Prime Minister: are you ruling out 13 October? Because, if it is not 13 October, it will be 20 October or 27 October.

David Hawker (Speaker) Share this | Link to this | Hansard source

I suggest that the member comes back to the bill.

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

But we need to know, and the Prime Minister and I are good friends! I know he will tell me, and I will tell the alternative Prime Minister, because he is anxious to sit where you are sitting. Come on, do us a favour!

David Hawker (Speaker) Share this | Link to this | Hansard source

I remind the member for Lowe that question time will not start until two.

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I have 35 seconds, and I very rarely get this opportunity just prior to question time. The Prime Minister could do the country a great service by indicating when the election is likely to be held, because I am nominating 13 October. But, if it is not 13 October, it will be 20 October or 27 October. I do not believe it could go any longer. Do you agree with that? He is not giving anything away.

Opposition Members:

Opposition members interjecting—

John Murphy (Lowe, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

The member for O’Connor is another friend of mine, and perhaps he could tell us when the election is, because I suspect, Member for O’Connor, that it is 13 October. Perhaps the Treasurer could tell us? I mean, he has an interest in when the election is going to be held.

David Hawker (Speaker) Share this | Link to this | Hansard source

Order! It being 2 pm, the debate is interrupted in accordance with standing order 97. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.