Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

by leave—In supporting small business and the enterprise economy, the Rudd government believes in reward for effort, risk-taking and entrepreneurship. We believe in restoring incentive for small business owners to create jobs and prosperity.

Inflation is the No. 1 enemy of small business. It increases small business costs and it is a precursor to higher interest rates. Small business prospers in a low-inflationary, strongly growing economy. Remember, the independent inflation-targeting Reserve Bank’s charter is to keep annual inflation within the band of one to three per cent. Yet since 2002 the Reserve Bank has felt obliged to raise interest rates 12 times. Such is the Reserve Bank’s verdict on the previous coalition government’s performance in controlling inflation.

At the time of the change of government in November 2007, Australia had the second-highest official interest rates in the developed world. The coalition rejects any link between inflation and interest rates, describing inflation as a ‘charade’ and a ‘fairytale’. The Rudd government does not subscribe to the coalition’s fairytale economics where, the more you spend, the more you have to spend. In its most recent Economic Roundup, Treasury likens the free spending of the previous coalition government with that of the Whitlam government. The coalition government was never interested in investing in the nation’s future through skills development or investing in infrastructure. Instead, it tried to buy its way back into office. In 2002, the previous coalition government spent around $450 million on community grants. By 2007 it was spending $4.5 billion on grants. That is a 10-fold increase in five years.

Having inherited an inflation rate at 16-year highs, the first task of the Rudd government for small business has been to bring inflation under control. The Rudd government’s first budget reins in government spending. This has been tough, but as responsible economic managers we had no choice. In the coming financial year, Commonwealth budget spending is estimated to constitute less than 24 per cent of GDP—down sharply from an average of just under 25 per cent so far this decade. The budget cuts real spending growth from five per cent to just one per cent. The government’s fiscally responsible budget is helping to put downward pressure on inflation.

In developing our specific policies for small business, we have asked ourselves: what is the role of government in an open, competitive economy? We see that role as being to remove impediments to small business success and to improve the capacity of small business to operate successfully and to compete. The success of small businesses is built on the creativity, ingenuity, innovation and imagination of their owners and staff. The Rudd government is determined to restore incentive for small business through reforms to the tax system by allowing small business operators to keep more of their earnings. The budget made a down payment on both tax relief and tax reform. Small business operators will receive up to $50 per week in tax cuts next financial year and up to $91 a week the following year.

The government supports the desire of small business for a simpler tax system that cuts compliance costs. Small businesses incorporate for a variety of reasons and, once incorporated, they are subject to all the complexities of tax laws that apply to large corporations. To reduce the compliance burden on small- and medium-sized companies, the Institute of Chartered Accountants and Deloitte have developed a proposal for an entity flow-through tax regime for small companies with five or fewer shareholders and for unit trusts. Under these proposals, ownership arrangements would be set to one side for income tax purposes. Instead, the entity would be treated like a partnership with owners taxed at their marginal rates. This proposal could operate as an option for small companies and unit trusts wanting to reduce the compliance costs associated with understanding and accounting for different types of financial flows from the entity to its owners. The government has decided to refer the proposal to the review of Australia’s future tax system headed by Treasury secretary Ken Henry.

The GST remains a major compliance burden for small business. In the MYOB survey of the red-tape compliance burden, more than two-thirds of respondents ranked BAS reporting among their top three red-tape burdens. In April 2007, I released a paper on the BAS Easy option for reducing the GST paperwork burden on small business. It was welcomed by the Council of Small Business of Australia as ‘a simple and practical answer to the current BAS red tape’. BAS Easy will be considered by the Board of Taxation as part of its review of the legal framework for the administration of the GST.

Tax is not the only impediment to small business success. Small business is being choked by red tape that has been hung around its neck by the sloth of the previous coalition government. The Business Council of Australia has lamented the ‘creeping re-regulation of business’ as an example of ‘how the benefits of past reform can be quietly eroded over time’. In government, the coalition re-regulated the economy, reversing many of the deregulatory reforms of the previous Labor government. Way back in 1996, the previous government committed to cutting red tape by 50 per cent in its first parliamentary term. Towards that end, it commissioned a report from the late Charlie Bell, then CEO of McDonald’s. The report, Time for business, made a raft of recommendations to lift the red-tape burden from the shoulders of small business. It was a good report. Yet in 2006, a full decade later, the coalition government commissioned a new report, this time from a task force chaired by the Productivity Commission chairman, Gary Banks. Many of the recommendations of the Banks report are identical to those of the Bell report of a decade earlier. Yet the coalition government showed an intense lack of interest in reducing the red-tape burden on small business.

In the 21st century Australia can no longer operate as nine markets with overlapping and inconsistent regulation. The creation of a single, seamless national market, as called for by the Business Council of Australia and the 2020 Summit, is essential to restarting productivity growth and paving the way to increased prosperity. By reforming business regulation, the Rudd government, in cooperation with the states and territories, is dismantling productivity-stifling barriers to businesses operating seamlessly across state and territory boundaries. Through the Council of Australian Governments, we have identified 27 areas of regulatory reform designed to reinvigorate productivity growth. This is a far-reaching and necessary program which will benefit both large and small businesses.

In the Commonwealth’s own house, the budget provided $16 million over three years to establish a superannuation clearing-house facility—delivering on another election commitment. This free service to small businesses will cut the compliance costs associated with making superannuation guarantee payments under the super choice regime. The superannuation clearing house is scheduled to start on 1 July 2009. These are some of the impediments to small business success that the Rudd government is intent on removing. But governments can do more for small businesses. Governments can and should improve the capacity of small businesses to thrive and prosper.

Labor had been warning of an emerging skills crisis as far back as in 1999. Small businesses know, and the Rudd government knows, that there is a shortage of skilled and even unskilled staff. The Rudd government has made an additional 20,000 training places available in April to start the work needed to ease the skills shortage. We have provided $1.9 billion to deliver an extra 630,000 skilled training places over five years. And over the next 10 years $2.5 billion will be devoted to establishing trade training centres in secondary schools. We will also increase the intake of skilled migrants by 30,000 places this year alone.

Small business competitiveness in the 21st century will depend heavily on wise investment by governments in infrastructure, including broadband infrastructure. That is why the Rudd government has created a $20 billion Building Australia Fund to be overseen by Infrastructure Australia. At a small business forum convened by the Council of Small Business of Australia ahead of its recent national conference, the clearest message to me was the underutilisation by small businesses of the latest information technology. Small business owners simply do not have the time to become experts in information technology. Yet there are potentially huge benefits to small business in adopting and adapting the latest information technologies.

Governments can help. The Rudd government will roll out a high-speed national broadband network. Yet again in question time yesterday the coalition, now in opposition, criticised our high-speed broadband rollout. The opposition seems stuck in the 20th century; Labor is investing in 21st century technology for small businesses. We are building small business capacity in other ways too. The Rudd government is keeping its election promise by providing $42 million over four years to provide ongoing funding for 36 one-stop business advisory services in suburban, rural and regional Australia. This funding commitment means that small business owners will not have to go from place to place to obtain legal, tax, accounting and marketing advice.

Sadly, just last week, in debate on the budget, the coalition criticised Labor’s policy of supporting business enterprise centres. I suppose I should not be surprised since the coalition provided no ongoing funding for business enterprise centres, but I am disappointed, since the criticism tells us all that, if the coalition were elected to government, it would not look kindly on continuing support for our business enterprise centres.

A further contribution of the Rudd Labor government to enhancing the capacity of small businesses to compete is our amendments to the Trade Practices Act. The Rudd government’s amendments are designed to stop powerful businesses from engaging in predatory pricing in their dealings with small business. These reforms clarify the test for predatory pricing and what it means for a business to ‘take advantage’ of its market power. Victims of predatory pricing will not need to prove that the powerful business in question has the ability to recoup losses after sustained below-cost pricing. These are just some of the Rudd government’s policies for supporting small business. There are others: government procurement policies to bring small businesses onto the competitive field in bidding for government contracts, penalties for late payment of small business invoices by Commonwealth agencies, support for independent contractors—the list goes on.

In closing, I want to acknowledge the contribution to policy development of the Council of Small Business of Australia through its president, Bob Stanton, and its chief executive, Tony Steven. I am sure we will not always agree, but I do know this: Bob, Tony and the board and membership of COSBOA will never relent in representing the interests of small business. That is as it should be and it is as the government wants it.

The Rudd government is supporting small business. We are increasing incentives and rewarding effort, risk-taking and entrepreneurship through tax relief for small business operators and through tax reform. We are cutting the red tape that has been strangling small business initiative and innovation. We are providing critical skills training places and increasing the intake of skilled migrants. And we are promoting competition.

May small businesses in Australia thrive and prosper, freed of government impediments to do what they do best—create prosperity for themselves and their families and jobs for almost four million other working Australians.

I seek leave of the House to move a motion in relation to the debate.

Leave granted.

I move:

That so much of the standing orders be suspended as would prevent Mr Ciobo speaking for a period not exceeding 13 minutes.

Question agreed to.

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | Link to this | Hansard source

How remarkable that the Minister for Small Business, Independent Contractors and the Service Economy commences his ministerial statement outlining what the Rudd government believes when it comes to small business because, as we know, what the Rudd government does and what the Rudd government claims to believe in are two remarkably different things. The minister said that inflation is the No. 1 enemy of small business. Obviously, it has been a while since the minister got out there and talked to small businesses on the ground, because small businesses are saying that the Rudd Labor government is enemy No. 1. Why is that the case? Because in the first Rudd Labor budget nearly $1 billion of support for small business was axed. Why is the Rudd Labor government enemy No. 1? Because Rudd Labor also whacked Australia’s small businesses with hundreds of millions of dollars of new taxes. Why is Rudd Labor enemy No. 1 for small business? Because Labor’s Treasurer cannot handle the economic challenges of the day. Finally, why does small business view Rudd Labor as enemy No. 1? Because Rudd Labor is promising the return of unfair dismissal laws, ‘go away money’ and a three-strikes warning system.

Contrast Labor’s first six months to the achievements of the coalition when it was in government. Over the 11 years we were in government, the coalition put the government back into the black. We eliminated $96 billion of Labor government debt, started saving for the future and restored Australia’s AAA credit rating. The minister stated the Rudd government’s first budget was focused on reining in government spending. As is typically the case with Labor, it is important to look at what they do rather than believe what they say. Spending has gone up by $3 billion in this current financial year and by $14.9 billion over the forward estimates. I do not know of any small businesses that would consider that outcome a reining in of government spending. Labor say they will rein in spending, but when you look at what they do you see that it is the opposite. The Rudd Labor government have increased spending. It is an old-fashioned Labor budget.

Similarly, I doubt small businesses care much for the Treasurer’s resolve to talk down the Australian economy. If Labor truly believed inflation was the No. 1 enemy of small business, would the Treasurer really be spruiking to the world that inflation in Australia was out of control? Small business people across the country looked on in horror when, the day before the Reserve Bank met, the Treasurer held that extraordinary press conference—and we recall it—where he said:

The inflation genie is out of the bottle.

In contrast, the strong economy the coalition fostered under the stewardship of the former Treasurer and member for Higgins provided Australia’s small businesses with actual confidence to invest in their businesses, to take risk and to deliver more jobs to working Australians—of whom there will be fewer under the Rudd Labor government, according to their first budget—who deserve better. The Labor government are certainly on target to meet their goal of slashing 134,000 jobs for ordinary working Australians; indeed, they may even exceed it. ABS figures released earlier this month show there were 19,700 fewer Australians in employment in May this year than in April this year.

But a strong economy was not the coalition’s only achievement. The coalition reduced the company tax rate from 36 per cent to 30 per cent. The coalition reduced personal income tax rates in its last five federal budgets, leading to consumers having more money in their pockets to spend in Australia’s small businesses. All of these tax reform initiatives put more money in the pockets of Australia’s small business men and women. I am pleased to see that the minister has become a latter-day convert on tax reform, but I doubt small businesses are giving the government much credit for copying the coalition’s tax cuts. Australia’s small businesses were paying attention when Labor opposed virtually every one of the key economic reforms that the coalition put forward over its time in office—coalition reforms that resulted in Australia being a much stronger, more prosperous nation in 2007 than it was when we came to office after 13 years of Labor mismanagement.

The minister neglected to mention in his speech that the Rudd Labor government actually increased taxes for some small business owners by, for example, adjusting the entrepreneurs tax offset which, under the coalition government, provided an offset of up to 25 per cent to help small businesses with an annual turnover of less than $75,000. The small business community was completely gutted after the Rudd Labor government’s first budget axed nearly $1 billion of small business assistance programs. This included $700 million for the Commercial Ready program, which supported commercialisation and innovation in Australia’s small businesses. So much for Labor’s belief in Australia’s small business sector.

On industrial relations, the coalition encouraged cooperation in the workplace, which resulted in nine of the 10 most harmonious years, in terms of working days lost per 1,000 employees, in Australia’s entire history. Labor did not waste any time turning this coalition achievement on its head. Australian Bureau of Statistics figures released earlier this month reveal that 42,800 working days were lost due to industrial disputation in the March quarter of 2008. Yet only 49,700 working days were lost through industrial disputation for the whole of 2007. So in the first quarter of the Rudd Labor government nearly as many working days were lost due to industrial disputes as in an entire year under the previous coalition government.

The coalition was finally able to give small business greater confidence to employ people following the removal of Labor’s job-destroying unfair dismissal laws. The coalition attempted to pass these laws 42 times, and Labor rejected them every single time. These laws were only able to be passed when the coalition gained a majority in both houses.

The minister has a very special history when it comes to unfair dismissal laws. As Labor’s former shadow minister for workplace relations, the minister made it a personal vendetta to oppose the coalition’s unfair dismissal laws. At a doorstop interview on 12 August 2003, the now minister, speaking about the then Minister for Employment and Workplace Relations and the fair dismissal bill, said:

Labor will not cop his thuggery. I said when I got this portfolio that whenever Tony Abbott brings legislation into the Parliament … we will oppose it. And we opposed it last night, successfully.

So much for Labor’s belief in mandates. Labor believe in mandates when it suits them. But when the coalition had a mandate, which was confirmed by the Australian people on three separate occasions, Labor blocked it, Labor blocked it and Labor blocked it. Little wonder, then, that Labor’s Minister for Small Business, Independent Contractors and the Service Economy has proposed the reintroduction of Paul Keating’s job-destroying unfair dismissal laws, which will cripple Australia’s small business sector. But this time they come with added red tape—Labor’s mooted but as yet undetailed ‘fair dismissal code’. It is no wonder the minister is already being referred to as the ‘minister for smaller business’. I agree with the minister that the Council of Small Business of Australia will never relent in representing the interests of small business. Indeed, the minister would be well served to revisit the comments made by the President of COSBOA, Bob Stanton, in June 2006:

The continual resolve of the Labor Party to block exemptions for small business on unfair dismissal ... only indicates to us that their position is politically motivated with no regard for small business.

The many small businesses I have been meeting with around the country tell me that the lack of regard for small business is alive and well in the Rudd Labor government. I would also draw the minister’s attention to the comments made by the CEO of COSBOA, Tony Steven, in April of last year:

We want to maintain the unfair dismissal exemption and, if an extended probationary period is the Labor Party’s answer, that is not good enough.

The minister says the Rudd Labor government will roll out a high-speed national broadband network that will be of assistance to the small business sector. But at what cost? In another example of where the Rudd Labor government says it will do one thing and then does another, there are legitimate fears that Australia’s small businesses across the country will be forced to pay substantially higher prices for broadband services. Adding to the price fears are the wild variations in costings that we see surrounding Labor’s proposal. First, Labor said the network would cost $8 billion, and then they said it could be $10 billion. Yet just six months away from Labor’s promised construction start date, key industry figures are lining up against the government. Telstra says the government’s plan will cost $15 billion and Pipe Networks say it could be $20 billion or more. Does the minister really believe that small businesses want $4.7 billion of their taxes squandered on a badly costed proposal to provide subsidies where the private sector is already investing or prepared to invest in commercially viable infrastructure?

The coalition also introduced the Building Entrepreneurship in Small Business program. This program provided training and mentoring in business skills through 65 small business field officers who helped small business access information and get advice, along with funding for providers of skills development, mentoring and succession planning. It was the same skill set, the same advice that the minister just spoke about that was available to the business enterprise centres. The entire program was funded at an annual cost of some $10.3 million. Yet, in some bizarre twist in their new-found alleged economic conservatism, Labor saw fit to scrap this program and replace it with 36 business enterprise centres at an annual cost of $10.5 million. So we have the coalition’s former program of 65 small business assistance contacts at $10.3 million or Labor’s new program of only 36 small business assistance contacts at $10.5 million. The minister said that these contacts will be in suburban, rural and regional Australia. Yet, by reducing the contact points from 65 to 36, the Rudd Labor government has abandoned small businesses in rural and regional Australia. Take, for example, small businesses in Cairns, which were previously serviced by a small business field officer. They are now faced with a round trip of more than nine hours to their closest business enterprise centre. The locations of the BECs the government has chosen to fund are another example of the Rudd Labor government saying one thing and doing another. It is little wonder small business confidence in the Rudd Labor government’s policies has plummeted.

In February, the first Sensis business index after the election of the Rudd government showed the biggest fall recorded in the history of the index in terms of the attitude to federal government policies. And Labor backed it up again in the second index, with the May index showing that the confidence of small business in the policies of the Rudd Labor government has now collapsed by a massive 53 percentage points. Did the index reveal that small businesses thought inflation was the No. 1 enemy of small business? No, it did not. According to the Sensis business index, Australia’s small businesses have lost confidence in the Rudd Labor government because they believe the Rudd Labor government does not offer incentives to small business. They believe the policies of the Rudd Labor government will work against their business interests, and they believe the policies of the Rudd Labor government only favour larger businesses and firms in certain industries. The minister says the role of the Rudd Labor government is to remove impediments to small business success. Well, I am not sure if the Prime Minister would agree with the minister by calling an early election, because Australia’s small businesses say the Rudd Labor government is the impediment to small business success in this country. (Time expired)