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

My question is to the Prime Minister. I refer the Prime Minister to reports which show 93 per cent of small businesses are under cash flow stress. Prime Minister, how does your government expect small business to take advantage of the increase announced yesterday in business investment allowance if 93 per cent of small businesses do not have the cash to invest?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the honourable member for his question. The government has been working its way through a range of options to try and assist the small business community across Australia, who are bearing the brunt of this global economic crisis. Small business is extremely important. It generates employment of a large order of magnitude across the country. There are millions of small businesses. Each of our communities is well represented by the men and women of small business who are out there, often putting their houses on the line in support of their small businesses and generating jobs for themselves and incomes to support their families.

These small business men and women have not caused this crisis—not one bit. It has been caused by other factors which have been the subject of debate here and elsewhere. The practical question we face is: how can we support those businesses? What we have done so far is implement a range of measures which assist—they do not remove or eliminate the impact on them of the global economic recession but they assist—in reducing that impact. One of those measures has been derided almost universally by those opposite, and I refer here to the measures that we have taken to support private consumption. Small business operators, as the honourable member will know from the Gold Coast, are very much concentrated—not exclusively—in the retail sector. Therefore, when you provide direct stimulus to consumption, it flows through in large part to retail.

The statistics referred to by the Treasurer before, about what happened with the retail sales figures at the end of last year, reflect therefore a direct flowthrough to small business operators. It is not the end of the story. It means that more measures must be taken, but we are acutely conscious that small businesses, out there at the front arm of retail, are bearing so much of the brunt of this impact, and therefore our direct support for consumption last year and this year is of direct relevance to them. Secondly, when it comes to the stability of the financial system and the ability of banks to provide credit at all—and I will go to the question of the extent to which banks are properly providing credit to small business in a minute—the first and foremost responsibility of this government, given the extraordinary events of last September and October, was to ensure the continued stability of the financial system, period. In this country, our overwhelming focus has been on what we need to do to make sure that Australia’s main commercial banks remain viable into the future. If you look across the world at what has happened with the mainstream banks and other major Western economies as they have fallen like ninepins, you will see that 30 of them either have collapsed or have had to be bailed out by governments. That is of fundamental and continuing concern to this government, hence the actions we took—which were, in large part, opposed by those opposite—in the double guarantees that we provided both to depositors and to banks for interbank lending. Why we provided support for interbank lending—

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

Mr Speaker, I rise on a point of order. Whilst this is a general meander through the government’s response, the fact is that my question was specific about the initiative announced yesterday. The Prime Minister has been speaking for six minutes and has yet to address in any way the question I asked.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The Prime Minister is responding to the question.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I will come to the measure announced yesterday, which relates to the accelerated investment allowance, once I have described the impact of supporting banks and their ability to provide credit, period. You see, the debate in this parliament about what we do on stimulus is important. It goes to the questions of government direct action in supporting jobs and also government direct action in building necessary infrastructure in our schools and elsewhere. But, in the overall global scheme of things, what happens with the normalisation of private credit markets is of fundamental importance. If we do not get that right globally then stimulus can only do so much—even macroeconomic global stimulus, including both fiscal and monetary policy measures. It is getting global credit markets operating again which is so fundamental to allowing credit to flow again at a reasonable price to small business borrowers as well. That is why we are so actively engaged in the whole exercise of ensuring the continued stability of our major banks and our overall financial system.

Also, what has been criticised by those opposite is our direct engagement in a measure with the banks to support the private commercial property market. Those opposite need to reflect on this: in the event of the withdrawal of foreign participation in the syndication associated with the commercial property markets—as the Leader of the Opposition audibly groans—what you are effectively signing up to by opposing that is to allow the collapse in asset values of so many of the major companies of this country who have substantial investments in the commercial property sector. That sector alone employs some 150,000 people and a number of small business contractors directly affected by any such collapse in their asset values, of which the ‘member for merchant banking’, otherwise called the Leader of the Opposition, seems to be completely oblivious and disregarding.

On the measure that we announced yesterday, which goes to the investment allowance, we have specifically embraced measures to reduce the overall threshold at which small business can apply for their handling through the measure that we have embraced. Before, the threshold was $10,000; now it has been reduced to $1,000. We have also increased the actual amount from 10 per cent to 30 per cent. We are acutely mindful of the decisions which small businesses must make. On the supply of credit and the cost of credit to small businesses, as I also said yesterday, we will remain heavily engaged with the banking sector to do whatever we physically can to support the proper flow of private credit to small businesses as they need it.

Small business, together with other sectors of the economy, is critical and represents a critical focus of what the government seeks to do. We are engaged in a grave debate in this parliament about how Australia should respond to this global economic crisis. What stuns me about the debate today and the position taken by the Leader of the Liberal Party is that the Liberals, demonstrating how much they have lost touch with the Australian community and economy, are now threatening in the Senate to block tax bonuses to 8.7 million Australians, to block the biggest single building program across Australia—7½ thousand primary schools—and frankly, they should reconsider their position.