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

The former member for Brand and former Leader of the Opposition Kim Beazley once remarked of the Australian Labor Party that they were not a small business party and they never pretended to be. And yet, we see a subtle change has moved across the benches of the government, because they are still not a small business party but the key difference is that they now pretend to be a small business party. When we look at the announcements that were made in last night’s budget, and in particular the bill that is before the House today, the Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009, we see the Australian Labor Party doing their best to pretend that they have the interests of Australia’s 2.4 million small businesses at heart.

We on this side of the House have a rich depth of people who have been involved in small business—in running their own small businesses and in working in small business. That stands in stark contrast to the Australian Labor Party, which simply does not understand small business, because, quite frankly, the closest the majority of the Australian Labor Party have got to small business is when they set foot inside one to buy a cup of coffee. That is the experience of the Australian Labor Party, which unashamedly is the political wing of the trade union movement.

The announcement made in last night’s budget was in effect a snowballing of an announcement initially made in December last year. On 12 December last year we had the first incarnation of the bill that is currently before the House. It was to provide a 10 per cent investment allowance for business. This morphed on 3 February 2009 into its second iteration, which provided a 30 per cent investment allowance for all businesses. Then last night the third incarnation was presented to the parliament: a 50 per cent investment allowance for small businesses. If we follow this same trajectory forward we can probably expect that by Christmas time, as this measure still fails to work, there will be something like a 125 per cent investment allowance for small business.

The Labor Party has a problem: the Labor Party does not understand small business but they are desperate to be seen to be doing something for small business. We know that Labor Party policy is going to make it very hard for small business owners and operators to continue to operate. We know that, under the Australian Labor Party, occupational health and safety compliance costs are skyrocketing. We know that, under the Australian Labor Party’s industrial relations reforms, the costs of the labour force are going to skyrocket. We know that, as a result of the Australian Labor Party’s policy of so-called modern awards, the costs of employing staff are going to skyrocket. The restaurant and catering industry, perhaps one of the most densely concentrated groups of small businesses in this country, have outlined that, thanks to Labor’s policy changes, about 8,000 jobs will go in their industry. In the retail sector we see that, thanks to Labor’s policy changes, the retailers are expecting a 15 to 20 per cent increase in business operating costs. The Pharmacy Guild is predicting about a 30 per cent increase in business operating costs thanks to Labor’s changes. We know the Newsagents Federation has said that they are predicting somewhere between a 50 and 70 per cent increase in operating costs thanks to Labor’s changes.

That is what this government is doing to small business at the very worst possible time. It is the worst possible time because small businesses are under cash-flow stress—sales are down and, thanks to Labor, business operating costs are up. Small business owners are doing it tough. But do you know what many are doing? Fundamentally, they are good people. They are good Australians and in most instances those small business men and women who employ the 3.8 million Australians who work in the small business sector are putting themselves second to the interests of their employees. That is the small-business culture that I have the opportunity and privilege of gaining insight into every day in my role as Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts. Small business owners are putting themselves second in order to keep people employed, because they know that, as an owner of a small business, as an employer, they have a responsibility to their employees to keep them on, help them to pay their mortgage and help them as much as possible to keep food on the table.

I applaud that tenacity, I applaud that compassion and I applaud that understanding that small business owners have. That is why I get so irate when I hear the Minister for Small Business, Independent Contractors and the Service Economy, who is meant to be the advocate for small business in this place and outside it, make comments like the reason we need a fair dismissal code is because one day a small business owner might go into his business in a bad mood and fire good people. That is the remark that the minister for small business in this Labor Party government made about those men and women across the country who own and operate small businesses, those 2.4 million small businesses that employ about 3.4 million Australians. That is the kind of casual disregard and the kind of ignorant understanding that the Labor Party have towards small business in this country.

I have outlined some ways that the government’s policy should reflect real initiatives to help small business in this country, and the coalition have done that on a number of occasions. Prior to Christmas we announced changes and reforms, albeit temporary, to the PAYG instalments system that we believed would assist small business. In addition to that we recently announced a detailed six-point small business action plan that was launched by the Leader of the Opposition and me to reinforce to those small business men and small business women how vitally important they are to Australia’s pathway to renewal and to economic recovery. Not one of those initiatives has been picked up by this government. Actually, I will correct myself. There was one initiative that was picked up by this government and amended. That was to do with the changes to the PAYG instalments payments. But the only other initiative that the Labor Party have come up with in 18 months, aside from all those initiatives which are pushing up small business costs, has been the announcement—in December, again in February and again last night—in different iterations for a 50 per cent investment allowance for small business.

Do not get me wrong; there are some small businesses that will benefit from Labor’s announcement. It is not all bad news. I am not going to be typecast in anyway as being someone recklessly opposed to Labor’s initiatives, because this is not all bad news, as there are some small businesses that will benefit as a result of this announcement. But the problem is that so much more could have been done to assist Australia’s small businesses by this Labor government had they simply understood the needs of small business a little better. The fundamental issue that Labor just do not get is that, when times are tough, when sales are down and when costs are up, what just about every small business is facing is cash-flow stress. That means they are not sitting there on a bank vault full of money with the tills full of cash. Rather, small business owners are working the telephone and calling in those debts that need to be repaid promptly. They need the cash, they are under stress, the payments are slow to come in and they are not as much as they used to be. The outgoings have increased and, of course, they have got to pay wages.

Cash-flow stress is the most fundamental feature of small business during these tough economic times. So what do the Labor Party propose as their panacea for small business? The Labor Party’s proposal is for a 50 per cent tax investment allowance. So how does this actually work in practice? The Labor Party say, ‘Well, what we’re going to do to stimulate the small business sector is we’re going to say to them, “Go out and buy small plant and equipment worth more than a thousand dollars and you’ll get 50 per cent back upfront”.’ As I said, there is some merit in that idea, but the fundamental problem is that if you are not sitting on cash, if you do not have access to credit and if you do not have a bank vault full of money then this kind of incentive is worthless. Unlike this government’s approach to finance, most small business owners do not just go out and get what they want now and to hell with how they are going to pay for it. They actually take disciplined, financially responsible decisions. They will look at plant and equipment that they would like to purchase and say, ‘I can’t afford it right now.’

I know that is a jarring realisation for the Australian Labor Party—the government that are putting us $188 billion in debt, the government that are driving up our deficit to a record $58 billion this year alone. I know that that is something that this government cannot comprehend, but let me inform the government that every small business owner out there knows this fundamental fact: if you cannot afford it, you do not buy it. A tax investment allowance of 50 per cent, as generous as it is, is useless if you do not have access to credit or are unwilling to use credit and you are not sitting on cash. That is why coalition representatives pleaded with the government to please look at what we have said in our six-point small business action plan and do something to assist small business with cash flow. We outlined a series of proposals that we thought would be very good. These included, as outlined by the Leader of the Opposition, a number of key commitments. I will run through them quickly.

As an alternative to Labor’s $42 billion cash splash, the coalition proposed that a more effective approach to support small businesses would be to reimburse a portion of the superannuation guarantee contribution for small businesses. We thought in the first year it should be three per cent of the nine per cent paid by small business. This achieves two outcomes. The first is that it ensures that the costs of employing staff are reduced. We would make it cheaper to keep people on the books. That is something that is important when this government’s forecasts are for there to be one million people unemployed. The second thing it does is help small business with cash flow. Because they are no longer required to make those payments to the ATO and the superannuation accounts, they can keep three per cent extra in their business to help them with cash flow. That would be a far wiser thing to do. A second thing that we outlined, a second initiative of the coalition, was for a cash loss and tax loss carryback. Again, this focused on bolstering the cash position of firms that have a solid operating history but are facing large operating losses in 2009 and/or 2010. The coalition recommended introducing a two-year window for businesses to offset the tax value of any losses they suffer in 2009 and/or 2010 against up to $100,000 of taxes that the businesses had paid over the previous three years, enabling those taxes to be refunded back to the small businesses.

Let me explain for union members opposite what that would mean. Those firms would be able to offset their operating losses and retain staff by claiming back the taxes they had previously paid. The measure would only apply for businesses with at least one employee in each year a refund claim was made and in each year the tax was previously paid—again, an incentive to keep people on the books. The carryback would be governed by the same rules that currently apply when companies carry forward tax losses to reduce their liabilities in future years. Since the carryback refunds would over time be offset by lower losses that were carried forward, the long-run budgetary cost of this measure would largely arise from the changed timing of receipts and in fact would basically be nil.

This is a measure that many First World countries are already instituting. Similar treatment of current losses to reclaim past tax payments is available to firms in the UK, Canada, Ireland, the Netherlands and the United States, where the Obama administration recently extended the carryback period from two to five years. However, again the Australian Labor Party has stubbornly refused to adopt this proposal. But it has not refused to adopt it because it would cost money—we know that the impact on the budget would be next to nil. It has refused to do it because it was a coalition initiative. That is the reason this arrogant Labor government, which does not understand small business, has not instituted this reform that would make a meaningful difference to the cash-flow positions of small businesses today and help keep Australians employed. I would dearly love to hear from members opposite why they will not adopt the tax loss carryback initiative that the coalition outlined. There is no budgetary reason not to; there is just the simple pride of a Labor government that refuses to acknowledge it is getting it so very wrong.

Another key aspect of our policy, because we are so often asked what the coalition would do, is to reduce the overall regulatory compliance burden on small business. We know the economic costs of meeting regulatory requirements are onerous for business owners. Time is money and currently time is spent and lost filling in forms and filing taxes. We recommended applying a comprehensive quantification to the full range of Commonwealth, state and local government filings that are required to start or expand a business. This regulatory burden needs to be reduced to at least match, and over the future years improve on, OECD best practice.

Another aspect is to cut red tape. We outlined our proposal to deliver a one-stop business regulatory portal for small businesses which would provide integrated online access to all forms and filings regardless of which tier of government was imposing them, forcing local governments and state governments to work with the federal government to make sure that there is only one place that businesses need to go for their regulatory requirements. Cutting red tape and bringing these functions together requires substantial cooperation and does heavily depend on the accelerated replacement of traditional reporting methods with internet based alternatives, something that surely the Labor Party would be supportive of, given their grand scheme for the National Broadband Network of some $43 billion. To make this one-stop shop for compliance and regulatory filings a reality, the coalition will create a small business service delivery agency expressly charged with delivering integrated online access.

Another key part of the initiative was the family business support. We identified that the new small business service delivery agency should also operate a program that can provide support and advice for family businesses on succession planning and family business professionalisation, working closely with a key advocacy group in the sector. This is not a large resource outlay, but it does represent an appropriate response to what is a vital issue for Australia’s small businesses, so many of which, of course, are small family businesses.

Of course, all of these initiatives have come about because the coalition, unlike the Australian Labor Party, has given small business a seat at the table where it matters. The shadow cabinet appropriately recognises small business’s importance to the national economy. Unlike the minister for small business in the Rudd Labor government, who is sidelined in the outer ministry—and, we know, whom the Treasurer despises—as shadow minister for the coalition I sit at the shadow cabinet table because we believe, front and centre, that small business policy must be at the epicentre of decision making for the coalition. This six-point small business action plan is focused on supporting small business to help them manage their cash flow and keep staff on the books.

There have been some very direct criticisms of this Labor bill. Indeed, there are many examples of businesses that might have participated but are excluded from doing so. That is one of the fundamental concerns that we have with the bill before the House. I encourage the government to run through the six-point plan that I outlined and use that information and those initiatives to bolster support for small business. It is clear that the measures in the bill will not do enough for the small business sector, not only because it is already under cash-flow stress but also because a raft of problems with the legislation as it stands have been outlined.

A number of groups have come to speak with me over past months in relation to this bill and its various previous iterations. The Australian Information Industry Association, Australia’s peak technology industry body, has indicated that the exclusion of software and related services from the investment allowance effectively nullifies the potential productivity upside impact of the tax break. This is a government that says so much about productivity. This is a government that says that, wherever possible, we should be providing incentive to boost Australia’s productivity. Yet in this very bill, when the government has an opportunity to provide an extension of this allowance to incorporate expenditure on things like software—which, of course, is a productivity boost—it does not take it. Again, the Labor Party is very quick to say one thing but very different when it comes to the follow-through.

The AIIA believes that the exclusion from the operation of this bill decreases the attractiveness of this allowance to business taxpayers. In addition, it also fails to act as a stimulus for the Australian ICT software sector, which is increasingly being impacted by a slowdown in business procurement. In addition, the association has indicated that computer systems, which are eligible assets, are frequently purchased with software embedded in them. The administrative burden associated with separating the cost of those tangible and intangible assets in such a purchase will involve additional red tape for small businesses intending to use the allowance. I would say to the minister: please, exercise some common sense—recognise that under your proposal those Australian small ICT software suppliers are excluded. A business that purchases equipment with a software program already installed is then somehow meant to split the cost between the eligible cost of the plant equipment—that is, the computer—but exclude the cost of the software. This is the kind of madness that we see from policy directions given by the Australian Labor Party.

I also know that Irrigation Australia have raised their concern with a number of members on this side, and possibly even with the government, that the bill specifically excludes water efficient irrigation equipment. Irrigation Australia has noted that such exclusion will not assist the irrigation sector to recover from the prolonged drought conditions across Australia. Notwithstanding this, the coalition accepts that this measure would be welcome by small businesses. Moreover, we know that some businesses have made capital purchases based upon this tax break and are relying upon it to help justify the cost of the investment. Again, I implore the Australian Labor Party: think about which assets are included and which are excluded, because at the moment there is a snub to the entire agricultural sector that would be looking at purchasing efficient water irrigation equipment in order to take advantage of the allowance as it currently stands.

In looking at the bill in toto, where do we actually see Labor’s approach to small business as reflected in this bill? As I said, it has been an interesting journey. Originally announced on 12 December last year and re-announced on 3 February and then last night reiterated once again, the bill is finally before the parliament for debate on 13 May. And bear in mind that prior to last evening, this allowance, as it was previously announced on 3 February, would have completed on 30 June of this year. After 30 June, the announced additional incentive as of 3 February would no longer apply. And the first opportunity that the parliament has had to debate this bill, to demonstrate its intentions with respect to this bill, is now on 13 May. So little wonder that so many small businesses started contacting the opposition and asking if this measure would go through. They knew that they needed to have some indication from the coalition as to whether the measure would be passed.

But the key point is that the coalition has done the government a favour. I took the decision to assist the government not because I was that interested in assisting the government, but because I wanted to assist those small businesses across Australia for whom this piece of legislation was an important aspect in their expenditure considerations. They wanted to know whether the bill would be passed, but despite the many sitting weeks between 3 February and 13 May, despite the many opportunities that the government had to introduce this legislation prior to now and to ensure that the debate was had, that it was taken to the Senate and a position determined, this government refused to do it. It is little wonder that small businesses were calling up and saying, ‘If the Labor Party can’t control their legislative agenda, how can we expect them to control the Australian economy?’ I agree, and that is why I took pity on this hapless minister for small business and indicated to the media that we would not frustrate the passage of this legislation. Because otherwise this so-called tax effective investment allowance would have been completely ineffective because businesses would not have dealt with the uncertainty that existed as a result of this government dragging its heels on this initiative and not even getting it into parliament for debate until 13 May. Talk about a government that has lost control.

So vital is this piece of legislation according to the minister—and the Prime Minister referred to it numerous times today—so crucial is it to the small-business sector of this country that the government could not even get it together to bring it into the parliament for debate ahead of 13 May. What an indictment on the priorities of the Australian Labor Party. No wonder small business has a question mark over it. In fact, the minister should come into the chamber and acknowledge and thank the coalition for making his job easier by indicating that we would not frustrate the passage of this legislation—notwithstanding the fact that the six-point proposal that the coalition outlined is vastly superior in initiatives and support for small business and their cash flow than this piece of legislation that is before the House today.

Finally, based on the amendments that the Assistant Treasurer has circulated, we know the bill will provide a 50 per cent tax deduction for assets costing $1,000 or more for small business with revenue of $2 million or less. As the Leader of the Opposition has said, such an allowance has some merit—I acknowledge that it has some merit—and it will be welcomed by some small businesses. However, this bill—and I should note that it forms the pinnacle in the Holy Grail of the Australian Labor Party’s approach to small business—does basically nothing for the vast majority of small businesses. You do not have to take my word for it because according to the March 2009 MYOB Australian Small Business Survey, and the minister referred to this number today in question time, only 30 per cent of small businesses intend to take advantage of this legislation.

For 70 per cent of the 2.4 million small businesses that employ around 3.4 million Australians, this bill will mean nothing to them. The reason it means nothing to them is to go right back to where I started in this debate that when times are tough small business owners know you cannot buy what you cannot afford. That is the fundamental issue that they have and that I have with this piece of legislation. Fundamentally we will not frustrate its passage but we recognise this bill will do very little for those small businesses that are struggling out there. This bill will do nothing for the 70 per cent of small business who simply do not have access to cash or credit to buy new plant and equipment.

I implore this government to not be arrogant about their policy approach to small business. The coalition understands that Labor just does not get small business. That is why we are doing our best to make it easy for you. That is why the coalition has outlined a six-point plan. I would encourage the Australian Labor Party to copy our six-point plan in exactly the same way that it copied our PAYG initiative. I would encourage the minister for small business, perhaps the only person on the Labor Party frontbench who has had some involvement in small business—albeit a consultancy back to the government—and the Australian Labor Party to copy these initiatives. (Time expired)

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009. Whilst I certainly do not want to waste the time I have in this debate to respond to the member for Moncrieff I will make two points. One of them is that, prior to entering this House, for some 40 years leading up to that time I operated a small business and I have been associated with small business since leaving school. I would also say that, when it comes to pretenders in respect of who are the friends of small business, the pretenders are the members of the coalition.

I want to reflect on a comment that was made by the Minister for Infrastructure, Transport, Regional Development and Local Government earlier on when he was speaking about nation building. He made the comment that in the first 18 months of this government being in office we have spent more on infrastructure than the previous coalition government did in all of their 12 years. The same statement could apply when it comes to small business. The Rudd Labor government have in fact done more in their first 18 months in office to support small business than the previous coalition government did in 12 years. I can say that, as I was someone who was a small business operator for that 12 years and was directly affected by the policies of the Howard coalition government at the time. As someone who does understand what it is like to operate a small business, I certainly welcome the initiatives of the Rudd Labor government, including the one I am about to speak to.

This bill provides a temporary bonus income tax deduction of originally 30 per cent of the cost of an asset if the asset is acquired between 13 December 2008 and 13 June 2009 and the asset is installed ready for use before the end of June 2010. As we heard last night, when the Treasurer was delivering the budget, that 30 per cent figure has now been increased to 50 per cent for those businesses that have a turnover of less than $2 million per annum, and the offer of 50 per cent has been extended until 31 December of this year.

The bonus tax deduction is in addition to the normal depreciation deduction for assets for which capital allowance deduction is available under the core provisions of division 40 of the Income Tax Assessment Act or new expenditure on existing eligible assets. To qualify for the tax deduction a minimum expenditure of $1,000 must be made by a small business and a minimum expenditure of $10,000 must be made by all other businesses. For business assets acquired between 1 July 2009 and the end of December 2009 a bonus tax deduction of 10 per cent of the asset’s cost will be provided if the asset is installed and ready for use by the end of December 2010 and it is a business of over $2 million turnover per annum. These are very sensible and very welcome measures for the Australian business sector during the current economic downturn.

It was interesting to hear the member for Moncrieff on the one hand telling us how he had been lobbied and pestered effectively by small businesses that he talks to about whether this legislation is going to get through, and then on the other hand suggesting that it has limited value. You cannot have it both ways. Businesses would not be contacting you wanting to know whether you are going to support it if they did not think it was legislation that was going to be in their interest.

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

Mr Ciobo interjecting

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Moncrieff has had the opportunity of making his contribution. I would ask him to contain himself.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

This is good legislation because it provides businesses with a much needed cash boost that can be used to purchase new assets which in turn will add to business efficiency and productivity and thereby further stimulate the economy. It was only last Wednesday that this legislation was being discussed at length by financial commentator Paul Clitheroe and leading talkback host Leon Byner on Adelaide radio station FIVEaa. They were speaking of the benefits of this legislation to the business community generally with the only proviso that they did not know whether the opposition was going to support it or not. Australia’s 1.9 million small businesses employ almost four million people and their ongoing viability will be crucial to Australia’s economic recovery and Australia’s economic growth.

The Rudd government understands the important role of small and medium businesses, and the provision of a bonus tax deduction for capital purchases adds to a number of other support measures for small and medium sized businesses already committed to by the Rudd government. I want to go through some of those measures, which include reduced pay-as-you-go tax instalments in the year 2009-10 and $46 million funding for some 36 business enterprise centres around Australia. Again, this is something the previous government never ever did. It is the first time ever that a federal government has supported small business through investing in BECs around the country. There is an on-time payment guarantee that commenced in December 2008, which means that small businesses that contract with government departments will be paid within 30 days or penalty interest may be charged by the small business—and we know how many small businesses are dependent on government contracts.

Cutting red tape by targeting 27 areas of state and federal regulations affecting businesses—I heard the member for Moncrieff talking about how this has to be done. Again I ask the question: why didn’t you do it in the 12 years your party was in office instead of talking about it now? Instead of giving lip service, you should have actually acted. I go on with some of the measures introduced by the Rudd government: a simpler superannuation payment system for small businesses, the rollout of a national high-speed broadband network across Australia—and I welcome the $43 billion recent announcement by the government in respect of that. I digress on that particular topic. The member for Moncrieff went on to talk about software. Where was his and his party’s concern about software, broadband and computers when they were in office? I can tell him that, when I was Mayor of the City of Salisbury, we had to look for our own investment and go into partnership with a private company in order to provide the broadband services that small businesses in that community needed but could not get access to, thanks to the federal government’s inaction on that very issue.

I add to that list the announcement by Senator Kim Carr on 7 May 2009 that Enterprise Connect, a $271 million network of manufacturing and innovation centres designed to help firms become stronger by focusing on innovation, creativity and excellence, will join with up to 19 organisations, private and government, with substantial business experience to deliver 180 workshops across Australia. I welcome that because it is an attempt to reach out to those small businesses and give them the kind of assistance that in many cases they need. The workshops will be held at no cost to participants and will focus on topics such as managing cashflow and how to better generate sales.

There was further support for small and medium businesses announced in last night’s budget. There were measures such as, as I said earlier, the increase in the tax deduction from 30 per cent to 50 per cent for businesses with turnovers of less than $2 million who acquire assets before the end of December 2009; new research and development tax credits available in 2010-11 of 45 per cent for companies with turnovers of less than $20 million and a doubling of the research and development expenditure threshold from $1 million to $2 million for the years 2009-10; additional support services for small business, with $10 million for the Small Business Online Program and another $10 million for the Small Business Support Line, which will provide initial over-the-phone advice and put small businesses in touch with specialist advisers on matters such as cashflow management, obtaining finance, marketing, and personal counselling and support; an increase in funding for current programs such as the Export Market Development Grants Scheme; further cashflow relief via the previously announced pay-as-you-go instalment adjustment; and $196 million for the new Commonwealth Commercialisation Institute to give small and medium sized businesses the power to turn great ideas into reality. We have not even come to the $4.5 billion relating to the Clean Energy Initiative, which undoubtedly will be a huge boost to so many small businesses out there.

Of course, the most significant boost to small and medium businesses came through the Rudd government’s economic stimulus strategies: the investment of $14.7 billion in upgrading or building new facilities at every school; the construction of 20,000 new public and Defence homes; an increase in the first home owners grant to $21,000 for newly constructed homes; almost $4 billion to insulate 2.9 million homes around Australia; and $800 million for 3,000 community infrastructure projects across Australia, such as town halls, parks, playgrounds and sports facilities. They are all investments that will ultimately provide support to small business. It will be small businesses that will get a direct and immediate benefit as a result of those commitments. In fact, it would be small and medium sized businesses every step of the way that will deliver those projects for Australia. That in turn means local jobs, with benefits that flow through every sector of the community, from suppliers to tradespeople and through to the local lunch bar. How better can you support small business than to add expenditure in the very areas where they will get a direct benefit?

I have had many discussions with school councils and local community groups about these commitments by the government. I have been incredibly impressed by the keenness of those local community groups to ensure that, when the work takes place, local people are contracted to carry out the work. They are as concerned as anyone else to ensure that their local people are the beneficiaries of these government commitments.

On the specific issue of jobs, I understand that in some trades there is still a shortage of suitably skilled people. I want to talk about a conversation I recently had with a constituent. Graeme Parkin, one of my constituents in Makin, raised with me his concerns about finding suitably skilled tradespeople in the tiling industry and, more specifically, about the low number of apprenticeships within that industry. Tiling is not the most appealing vocation for a young person to pursue, but the real problem is that too few tradespeople are prepared to take on an apprentice tiler. As Graeme Parkin quite correctly points out, there needs to be a reassessment of the apprenticeship and training process relating to the tiling industry. The Rudd government is taking action to address these skills shortages with the delivery of 701,000 new training places over the next five years, the building of trade training centres in our schools and the $145 million for securing apprenticeship initiatives which support out-of-trade apprentices and trainees to remain connected to the workforce and maintain their investment in training.

I said earlier that small and medium businesses will be critical in Australia’s economic recovery and growing our nation. Small and medium business operators are accustomed to doing it tough—working long hours, taking risks, and surviving downturns in business—so, in these tough economic times, it will be the resilience and the entrepreneurship of the small and medium business sector that will be critical to our economic revival.

I want to talk about a specific business. I was recently asked to speak at a launch at a business known as SA Motorcycles. The launch was for a new motorcycle, the Kawasaki ZX6R. This is a business that was established just over 10 years ago by a young person who had an interest in motorcycles and, along with a few friends who also had an interest in motorcycles, he put together a team of people who understood that particular sector. Today that business employs about 15 people, and it is still growing. The last two of those people were employed in recent weeks. More importantly, it has become the number one Kawasaki dealer in South Australia.

Evan Byles, the director of this company, deserves an incredible amount of credit. But he also deserves credit for being someone who is prepared to do all of those things I mentioned earlier—working long hours, taking risks—and he was quite proud to show me the amount of background work he had undertaken with his wife in the lead-up to getting that business up and going. It is a credit to him, and there are so many other small business operators just like Evan who are doing exactly the same thing and are prepared to work through the tough times and work the long hours that it takes to ensure that a business remains viable. For them, the tax deduction that is provided will give them the ability to invest in new assets, thereby reducing ongoing overheads and improving business efficiency while simultaneously creating flow-on benefits to those from whom those assets are bought.

This legislation is good for business, good for the economy and good for jobs—just as were the direct payments to Australian people in the Rudd government’s economic stimulus package. Those payments undoubtedly contributed significantly to the strong retail figures that we have seen over recent months. We have heard how the retail sector in this country employs some 1.5 million people. In my own State of South Australia, it employs 117,000. In my own region, it employs about 25,000. It is probably the single biggest industry sector employer in the region that I represent. I care about the people in the retail industry sector, and I care about the fact that they too, the retailers, are under pressure as a result of the economic downturn. But, thanks to the economic stimulus package, we have seen remarkably strong growth in the retail sector when contrasted with comparable overseas countries, and the situation is even more remarkable when compared with the previous month’s figures prior to the economic downturn.

That growth in retail spending has undoubtedly ensured that the jobs of those 25,000 people in my region who are employed in the retail sector have been secured. If it were not for that growth, I am sure that things would be much worse for them. It may well be the case that no-one can quantify with absolute certainty just how many jobs will be created or saved, however you want to look at it. There is no question in my mind whatsoever that that growth has contributed to employment certainty for those people—and their jobs are just as important as anybody else’s. Let us look at some of the retail figures. Between November 2008 and March of this year, Australia has seen a 4.5 per cent increase in retail trade. This is compared to a 3.1 per cent fall in Japan, a 2.5 per cent fall in the US and a 2.2 per cent fall in Germany over the same period. The Rudd government’s economic stimulus strategy is having the right effect, and the figures prove that. That strategy was the right thing to do for the nation, the right thing to do for the 1.5 million people employed in the retail sector, and the right thing to do for the tens of thousands of small businesses in the retail sector.

The opposition’s attack on the government’s direct payments to families is misguided. To claim, as the opposition has continually done, that the stimulus package has not worked not only is contradicted by the retail figures that I have just referred to but also demonstrates just how out of touch opposition members are with their communities, how little they understand local economies and how little they care about the 1.5 million people employed in Australia’s retail sector. There is a similar story with respect to this government’s housing commitments. Total building approvals rose for the second consecutive month, in March, by 3.5 per cent and the increase in house approvals of 3.4 per cent is the highest monthly rise since March 2007. The National Australia Bank’s April business survey, released yesterday, showed an improvement in business conditions and an increase in business confidence described by NAB Chief Economist, Alan Oster, as ‘the most encouraging set of numbers for some time’. What could you put that down to other than the government’s stimulus package? It is small businesses in both the construction and retail sectors that will be the prime beneficiaries of the Rudd government’s housing stimulus package.

There is a fundamental difference between small and medium sized business and big business. Small and medium sized businesses are primarily owned and operated by people who have invested their life and their future in their business. They have everything at stake in the success of the business and, unlike big business, where decisions are often made by highly paid executives who come and go, making decisions using investors’ or shareholders’ funds, small and medium sized business owners have a huge personal stake in the decisions they make. But they, too, are facing additional pressures because of the global recession. The Rudd government values the small business sector and, rather than just pay lip service to the sector, the government is providing real assistance with a broad range of policies that respond to key areas of concern raised by small and medium sized businesses throughout Australia. The minister is listening to those concerns, and I am pleased that he attended a small-business function in my electorate only a month or so ago where the 120 small businesses that attended could speak directly to him. He listened to what they had to say, and I did not hear one of them stand up and criticise the government for not doing enough. This is good legislation, and I commend it to the house.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I am already on the record as saying that, of all the measures contained in the stimulus response of around December last year, it is the 30 per cent small-business tax break through to June of this year that I consider the best and most appropriate stimulus response of all. It was a pleasant surprise for me, and I can confirm for my small business community on the mid-north coast of New South Wales, to see it geared up another level, up to 50 per cent through to December of this year. In light of that, of measures announced in the budget last night, and from what I have read and seen, I would consider this to be the best aspect of the budget last night, including as it does a stimulus response but also recognising the role to be played in the engine room of business in Australia, and that is the small-business community.

On the mid-North Coast of New South Wales, 95 per cent of the business community is small business. We are very much a ‘five employees or less’ community. The businesses are family based. A lot of them are home based microbusinesses. Therefore, this is a nugget of gold from the federal government in directly assisting business activity and business growth in a difficult 12 to 18 months. My message for government while I am on my feet tonight is this. As I as a local member talk to business communities—businesses that are connected to chambers of commerce and the various other business organisations, such as the BECs and the Australian business networks—I notice there are a lot of small businesses that for one reason or another still are not aware of this. Therefore, I hope that advisers in the boxes, government members and the executive can consider how this message can be got out to the small business community. In most cases they are head down and bum up doing the job of making a living and are not tuned in as clearly as we might like to think they are to messages that are coming out of this place. Selling this program is incredibly important, because it should be considered by every single small business. It should be deeply discussed with accountants. The fine detail and the future planning for potential capital purchases should be weighed up over the next seven months, because there will be no better offer from government.

Probably the best budget one-liner last night was from a colleague upstairs, Senator Xenophon. He described it as the ‘Harvey Norman budget—the buy now and pay later budget’. This aspect of the budget has bargain basement, Crazy John elements to it. I say that in a positive, not a negative, way. We will see no better offer by government than a 50 per cent tax concession on capital purchases. Therefore, over the next seven months I would really encourage the small business community to look at this and to consider how it fits in with strategies within their businesses. If there are capital purchases to be made within the next couple of years—and I am sure there will be—why not make them in the next seven months while this offer is on the table? A substantial tax break has been put on the table by government. It is, in my view, the best aspect of the fiscal stimulus and the federal budget. I could not be hotter on this and I could not endorse it more. It fits in well with several programs that we are trying to get up and running on the mid-North Coast both with government and separate from government.

I note the comments that have already been made about some of the small business aspects of last night’s budget, such as the new support line and the online programs. I sincerely hope we see the delivery of the National Broadband Network both on time and to the home. To the extent that we are hearing it discussed, it will change the nature of small business in regional communities. In fact, it will change life in regional communities such as ours. In my community we are still reliant on dial-up. That might make people in this chamber laugh. We are not only reliant on dial-up but also frustrated by dropouts when we are trying to access what in a building such as this is considered a basic service. This is creating the haves and the have nots in the knowledge economy. The National Broadband Network and fibre to the home are absolutely crucial. Hopefully, over the next couple of years, we will see that not drop off the agenda but in fact be delivered in an even shorter time frame than proposed.

I also note the doubling of the R&D tax credit in last night’s budget. Among the small business community and former governments as well as the current government I would hope there was and is general consensus that the R&D tax credit program is excellent. It probably does not get the attention that it deserves within political circles. I have noticed in my first eight months as a federal member the number of businesses that could and should apply but which are not aware of the programs offered and available from the government through AusIndustry, Enterprise Connect or other means. I was very pleased to see the Cutler review turned into a doubling of the R&D tax credit last night. Also, there were various aspects of the stimulus package for the local trades community through schools, home insulation, solar hot water or various other things. Those will and are making a difference on the ground. I would encourage government to stay committed to those programs through the next six to 12 months in particular.

As well, regardless of the role of government, at the mid-North Coast level we are getting organised with the small business community. For the first time the mid-North Coast is participating in the Innovation Festival, which nationwide has been running since 2002. We are underway with the Innovation Festival in May. Hopefully that will engage small business in the creativity through to commercialisation aspects of their business that sometimes do not get the attention they deserve as people push hard just to make a living. Also, we now have up and running what I consider a very important step for our region—that is, a couple of education and skills forums within our local community. They are engaging councils, TAFE, the education sector generally and the business sector. The forums are just about getting everyone around the one table on a semiregular basis to try to sniff out the opportunities from government and other areas and seeing how we can improve our situation.

Frankly, our situation on the mid-North Coast is not good. We have over 10 per cent unemployment, as of the last figures. That should not be lost on the government as we make our way through a difficult 18 months. The mid-North Coast has pretty beaches and a lovely hinterland and there is the perception that we are the land of luxury, but we are in the top 10 poverty areas in Australia. Unemployment floats between two and five per cent above the national averages. For youth unemployment, you can double that again and, for Indigenous unemployment, you can probably add another five per cent. Our income and education levels are some of the lowest in Australia.

We have some significant structural disadvantage issues that we have to deal with if we are going to have equity of advantage and equity of services with the rest of Australia. Programs like this do talk to my region; they do talk to the mid-North Coast. They are incredibly important in addressing some of those fundamental structural issues that make life there somewhat different from life in other communities, such as this one that I have now started to visit. I sincerely hope that the government promotes this package to every small business operator in Australia. I sincerely hope that every small business operator does their bit and takes half an hour to read this, digest it, think about it and, if they can sniff out an opportunity, jump on the phone to the accountant and actually do it in the next seven months.

This is a great window of opportunity for Australia at the most local level and at the small business level to kick some real goals. If we can do that, with the thinking that small business is the engine room of business and is the engine room of life in Australia, I think we will be no longer talking about recessions and sooner rather than later we will be talking about recovery, and strong recovery. I strongly support this legislation.

Jim Turnour (Leichhardt, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009. This legislation was announced as part of the Rudd government’s Nation Building and Jobs Plan. This bill puts in place an important mechanism to provide immediate and short-term stimulus to the Australian economy and support for small business. It was great news last night that the 30 per cent tax break will be extended to 50 per cent for small business.

Small businesses all across the country, including in my electorate of Leichhardt, are being impacted by the global recession. The Rudd government has had a stark choice: it could sit on its hands or it could act decisively to support small businesses to support jobs in the Australian economy. That is what we have done since the global financial crisis rolled out and impacted all across the developed world, creating a global recession.

We moved quickly last year with our banking guarantee to restore confidence and ensure that we have confidence in the financial system. The banks are not often popular with small business, particularly at the moment—they would like to see them pass on some more of the interest rate cuts that have come through from the Reserve Bank—but the small and medium sized businesses in my electorate understand how important the banking system is for a strong Australian economy and how important it is for them in their business operations. So supporting the financial system and producing confidence in that was the fundamental response that the Rudd government made.

Similarly, we acted early and we acted decisively to support business by introducing some stimulus last year through bonuses and some other measures. This was to support jobs in the Australian economy. My electorate of Leichhardt has a lot of retail and hospitality businesses. The area is strongly built on tourism. Those cash payments and bonuses, not only last year but also recently in the Nation Building and Jobs Plan that are flowing through now, are important to the retail and hospitality industries. Small businesses in my electorate have benefited directly from that stimulus.

The government acted decisively. It supported the financial system and it is supporting activities within the economy through the stimulus measures last year and this year with the $42 billion Nation Building and Jobs Plan. These have been important measures. Initially the opposition said they were supporting the stimulus measures, but then they sought to undermine them. The opposition’s small business spokesman today spoke for 30 minutes on this legislation. It took us 27 minutes to work out whether he supported the legislation or was going to oppose the legislation. He took 27 minutes of the 30-minute speech to say whether he supported it or opposed it. Small businesses in my electorate support this legislation. They are telling me that they are tired of the opposition opposing everything that the Rudd government puts forward to try to support them as they are dealing with these pretty tough economic times.

I see the member for Blair, the member for Makin and other members here who also have businesses in their electorates that are struggling. Those businesses want the opposition to support the measures the government is taking, particularly measures like this one that is particularly focused on small business. Many businesses in my electorate have said to me that they are really struggling finding the confidence to take up the 30 per cent tax break, and now we are going to see a 50 per cent tax break. They want to see this legislation go through the parliament before they are prepared to make that investment. All they hear from the opposition is opposition for opposition’s sake. The opposition is about opportunism. Businesses want this legislation to go through so they can have the confidence to make those investments.

Businesses in Cairns are under a lot of pressure. Rio Tinto has had to cut 100 jobs in Weipa. That directly flows through to the Cairns economy. We saw in the tourist industry Qantas make cuts last year. There were a significant number of jobs lost in Cairns as a result of that. The federal government and the Minister for Tourism responded by putting in place a $4 million tourism support package. That has been welcomed. It has been invested in marketing to bring tourists back to Cairns. A recent report done as part of that package by Access Economics demonstrates that the Cairns region is the most vulnerable area around Australia as a result of the global financial crisis and as a result of a downturn in the tourism industry. So we are hurting.

The construction industry is a very important industry in my electorate. We have introduced measures in our stimulus package—70 per cent of our stimulus is infrastructure investment—to support the construction industry. But the construction industry has some difficult times ahead. Just last week it was reported that CMC, a major construction company in Cairns, were looking at potentially going into receivership and liquidation. They employ hundreds of people through their subcontractors and there is real concern in the Cairns community. But they are looking to government to act, not to sit on its hands as the opposition would have us do. And they are looking for the opposition to support the government in our measures to build confidence in the Australian community and in the Australian business community.

There must be a concerted push from a range of angles to stimulate the economy. The government has carefully formulated and implemented a number of stimulus measures in recent months. Many of these have been centred on nation building or on investment in infrastructure. As I said, 70 per cent of our stimulus measure is investment in infrastructure. However, the small business and general business tax break is a critical element in this mix. The tax break was a big winner in last night’s budget as well. The tax break was expanded—costing $141 million over the forward estimates—to build on the previously announced tax break, which now totals $3.7 billion of tax relief for small businesses and larger businesses. This is significant and it is also very well targeted.

The expanded tax break will give small business an additional tax deduction when they acquire new assets or renovate an existing asset. Small business will now be able to claim a bonus tax deduction of 50 per cent, which is up from the 30 per cent that was announced in the February stimulus package, of the cost of eligible assets acquired between 13 December 2008 and 31 December 2009 and installed by 31 December 2010. An additional 50 per cent is a significant amount and, for example, should a business in Cairns, say, an engineering workshop, purchase a new welder that is valued at $12,000 and do this by the end of December this year, they can claim $6,000 thanks to the small business and general tax break. When lodging their tax return this engineering business would be able to claim this deduction in addition to the usual depreciation deductions in respect of the asset. It is clear that this will be a great benefit to businesses throughout Australia and in my electorate of Leichhardt.

The small business and general business tax break is a major announcement for small business—that is, businesses that have turnovers of less than $2 million annually. But it is also important to note that larger businesses do not miss out under this measure. They can continue to access the tax break at the 30 per cent rate for eligible assets costing $10,000 or more that are contracted for between 13 December 2008 and 30 June 2009 and ready for use by 30 June 2010. They may also claim 10 per cent for eligible assets over $10,000 that they commit to invest in between 1 July 2009 and 31 December 2009 and have ready for use by 31 December 2010.

The tax break has been carefully developed. It specifically targets and it has been developed in consultation with industry associations, businesses and the accounting profession. I see that the Assistant Treasurer is here today. I congratulate him and the Treasurer on these measures and the work that they have done in bringing them forward.

It is very important to note that second-hand assets are not eligible under this bill. I have had some inquiries about that in my electorate. They are not eligible under this bill, nor have they been eligible under previous investment allowances. This bill is geared towards new investment that will upgrade and extend our economy’s productive capacity as we are in the middle of a global recession. Clearly a recovery will not happen overnight. We need a clear long-term plan for the future, and new capital and new equipment are a fundamental part of gearing up for the future.

We want to support small business in these difficult times to bring investments forwards and to make those investments that improve their productive capacity so that they can take advantage of the recovery. We are investing in long-term, nation-building infrastructure because we recognise that at this time we need to invest in the productive capacity of this nation, build infrastructure—the roads, the ports and the railway lines. That was a central part of our budget last night, in which we proposed a $22 billion further investment in nation building. In the same way that the government is investing at this time to build the productive capacity of our economy through investment in infrastructure, through support for skills and training in universities and TAFEs, and all the way through our schools with investment to support modernising our schools and early childhood education, this is a good time for small business to also make investments, and that is what this business break is about.

Local small business representative organisations have supported this measure. The Australian Chamber of Commerce and Industry said the following about the tax break:

The extension of the investment allowance to 50 per cent for small business until December 2009 is an excellent initiative—and the stimulus measures first proposed by the ACCI and our members.

So they supported it and thought it was an excellent initiative. The Chief Executive of the Federal Chamber of Automotive Industries, Andrew McKellar, said:

The Federal Government’s Budget decision to increase and extend the investment tax break for small business provides a valuable incentive for new vehicle sales. The tax break will help stimulate the new vehicle market and support jobs in the industry.

So they too support it. We have also got the Master Builders Association supporting it. The Master Builders Association also welcomes the increase in the small business investment tax allowance from the current level of 30 per cent to 50 per cent. So we have got the Australian Chamber of Commerce and Industry, the automotive industry and the master builders supporting this tax break. They understand how important this measure is for their members and they want to see this measure passed through the parliament as quickly as possible.

I recently held a small business forum in Cairns. Over 80 local businesses attended to see how they could make the most of the government’s $42 economic stimulus package. I am very committed to ensuring that businesses in Cairns have every opportunity to access and to take advantage of our $42 billion nation-building package. This business tax break at a 30 per cent level was a very popular item of conversation and there was quite a lot of follow-up in the media in relation to it.

People want to take advantage of this investment. I understand from listening to the Minister for Small Business, Independent Contractors and the Service Economy in question time today that ACCI have done a survey showing that there are about 30 per cent or more people that are looking at taking advantage of this tax break. And that was at the 30 per cent rate. It has been increased to 50 per cent for small business, and no doubt larger sized businesses will also be taking advantage of it. So it is a welcome initiative by the small business and general business community.

The Pressure Pumps NQ owner attended the business forum that I ran to keep Leichhardt working. Owner Derek Ross, who I met at the forum, has looked the global financial crisis in the eye and cast it aside. He has taken the proactive approach. He is always looking for opportunities and is very positive about the future. He said that there were so many infrastructure projects in a number of government initiatives—just like the tax break—about at the moment that business can take real confidence and get a decent kick out of. So you have a fellow who is running a small business selling tools, compressors and other things to the construction industry, the other industry really taking benefit from this tax break and other measures and really supporting the work the Rudd government is doing to try and support business.

A local medical firm in Cairns has similarly spoken to me about taking advantage of the tax break. They are introducing a new telephone system and computers, and putting in place an elevator to enable patients to better access their clinics. There is a range of different areas.

PTS Traffic Management Services in Cairns has also moved on the tax break. They said, and I quote from a recent article in the Cairns Post:

It’s going to be a big saving and an enormous help.

They have already purchased two new utes to improve their fleet and may add another two more before the end of June. They quote:

Thirty per cent on $53,000 (for the new utes) is $15,900 and that’s a big help.

You have got medical industries, you have got small businesses selling tools, you have got people in the traffic management area all taking advantage of the tax break. They are going to go out and spend money in their local communities. I encourage people, when they are taking advantage of this, to spend money in their local communities and ensure that we, wherever possible, buy Australian and buy locally. The car industry definitely needs support, and this announcement is no doubt welcomed by the automotive industry, as I have already quoted.

I strongly support this measure. I say to the opposition: business wants confidence to undertake this tax break, to utilise this tax break. They are only going to get that if this legislation is passed through the House and the Senate quickly. It is very important for business to have that confidence. Get out of the way, stop opposing, stop being opportunistic about the way that you approach our stimulus measures. Support these measures and business will welcome that. I really commend this measure to the House and again congratulate the Treasurer and the Assistant Treasurer for the work they have done in bringing it forward.

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

I thank all members who have contributed to the debate on the Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009. This bill, of course, implements the small business and general business tax break, a key part of the government’s Nation Building and Jobs Plan to help cushion Australians from the worst impacts of the global recession. As the Treasurer said in his second reading speech for this bill, this $3.7 billion tax break will help boost business investment, bolster economic activity and support Australian jobs. It is targeted towards encouraging Australian business investment in the face of the global recession. The response from business has been overwhelmingly positive. The honourable member for Leichhardt went through his experience. It has certainly been my experience and the experience of the Treasurer, the Minister for Small Business, Independent Contractors and the Service Economy, as we travel around talking to businesses, that businesses are very keen indeed on taking up this proposal.

I would like to foreshadow several amendments to the bill. Foremost amongst these amendments will be expanding the tax break to provide additional assistance to small business, as announced in last night’s budget. I will also move several minor amendments of a technical nature. These will ensure that the legislation operates as intended. I recognise the support of the opposition. As the honourable member for Leichhardt said, it did take 27 minutes into the shadow minister’s speech before he got to this particular piece of legislation, but he did indicate support. It was rather belated, because there has been some concern in the business community that the level of uncertainty about the passage of this bill was discouraging investment. Some small businesses were not prepared to make that investment until they were guaranteed of opposition support so they would know it would pass both houses of the parliament. The shadow minister had previously indicated that they would not actively frustrate, but that was not enough for the business community. Understandably, given the opposition’s opportunistic opposition to everything this government does, they wanted to see a very clear indication of support. That will no longer be an issue. I do, in fairness, acknowledge the opposition’s assistance in having this passed through the House today. I commend the bill to the House.

Question agreed to.

Bill read a second time.