Tony Smith (Casey, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

In resuming debate on the Tax Laws Amendment (2009 Measures No. 3) Bill 2009, I will briefly address each of the four schedules within the bill, but I indicate that the opposition will be supporting this bill. Schedule 1 deals with the GDP adjustment factor for the 2009-10 income year. The government had previously announced, and in fact legislated, earlier in the year a reduction of that factor in light of the current economic circumstances. That passed through the parliament, and this schedule merely repeats that exercise for the 2009-10 income year. Under the PAYG instalment system, certain taxpayers calculate their PAYG instalment amounts according to the GDP adjustment factor, which essentially is determined using GDP growth between the last two calendar years—as the explanatory memorandum outlines. If that had been the case this year, it would have meant that the GDP adjustment factor would have been nine per cent for the 2009-10 income year. This bill sets it at two per cent.

The coalition has said previously that this is a welcome direction for small business. We had a varied proposal which we think provided more flexibility for all taxpayers in this situation. That was in fact announced by the shadow minister for small business prior to the government coming onto the field in this regard. The shadow minister for small business, the member for Moncrieff, will be following me in this debate, so I will not take the time of the House tonight to reiterate all of that in my contribution. I know he will address all of those issues and a range of issues relating to his shadow portfolio of small business in his own contribution in just a little while.

Schedule 2 of the bill brings into effect an announcement by the previous government. It allows entities that voluntarily register for GST to align their reporting of PAYG with their GST reporting. As I said, it was a measure announced by the previous coalition government, certainly in its last budget, and it will reduce compliance costs for eligible taxpayers. From my perspective as the shadow Assistant Treasurer, I am glad that the government has decided to legislate to bring this measure into being. It will reduce the compliance burden on entities that voluntarily register for GST by allowing them to report GST and PAYG together on an annual basis.

Schedule 3 makes very technical amendments to the petroleum resource rent tax regime. Again, this was announced by the previous coalition government in their last budget of 2006-07. The current government announced in last year’s budget that it would proceed with the measures with an effective date of 1 July 2008. In technical terms, schedule 3 will introduce a functional currency rule into the resource rent tax regime along similar lines to the functional currency rule used for income tax. This will allow entities to use a currency that better reflects the international petroleum market when determining their tax liability. The schedule also amends the petroleum resource rent tax to ensure that all exploration expenditure in an exploration permit area is deductible for petroleum resource rent tax purposes. Currently certain exploration may not be deductible. This amendment will ensure that the correct operational intention applies and the explanatory memorandum details that very well. The schedule also introduces, as I said, a highly technical amendment to provisions relating to petroleum sourced from within a project for refining and also extends the offshore exploration incentive.

Schedule 4, which is the schedule we see in many of these tax law amendment bills, amends the Income Tax Assessment Act 1997 to update the deductible gift recipient list. In doing so, it includes three new entities which are the Royal Institution of Australia, Diplomacy Training Program Limited and the Leeuwin Ocean Adventure Foundation. Once this bill is passed, each of those will be added to the deductible gift recipient list. The opposition will be supporting this Tax Laws Amendment (2009 Measures No. 3) Bill 2009. As I said earlier with respect to some of the small business measures and the coalition’s position, the shadow small business minister, the member for Moncrieff, will be making a contribution a little later.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to address the Tax Laws Amendment (2009 Measures No. 3) Bill 2009. This bill contains amendments to three areas of tax law. The first amendment concerns PAYG instalments. The bill reduces PAYG instalments for 2009-10 for taxpayers who pay quarterly instalments. It also allows eligible taxpayers who have voluntarily registered for GST and who choose to remit GST annually to also make their PAYG instalments annually. Secondly, the bill makes minor amendments to the Petroleum Resource Rent Tax Assessment Act 1987 to reduce compliance costs for taxpayers. Thirdly, the bill lists a couple of new organisations as deductible gift recipients. I know that such a listing is always eagerly looked forward to by people who do good work in our community.

I will speak firstly to the amendments concerning PAYG instalments, which are the most significant measures in this bill, as discussed by the previous speaker. These changes will deliver direct benefits to small business. Under current arrangements, the GDP adjustment factor calculated under the present income tax law would be around nine per cent. Taxpayers earning business or investment income pay quarterly instalments during the year towards their final tax liability so they do not have an unmanageable tax bill at the end of the year. These instalments are calculated based on the GDP adjustment method. It is based on the taxpayer’s taxable income from the previous year adjusted by the GDP factor, which reflects GDP growth over the previous two years. In simple terms, as I understand it, the instalments are based on last year’s taxable income plus expected profit growth.

However, these are unusual days and the GDP factor—which, as I said, would be at nine per cent—is an exaggeration of the kind of profit growth that most small businesses can expect at the moment. That might be different, perhaps, for some of those businesses that have thrived over the last three or six months—receivers, perhaps. I note that some of the major supermarket chains have also thrived. Obviously people are eating in.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

Liquidating.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

People are liquidating, as is suggested by the member for Blair. Video hire stores are also doing very well. People are obviously staying home and cooking their own meals, although I am told—not by the hairdressers that I frequent but by the hairdressers that I talk to in my electorate; I, of course, go to a barber—people are not necessarily scrimping on their hair. People are still prepared to spend their money on looking good, even if they do not have anywhere to go. They are all dressed up with nowhere to go. Apart from those specific niche businesses, most businesses have not been growing at nine per cent.

Cash flow is the lifeblood of small businesses, as we on this side of the House well know. The Rudd government does not want businesses paying instalments far above their actual tax liability. In these tough times, it is more important than ever for small businesses to retain cash flow and ensure they can continue to invest in their businesses. That is why this bill will set the GDP adjustment for the 2009-10 year at not nine per cent but two per cent.

This amendment will generate around $720 million in cash flow for small businesses. Small businesses in the electorate of Blair, small businesses in the electorate of Moreton and small businesses in the electorate of Port Adelaide will benefit from this government adjustment. Self-funded retirees and other eligible taxpayers will obviously also benefit. Most importantly, this measure will ensure that $720 million is not lying around in the coffers of the tax department but instead continuing to stimulate business investment, which means more jobs for Australia. Obviously, we on this side of the House understand that the current climate is all about jobs, jobs, jobs.

This bill also introduces some flexibility regarding PAYG instalments. It amends the Taxation Administration Act 1953 to allow taxpayers who are voluntarily registered for GST and who choose to pay GST annually to also make their PAYG instalments annually. This will eliminate unnecessary compliance costs for taxpayers.

These measures build on the Rudd government’s significant efforts to support small business during these tough economic times—times that almost every person in this room tonight has never seen in their lifetime. These are tough economic times. It is funny—we do not feel like we are in a flickering black-and-white newsreel, but I guess in 75 years time people will look back at this time and say this was a significant economic downturn. That is the reality.

Obviously, we on this side of the House understand that small business is the backbone of the Australian economy. We have some 1.9 million small businesses, employing almost four million Australians. I think the member for Blair was one of those small business people. I think of the many small businesses in my electorate, which provide employment and stimulate economic growth. There are successful businesses like MiniMovers, which was set up by Michael O’Hagan; Michael’s Oriental Restaurant at Eight Mile Plains, where I seem to have had every second meal over the last couple of weeks; the Framing Corner at Sunnybank, which does so much work; the Inn Florist at Moorooka, which always looks after me on Anzac Day and Remembrance Day and on my wedding anniversary, when I remember it; Chaotech, which was set up by Rex Manderson at Rocklea and which produces precision steel machine parts and is also developing a plant to produce soil carbon that will hopefully take advantage of the green vegetation in our environment and plough it back into the farms in the surrounding area; the Sunni Bakery and Sunnybank Plaza News at Sunnybank; 3E at Salisbury, which looks after the printing of my newsletters; the Mu’Ooz African restaurant at the heart of Moorooka in the little strip of Africa; the Sunnybank Oriental Restaurant; the Landmark Restaurant; any of Danny Yo’s many restaurants; and my dentist, Ken Martin, at Graceville. All these small businesses will benefit from the improvements we are bringing in tonight.

The Rudd Labor government is doing whatever it can to support businesses such as these. We are increasing and extending the small business and general business tax break. We are lifting the tax break from 30 per cent to 50 per cent and extending it to apply to eligible assets acquired between 13 December 2008 and 31 December 2009. Businesses need to make sure they take advantage of this wonderful opportunity. The 50 per cent rate applies to new tangible assets over $1,000 acquired by small businesses with a turnover of less than $2 million a year. It includes items like computers, electric tools, furniture and motor vehicles, to name but a few. We are also establishing a small business support line to assist small businesses during the global recession. Sometimes a bit of helpful advice might make the difference between a business surviving or getting into difficulties.

We are providing $10 million over two years to help small businesses go online and to open up to new markets through e-commerce. We are introducing a new research and development tax credit at 45 per cent for companies with an annual turnover of less than $20 million. I am proud of all these measures because I know that for some small businesses in Moreton it will be the difference between survival and bankruptcy. For some employees it will be the difference between a solid job and unemployment. These are good things to do because they are good for jobs and good for the economy.

This bill also makes some minor changes to the petroleum resources rent tax. Among a range of minor amendments the bill allows taxpayers with petroleum projects offshore to calculate their petroleum resource rent tax liability in a foreign currency. This will simplify tax compliance for taxpayers who operate in a foreign currency.

Finally, this bill welcomes three new organisations to the list of deductible gift recipients. Taxpayers will be able to claim income tax deductions for gifts to Diplomacy Training Program Ltd, which provides training for staff and representatives of NGOs in the Asia-Pacific region to help promote good governance and human rights. Obviously, it makes good sense to help where we can with our neighbour’s yard because that makes our yard that much safer. Also included is the Royal Institution of Australia Inc., an Adelaide based science research centre. I am sure the member for Port Adelaide would support this. The third included is the Leeuwin Ocean Adventure Foundation. This great organisation gives young people the experience of life on the tall ship Leeuwin. They learn skills in sailing and navigating but, more importantly, develop teamwork, confidence, responsibility and community spirit. This bill ensures that these organisations will be able to collect tax deductible gifts.

This legislation demonstrates how the Rudd government continues to respond to the dynamic global economy and the challenges that brings for Australian businesses. It shows that we are prepared to listen and respond with practical measures to help meet the emerging needs of business. I commend the bill to the House.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Tax Laws Amendment (2009 Measures No. 3) Bill 2009. This bill, as happens so often, amends by schedule a number of provisions in relation to tax and a variety of different pieces of legislation. Schedule 4 talks about three new organisations for deductibility for the purpose of gifts. Schedule 3 amends the Petroleum Resource Rent Tax Assessment Act, implementing four minor measures to reduce compliance costs and provide a number of concessions for interested taxpayers. Schedule 2 allows taxpayers who are voluntarily registered for GST and who choose to pay their GST annually to also make their PAYG instalments annually if they satisfy other sorts of tests for the purpose of eligibility for annual PAYG instalments, and it has the consequence of reducing compliance costs and regulation for business, and that is a good thing.

I want to talk mainly about schedule 1 and the other measures that the Rudd Labor government is undertaking both nationally and locally to help small business. We are in the most difficult times for 75 years, and it is for all business, whether in the area of real estate, car sales, dentistry, floristry, banking, food outlets or recreational facilities. All those types of outlets, all those types of small businesses who are in my electorate, in small communities such as Kalbar, Boonah, Laidley and Gatton, are facing the challenges of the downturn—not just in Ipswich, which forms the heart of my seat. But it is important that we provide for small business to give them confidence for our nation’s future. We need to be able to support small business at this very difficult time.

There is a great myth in Australian politics that the coalition somehow is the great saviour or advocate of small business. That is simply nonsense. The truth of the matter is that during their long tenure under Menzies they installed a Hansonite protectionist system supported by Black Jack McEwen, supported by the likes of Gorton, McMahon, Menzies and Holt, which served to straightjacket Australian business, profitability and the economic development of Australian business. They did not support small business. It was the Whitlam Labor government that brought in the Trade Practices Act and started the internationalisation of the Australian economy. It was the case that the Hawke and Keating governments internationalised our economy; made us internationally competitive; brought in superannuation, which helped so many people in this country; floated the dollar; reduced tariff barriers; and opened up the banking system—all of which was good for this country. It is the reality of Australian politics, rather than the myth, that Labor governments are the governments which are pro free enterprise, pro free trade and pro free market. It is a myth because those opposite support, invariably by their policies, big business and oligarchs.

You can see it in their opposition on many occasions. They are in opposition, simply, to our stimulus package—that is quite clear—because our stimulus package helps small business. What we are doing for small business, for the many small businesses in my electorate and for the four million people that are employed by the 1.9 small businesses across the country, is to support them in this hour of need. Those opposite, the coalition—the great saviours, the great advocates, of small business—oppose the stimulus package which simply was there to support and help small business, to give them a helping hand. They opposed it.

They oppose every person employed, for example, at the RAAF base at Amberley in my electorate, with the $60 million that we put in there; everyone who benefits from the Defence Housing Authority’s 133 new homes; everyone who benefits from the $30 million in the BER funding in my electorate; the tradesmen, the electricians, the plumbers, the carpenters and all those people who are employed by the Rudd Labor government. That is the reality of political life in this country. Us supporting small business, supporting free enterprise, supporting economic welfare and development in local communities across the country—that is the reality of political life, not the mythology perpetrated and perpetuated by those who sit on the coalition benches. That is the reality of Australian political life, the polity of this country and the economy of this country. We are the ones who have done what we need to do to support small business. It is clear: in our budget we support it. We support consumption. Our stimulus packages helped the businesses in our area.

When I went around the various shopping centres doing mobile offices in places like Riverlink in Ipswich, the Brassall Shopping Centre, Yamanto Shopping Village and Winston Glades, I spoke to many small business operators in those shopping centres which are so important in my area. I spoke to the management there. You can see how important helping small business is and how appreciative they were in relation to that. The legislation that we have before the chamber tonight is yet another example of the Rudd Labor government supporting small business, supporting free enterprise and helping businesses to maintain employment and to give people a chance.

We are the ones who support family values. How can it not be a family value to make sure that you can feed and clothe your children, to have a roof over your head? That is family values. That is being pro-family. That is being pro-free-enterprise as well, because business operators are not just members of our community but consumers. They purchase goods and services in our community, which supports small business. So the people who sit on the opposite side of the chamber should have a good look at themselves and at what they do and say in this regard.

I was in business for 20 years before I came to this place. I looked after my business. I built it up with the support of Matthew Turnour, the brother of the member for Leichhardt. Neumann and Turnour Lawyers employed many people. We had many staff. It was a multimillion-dollar operation. So, for those opposite who criticise those of us on this side of the House without business experience, I am not one that they can criticise because I know what it is like to have to meet the payroll, to pay the rent, to deal with telecommunications companies, to pay GST—to pay all these sorts of things, the challenges of small business. I know what it is like. I know it from personal experience.

Schedule 1 of this legislation helps small business in many, many ways. It is basically allowing small business to have $720 million in cash flow, to their benefit, simply from this change. What we are doing here is amending the GDP adjustment factor, which clearly does not represent the true rate of growth in income and profitability in businesses today. We are reducing it from nine per cent down to two per cent, and that means there will be more money in the kitty and the coffers of small business. It ensures that those businesses have more ready cash flow to meet their overdraft and other business requirements. It gives them a chance to invest, it gives them a chance to employ more staff and it gives them a chance to retain staff in the circumstances. The last thing you want to do when you are in business is to put staff off. That is the last thing you want to do. You want to keep your skilled staff, because when the recovery comes it means that you have the people who will return you to profitability, and they are the ones who can increase their productivity all the more readily.

The Rudd government is doing a lot to help small business. We are committed to ensuring small business remains viable and vibrant in all the circumstances. If we did not do what we are doing in terms of our budget and our stimulus packages, we would have 210,000 people out of work, according to Treasury estimates. That is 210,000 people effectively on unemployment benefits who cannot get access to the kind of cash which is necessary to purchase goods and services in small business, and that results in reduced profitability, retrenchment, liquidation, administration and lower corporate and PAYG tax receipts for the federal government. It is a spiral. So it is necessary to support small business. We are committed to that. We are providing more than $500 million in small business incentives and support.

One of the things which has been most readily hailed in my electorate has been the small business tax break. Last Saturday night I was at the Ipswich Art Gallery speaking to a number of small business people. There was the head of the Ipswich Chamber of Commerce, Martin Corkery, and James Sturges, who is one of the leading businessmen in Ipswich and the manager of Ross Llewellyn Motors—a great place. I have bought a car or two from them over the years. They were telling me how important the Rudd government’s commitment is to Ipswich and to the economic development of the area but also to business.

James waxed lyrical about the 50 per cent tax deductibility for assets costing more than $1,000, acquired after 13 December 2008 until 31 December 2009 and installed ready to use by 31 December 2010. James told me that they will sell more cars, and have been selling more cars, as a result of the 30 per cent increase. But now he thinks that the 50 per cent is a great thing for the local economy, as businesses purchase vehicles and a local car dealer in the area employs local staff and local people. This tax break will benefit small businesses with a turnover of less than $2 million per annum.

But other things are really important too. Our Small Business Support Line is important and our Small Business Online initiative is also important.

In my local area the Rudd Labor government is committed to small business in a practical way. We have funded for a period of four years the Ipswich Business Enterprise Centre. This helps local business in terms of mentoring, getting access to information and government services, access to finance, and access to the kind of information which will help small business to be profitable, to employ staff and to get started. I know a number of small businesses that have benefited. I spoke to Cindy Baker, who told me fairly recently in a meeting I had at the Ipswich Business Enterprise Centre, how enthusiastic she was and how enthusiastic has been the response locally in Ipswich and also the rural areas outside. It is interesting that the Ipswich Business Enterprise Centre was launched in the Lockyer Valley. It is important that we have representation from various chambers of commerce on the board that runs it. So I am pleased that the Ipswich Business Enterprise Centre is up and running effectively now and providing help for small business in the area.

Why is that important? Ipswich is growing faster than any other area in Queensland. The ABS data in the last 12 months shows that Ipswich is growing at four per cent. The federal electorate of Blair and its neighbour, Oxley, are just simply booming in population. The Ipswich part of my electorate will grow from about 64,000 voters to about 78,000 in the next couple of years. That is just the Ipswich part alone. In neighbouring Oxley it will grow from about 28,000 to 43,000 voters, and that is not counting children and other residents who are not Australian citizens entitled to vote. The truth is that we need a new classroom in Ipswich every week, such is the growth in population. So the commitment of the Rudd Labor government to small business in our community is simply stark. It is real, it is accessible to people, and it is very open and honest.

When I talk to the principals at various schools I can see that the BER funding is also having a big impact in terms of local businesses, and they are very enthusiastic about what it can do for local businesses.

The RAAF Base at Amberley, with a $1.1 billion injection of funds—$600 million in this particular year as part of our stage 3—is building new infrastructure in the local area and local jobs are being created.

When you drive along the Ipswich Motorway—again, another great project funded by the Rudd Labor government—you cannot help but notice that thousands of jobs are being created and supported by an $884 million injection this year. Driving back from Brisbane to Ipswich you see so many people travelling to Ipswich to work these days from Brisbane. There are almost as many vehicles on the road coming back to Brisbane of an evening as there are returning to Ipswich from work in Brisbane. That is not what it was years ago. Business in Ipswich is booming. The unemployment rate actually went down 2.1 per cent in the last 12 months because of what is happening. So helping business in my local community is simply vital in all the circumstances.

I think that this is a great bill which helps my local businesses. It is having a practical impact. I know from personal experience that this sort of PAYG cash flow relief will help lots of businesses that I was involved in as a lawyer acting for them years ago. But it is important also that we give not just to businesses in Ipswich or Brisbane or Sydney or Melbourne, but also to businesses in rural areas.

So the 12-month extension of exceptional circumstances for farm dependent small businesses is warmly welcome. This will continue $20,000 non-business salary and wages exemption for exceptional circumstance relief payments, and $750,000 for non-business asset exemption for exceptional circumstances interest rate subsidies. That is really important because, as I have said on many occasions, Queensland is very different from other states. We are very regionally based. We have large rural communities and lots of small towns. Many people work on farms. They also work in these small communities in the towns. For example, we saw many types of businesses helped by the last stimulus package: 119 farming families received it. I want to thank the government for their commitment, thank the government for their help for small business and thank the government for the legislative changes in relation to tax which will help small business in my community.

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

I, too, rise to speak in support of the Tax Laws Amendment (2009 Measures No. 3) Bill 2009. This bill, firstly, reduces the GDP adjustments for the 2009-10 financial year from around nine per cent to two per cent for taxpayers who pay quarterly PAYG instalments on the basis of the GDP adjusted notional tax method. Secondly, the bill allows taxpayers who are voluntarily registered for goods and services tax and who choose to remit GST annually to also choose to make their PAYG instalments annually. Thirdly, the bill amends the Petroleum Resource Rent Tax Assessment Act 1987 to implement four minor measures to reduce compliance costs and provide certain concessions for affected taxpayers. Fourthly, the bill specifically lists three new organisations—namely, Diplomacy Training Program Ltd, the Royal Institution of Australia Inc. and Leeuwin Ocean Adventure Foundation Ltd—as deductible tax receipts.

I want to take a moment to speak about the Royal Institution of Australia Inc., which is based in my home state of South Australia. In October 2009 the Royal Institution of Australia will open its new premises in the converted former stock exchange building in Adelaide’s CBD. The institution’s mission is to bring science to the people. It will bring the findings of science to society and aims to foster informed debate about science and technology within the community. The Royal Institution of Australia in Adelaide will be the first international satellite of the world renowned Royal Institution of Great Britain, which has been the flagship of science communication in the UK for over 200 years. Partnered with the Royal Institution of Great Britain and any future affiliated organisations, the new Royal Institution of Australia will be an internationally linked hub that will bring science from around the world to the community. The current director of the Royal Institution of Great Britain is Baroness Susan Greenfield, who was a South Australian government Thinker in Residence in 2004-05 and who played a major role in the establishment of the Royal Institution of Australia.

There is another Adelaide connection with the Royal Institution of Great Britain. William Henry Bragg and his son William Lawrence Bragg were Adelaide physicists who, after returning to the UK, were both subsequently directors of the Royal Institution of Great Britain, the role currently held by Baroness Greenfield. The Braggs hold a unique place in Australia and world history as the only father and son ever to be awarded a Nobel Prize. Lawrence was just 25 years old when they were awarded the Nobel Prize for Physics in 1915, making him the youngest ever Nobel recipient. The Braggs’ contribution to science worldwide is celebrated in their home state of South Australia in many ways, including laboratories at the University of Adelaide and a state electorate both being named in their honour. South Australia has a strong scientific heritage through the contribution of people such as the Braggs, Howard Florey and Sir Douglas Mawson. The new Royal Institution of Australia will provide a permanent location to showcase this heritage and will display artifacts related to the Braggs and other items of relevance to the scientific heritage and contemporary achievements of scientists in South Australia and Australia. Science education and awareness is an area of need within our community, and I welcome the tax deductible status this bill delivers to the Royal Institution of Australia.

We face the most severe global economic downturn since the Great Depression of the 1930s. We have seen over 30 banks around the world collapse or bailed out by governments. We have seen major Western economies such as the US, UK, Germany and Japan fall into recession. We have seen economies around the world fall into negative growth and we are seeing governments around the world go into substantial debt as they inject money into their economies in order to support jobs and prevent their economies from plunging into deeper recession or further productivity losses.

Australia was not immune from the impacts of the global financial crisis and nor is it immune from the global economic downturn because Australia is part of and operates in a global economy. What the Rudd government has done is to act quickly and decisively with measures that will cushion Australia from the full impacts of the global economic downturn. An article in today’s Advertiser shows how those measures are working in the restaurant business in South Australia:

South Australians spent a record $100 million in restaurants and cafes in March as diners defied the economic downturn.

The $100 million figure was $15.1 million more than March last year and almost $20 million more than we spent in each of the preceding two months, latest figures from the Australian Bureau of Statistics show.

Overall, in the six months to April, spending increased 3.8 per cent to $536.6 million compared with the same period last year ...

It is good news for the South Australian hospitality sector, which employs about 32,500 people, including 15,000 in restaurants and cafes.

That is clear evidence that the stimulus package which this government has embarked upon is having the desired effect of cushioning Australia against the global economic downturn. This bill is another in a series of measures the government has taken in order to support Australian jobs and the Australian economy—measures which are working and which have the support of most industry organisations and economic analysts.

The measures in this bill are particularly beneficial to Australia’s 1.9 million small businesses, which in turn employ nearly four million Australians and, as I have said on previous occasions, will be critical to Australia’s economic recovery and future prosperity. Many of these businesses are finding it tough right now. Their turnover has dropped and whereas in the past they may have turned to their bank for temporary increases in their business overdraft, even that option has become more difficult because of the global credit squeeze. In fact, had the government not introduced the bank guarantee measures early on in the downturn, the situation for many Australian businesses would today be much more dire. It was another example of the Rudd government acting early and acting decisively.

Reducing the pay-as-you-go tax adjustment from around nine per cent to two per cent will assist businesses with much needed cash flow at a time when every bit of assistance helps. Pay-as-you-go provisions ensure that businesses pay income tax on a regular basis throughout the year. This is somewhat consistent—although not entirely consistent—with the requirement for wage earners to pay income tax as they earn their income throughout the year. The fundamental difference is that pay-as-you-go tax payments are based on the previous year’s income. In contrast to wage earners, business income can vary substantially from one year to the next. Particularly during this period of economic downturn, it is both realistic and fair to reduce the pay-as-you-go tax payments they are expected to make.

Businesses are not the only taxpayers who pay PAYG tax. Many self-funded retirees who derive an income from their investments are also required to pay PAYG tax. As a result of the global economic downturn, the income of self-funded retirees has also been savagely cut, in many cases by more than that of many businesses. Reducing the adjustment to two per cent will also provide some relief to them. In a similar vein, taxpayers who choose to remit GST payments annually will also be provided with a boost to their cash flow if they choose to make their PAYG payments annually.

I have spoken on other occasions about small businesses and the valuable role they play in job creation, skills training, innovation and economic growth. For most small businesses, it is always tough, even during good times. If business is going well, new competition inevitably springs up, greedy landlords impose steep rent increases or suppliers increase the costs of their products. On Sunday, 24 May 2009, the Australian Retailers Association released a statement relating to steep rent increases:

The Australian Retailers Association has called on the Rudd Government to bring retailers and landlords together at a Retail Tenancy Crisis roundtable to help restore the balance in leasing negotiation and break the retail code of silence.

ARA’s Executive Director Richard Evans said the ARA had called on Federal Ministers Craig Emerson and Chris Bowen to step in and facilitate an environment where retailers, who often remain tight-lipped about unviable leasing conditions, are provided a platform to voice their concerns.

And this is the critical point:

‘Many retailers, particularly smaller retailers, subscribe to an unwritten law to remain silent about spiralling occupancy costs and unfair leasing conditions out of fear they will be penalised by self-serving landlords who can refuse to renew their lease,’ Evans said.

On that very issue, it was only two weeks ago that I was approached by a person who advocates on behalf of small business operators in shopping centres. He spoke to me about that very crisis which tenants in a particular shopping centre were facing—huge hikes in rent, no option but to pay the rent or lose their investment, and being treated in a way which none of us would believe to be fair and reasonable. He was looking for assistance as to how we might be able to help.

Those are some of the issues which small business people currently face. As I said earlier, it does not matter whether it is good times or bad, they are doing it tough. That is what makes them very special. Small business operators are accustomed to doing it tough. They know how to get through hard times. Small business operators endure hardship from the day they set up their businesses. As someone who has been in small business for most of my life, I have associated with small business people and can speak not only from personal experience but from the many conversations and discussions I have had with small business people, particularly in Makin, the area I represent.

These are extraordinarily tough times for small business. The Rudd government recognises that and has responded with a suite of direct and indirect measures that will support businesses throughout the nation. Direct benefits to small business include the 50 per cent tax concession for asset purchases and the extension of that concession until December 2009 for businesses with a turnover of $2 million; $10 million for a small business support line; a further $10 million for an online small business support service; and the cutting of December PAYG instalments by 20 per cent. These measures will directly assist with cash flow to help small business to remain viable during these very difficult times. On top of that, we have seen the funding of small business advisory centres around the country and business enterprise centres. We are also right now considering a proposal to support motor vehicle financing. This again is a proposal which undoubtedly will be a direct benefit for the many small businesses around this country.

All of those measures will make a direct difference to the ability of businesses to remain viable during these very tough times. But the biggest support that the Rudd government has provided to small business around the country is through the budget announced last week and through the stimulus packages announced prior to that. The Rudd government is investing in 20,000 housing units around the country and increasing the First Home Owner Grant to $21,000 for newly constructed homes and $14,000 for other homes. There is the school modernisation program, which affects the 9,540 schools around Australia. There is the home insulation program, where up to 2.7 million homes around the country will be eligible for free insulation. There are all of the national infrastructure projects, in addition to the $22 billion worth of infrastructure projects that were announced in last week’s budget. All of these measures will have a direct stimulus effect on small business because the prime beneficiaries will be locally based businesses here in Australia, the 1.9 million small businesses that I referred to earlier in this speech.

This proposal will provide an additional $720 million of cash flow to the small business sector in this country. It will support up to 1.5 million taxpayers across Australia, 1.3 million of those being small business people. It is the kind of proposal that makes a difference to their viability, it is the kind of proposal that is needed in these tough times and it is the kind of proposal that I have no doubt is welcomed by the small business sector across the country. I commend the bill to the House.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Tax Laws Amendment (2009 Measures No. 3) Bill 2009. I will be giving most of my attention to schedule 4 of the bill, which lists three new organisations as deductible gift recipients, or DGRs. I will also make some mention of schedules 1, 2 and 3 because they are very important reforms, particularly for the small business sector. In my electorate of Page there are more than 11,000 registered small business operators—and that is a rough figure; we know there are a lot more than that.

Schedule 1 of the bill relates to the pay as you go tax instalment system. The government will reduce PAYG instalments in 2009-10 for taxpayers who pay quarterly instalments on the basis of the GDP adjusted notional tax method by setting the GDP adjustment at two per cent. This reduction will provide around $720 million of cash-flow benefits to small businesses, self-funded retirees and other eligible taxpayers by ensuring that their PAYG instalments more closely approximate their actual income tax liability for 2009-10. The reduction will also provide a further economic stimulus to support Australian jobs, because taxpayers will have the use of around $720 million that would otherwise be overpaid tax. This is one of the issues that small businesses frequently complain about. So I welcome the change, and it is a good that the government is introducing it.

Schedule 2 relates to annual PAYG instalments when taxpayers are voluntarily registered for GST. The introduction of the annual GST payments in 2004 without a change in the annual PAYG instalment conditions at that time has created a misalignment between the PAYG and GST instalment systems. Some annual GST payers are prevented from making annual PAYG instalments solely because of their voluntary GST registration. This imposes unnecessary compliance costs on these taxpayers—and that is the last thing we want, particularly in these times. These amendments will allow taxpayers to choose to make PAYG instalments annually when they are voluntarily registered for GST and meet the other eligibility test for annual PAYG instalments. This will reduce the compliance costs for eligible taxpayers. The amendments will apply in relation to instalments for income years starting after 30 June 2009.

Schedule 3 introduces a functional currency rule to the petroleum resources rent tax, or PRRT. This will reduce compliance costs for taxpayers, which is again a welcome change. It introduces a modified look-back rule for exploration expenditure related to a production licence derived from an exploration permit and a retention lease. It introduces internal petroleum provisions similar to the external petroleum provisions and provides certainty by establishing rules for internal petroleum. It extends the offshore exploration incentive for designated frontier areas by one year so that it applies to the 2009 annual offshore acreage release. That will help encourage exploration of frontier areas for another year, until the release of the Australia’s Future Tax System review and the energy white paper.

Schedule 4, the deductible gift recipients—the DGR—lists a number of new organisations. One of them that I will talk about in some detail is Diplomacy Training Program Ltd. I declared an interest of support, knowledge and involvement with the DTP over many years—since its inception about 20 years ago—and I advocated the listing of the DTP to the responsible minister. Of course, Diplomacy Training Program Ltd had to pass all the tests because it is the tax office who makes the call on it, and they have deemed it to be eligible. The Diplomacy Training Progam visited our parliament last year and attended a session with the Joint Standing Committee on Foreign Affairs, Defence and Trade. They do a number of things and they have an annual training program where they bring people from the Asia-Pacific region—our region—together for a three- or four-week training program. That is what they did. They were here in Canberra and they came and met the committee and the chairs of the respective subcommittees. It was such a success that everybody—that is, the members of parliament who serve on the committee—deemed that they wanted to do it again next year. For some of the program members it was the first time that they had been able to come into a parliament, into a democratic space, and actually meet with members of parliament. Some of them said that it was amazing that they were able to do that.

I will give a brief history of the Diplomacy Training Program. It is an independent, not-for-profit association affiliated with the University of New South Wales. It was founded by Nobel Peace Laureate and President of Timor-Leste, Jose Ramos-Horta, hence some of my involvement and early working with the Diplomacy Training Program. It has a board of directors who are very eminent people in Australian life. I ask to incorporate the current board of directors into my speech.

Leave granted.

The list read as follows:

Current Board of Directors

• Emeritus Professor Paul Redmond (Chair) BA LLB LLM - Faculty of Law, UNSW
• Mr Philip Chung BEc LLB—Executive Director, Australasian Legal Information Institute (AustLII)
• Associate Professor Andrea Durbach, Director, Australian Human Rights Centre, UNSW
• Emeritus Professor Garth Nettheim LLB MA AO —Faculty of Law, UNSW
• Dr John Pace BA LLD —Former Secretary, UN Commision on Human Rights, Geneva
• Dr Sarah Pritchard BA LLB LLM —Barrister at Law
• Ms Louise Sylvan BA MPA —Deputy Chair, Australian Competition and Consumer Commission (ACCC)
• Roewen Wishart, Development Manager, Australian Bush Heritage Fund
• Professor Andrew Byrnes, Associate Dean, Faculty of Law, UNSW

I thank the opposition for that. The DTP provides training for representatives of non-government organisations in the Asia-Pacific region on human rights, good governance and the rule of law. Since its inception almost 20 years ago, more than 1,400 people have participated in DTP programs from a range of countries, including East Timor, Papua New Guinea, Fiji, Burma, Indonesia, Sri Lanka, Bangladesh and many more. Several participants have also been elected or appointed to senior government positions in East Timor, Malaysia and Australia since graduating from DTP programs, so it is an organisation well worth supporting. With that contribution, I commend the bill to the House and I thank the responsible minister.

Melissa Parke (Fremantle, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to rise in support of the Tax Laws Amendment (2009 Measures No. 3) Bill 2009. Amongst other measures, this bill provides for the Leeuwin Ocean Adventure Foundation to be listed for deductible gift recipient status. The Leeuwin Ocean Adventure Foundation’s ship, the Leeuwin, is a Fremantle icon, and the ship can regularly be seen sailing in and out of Fremantle port and along the beautiful Western Australian coastline. The mission of the foundation is to challenge and inspire young people to realise their personal potential and make a positive contribution to the wider community through the unique medium of a tall sailing ship. It is this dedication to providing a leadership and community building experience for young Western Australians that makes the Leeuwin Ocean Adventure Foundation such a worthy recipient of deductible gift recipient status.

The Leeuwin was launched in August 1986 and it is still sailing today. The ship has over 810 square metres of sail and is 55 metres long, which makes it the largest operating vessel of its kind in Australasian waters. Since being built, over 22,000 young people have benefited from participating in the Leeuwin’s sail training voyages. My brother Aaron is one such person who was a grateful participant and I remember well the joyful recounting of his 10-day challenging adventure on the Leeuwin, which included climbing up masts, setting sails and standing watch as part of a team of young people. The Leeuwin foundation provides a window into Fremantle’s vital port history by providing the opportunity for young Australians to sail on an 1850s style sailing ship.

The seed funding to make the Leeuwin foundation a reality came from the Commonwealth, the West Australian state government, businesses and community groups. What is more, many West Australians made personal donations towards its construction. I am pleased that people can now donate tax-free to the Leeuwin Ocean Adventure Foundation, which will encourage donations and help maintain the Leeuwin foundation’s donor base during the current global recession. This will be very helpful, for instance, with the Leeuwin foundation’s attempts to obtain funding for a talking compass, an instrument that repeats the compass course via a speaker so that a helmsman with visual limitations can con the ship as well as anyone.

Aside from the support represented by the granting of deductible gift recipient status, the Rudd government has also supported the Leeuwin Ocean Adventure Foundation through a volunteer grant in the latest round. The foundation received $20,000 to assist the large volunteer base who help keep the Leeuwin sailing. Specifically this grant will assist in reimbursing volunteers for some of the fuel costs which they incur as a result of their dedication to the Leeuwin.

The community engagement of the Leeuwin Ocean Adventure Foundation is evident in all the tasks they undertake. The ship does not just service the metropolitan area; it regularly travels as far south as Esperance and as far north as Darwin and stops along the way at Geraldton, Monkey Mia, Exmouth, Dampier, Port Hedland and Broome. When in these ports the local community are able to participate in voyages, making the Leeuwin an asset for all of Western Australia and even the Northern Territory. One example of how the Leeuwin voyages give back to the community is a voyage by the WA Navy cadets earlier this year, where the cadets stopped at Rottnest Island to participate in revegetation and clean-up projects that help preserve the fragile ecosystem of Rottnest Island.

The work of the Leeuwin Ocean Adventure Foundation is similar in spirit to that of other organisations listed in the tax act, including Ian Thorpe’s Fountain for Youth Ltd, the Clontarf Foundation and the Spirit of Australia Foundation. The Young Endeavour Youth Scheme, which does similar work to the Leeuwin foundation, has been listed for many years and I am pleased that the work of the Leeuwin Ocean Adventure Foundation and its crew has been similarly recognised. The Leeuwin Ocean Adventure Foundation contributes greatly to the West Australian community through its programs for young Indigenous people from the north of Australia, its programs for school students and its voyages for young people with disabilities. The contribution of the Leeuwin foundation to the broader Australian community includes running programs with schools from other states and even the international community, as demonstrated by their work with the United World College in Singapore.

The Leeuwin youth explorer voyages are recognised by the West Australian Curriculum Council as an endorsed program for the WA certificate of education for students in years 10, 11 and 12. This recognises that students who participate in Leeuwin voyages gain valuable life skills in areas like self-esteem, goal setting, communication and teamwork and a sense of community.

I note the member for Curtin’s ongoing support for the Leeuwin foundation and I am sure that she and her constituents will be pleased with the government’s support for this listing. I want to acknowledge the hard work of the Leeuwin Ocean Adventure Foundation in earning this listing. In particular I acknowledge the work of Carol Shannon, John Murray, Malcolm Hay, Terry Baker and the captain of the Leeuwin, Chris Blake. I especially want to thank the Assistant Treasurer, Chris Bowen, for his visit to Fremantle last year, where he acknowledged the important contribution the Leeuwin foundation makes to the lives of young Australians, many of whom are disadvantaged, and for his valuable contribution to the decision to grant the Leeuwin foundation deductible gift recipient status. I am pleased to be part of the Rudd Labor government, which has provided such support for this very deserving not-for-profit community foundation.

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

in reply—I thank all members who participated in this debate. The pay-as-you-go amendment contained in schedule 1 of the Tax Laws Amendment (2009 Measures No. 3) Bill 2009 will provide a substantial cash flow benefit to small business, self-funded retirees and other eligible taxpayers. This amendment sets the GDP adjustment for the 2009-10 income year at two per cent for taxpayers who pay quarterly PAYG instalments on the basis of the GDP-adjusted notional tax method. This will be an important initiative in this very difficult time for cash flow for small business in particular and it joins the general and small business tax break that the government has embarked upon as part of the government’s support for small business in these very difficult times.

The amendment in schedule 2 of the bill will allow taxpayers who are voluntarily registered for goods and services tax who choose to remit the GST annually to also choose to make their PAYG income tax instalments annually, provided they satisfy the other eligible tests for annual PAYG instalments. The amendments will reduce the compliance costs for eligible taxpayers by addressing the misalignment between PAYG and GST instalment systems.

Schedule 3 of the bill amends the Petroleum Resource Rent Tax Assessment Act 1987 to implement four minor measures, on which I will not detain the House. Schedule 4 amends the list of deductible gift recipients in the Income Tax Assessment Act 1997. Division 30 of the tax act sets out the requirements for organisations to be granted DGR status. Organisations with DGR status can collect tax deductible gifts. Organisations must either fit under one of the existing DGR categories or must be specifically listed under these provisions. This schedule specifically lists the Royal Institution of Australia Inc., the Diplomacy Training Program Ltd and the Leeuwin Ocean Adventure Foundation Ltd.

I am very pleased that the members for Page and Fremantle were able to contribute to this debate. The member for Page was instrumental in convincing me of the benefits of the Diplomacy Training initiative, something I am sure the member for Fremantle would also support given her extensive background in the area. The member for Fremantle, as the honourable member indicated, was very active in lobbying on behalf of the Leeuwin Ocean Adventure Foundation and took the opportunity when I visited Fremantle to introduce me to the board of directors and senior management. I had a range of questions about the services that were available to disadvantaged youth in particular and I found their case very compelling. As the honourable member for Fremantle indicated, there are a number of precedents for this listing and I was more than happy to support it through this legislation. She deserves the acknowledgement of the House for her tireless efforts on behalf of the Leeuwin Ocean Adventure Foundation.

Taxpayers can of course claim income tax deductions for certain gifts to organisations with DGR status. DGR status will assist the listed organisations to attract public support for their activities. Again, in these very difficult times where donations are drying up, DGR status is of vital importance to many instrumentalities and I am glad we have been able to extend it to these three organisations. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.