Andrew Broad (Mallee, National Party) Share this | Link to this | Hansard source

I move:

That this House notes:

(1) that Australian small business is a major contributor to the national economy and should be acknowledged for its innovation, entrepreneurship and endeavour, as demonstrated by the 15,000 small businesses across the electoral division of Mallee and many small businesses across the rest of Australia; and

(2) the recent budget must be commended for assisting small business with accelerated depreciation for assets purchased under $20,000.

Australian small business is a major contributor to the national economy and should be acknowledged for its innovation, entrepreneurship and endeavour, as demonstrated by the 15,000 small businesses across the electoral division of Mallee and the many small businesses across Australia.

It is the pursuits and endeavours of ordinary Australians that create the wealth that builds our society. There is a great Roy Orbison song, and I know it was a little before my time, but it was probably about the time that Deputy Speaker Broadbent was really in his prime that Roy Orbison was singing the song Working for the Man:'Hey now you better listen to me everyone of you, we got a lotta, lotta, lotta, lotta work to do.' It is all about getting people to work hard because they are working for the man. But the essence of the song actually says: 'One day I am going to be the man. One day I am going to be, not the worker, but the owner of the small business.' That is something we believe in: that you can start off working in a job and you might gain skills as an electrician or plumber, and then you think yourself, 'Wait a minute. There's more money to be made if I'm actually working for myself. There's more freedom if I'm working for myself.' And, actually, there are probably more hours to work if you are working for yourself.

Small business has been a fantastic element of the Australian economy. We need to harness small business. We need to empower small business and we need to endorse small business. Our government has done that in this budget. If you talk to any accountant in my electorate—who often operate as a small business—they will tell you that the $20,000 instant write-off for small businesses under $2 million has been immensely welcome. They will tell you that it has generated confidence, that people are grasping it, and that small business now, once again, knows that they are valued by the government. It is the shopkeeper; it is the retail business that might sell a bit of piping, some hardware or some tools; it is the plumber who might buy himself a new tradies trailer or even a new ute; it is a builder who will get a new nail gun; it is electrician—these are all critical small businesses.

The recent budget must be commended for assisting small business with the accelerated appreciation of assets of purchases under $20,000. It is not a grant of $20,000. It just means that if they are buying something that is going to help their business, and it is under the value of $20,000, they can write that off in one year. And not only once—they can buy something else. There might be a number of things. I run a small business and I think about the things that I might use in my business, and it opens the mind to what things we can buy that will drive productivity.

One of the other great things in this budget was the accelerated depreciation for irrigation infrastructure. In the electorate of Mallee—and most people are not aware of this—we are in the process of building probably one of the biggest irrigation infrastructure spends in a regional city in Australia at this point: $103 million of federal money plus $17 million of irrigators' money. We are building the Sunraysia Modernisation Project. We are putting new pipelines in. You can walk down these pipelines. Instead of irrigation channels that were leaky and unreliable, we have put pipelines in. This has also afforded us the opportunity to replant blocks of irrigation country that had been shut down through the very dry time. To do that we need to put more irrigation infrastructure in. This budget, and this initiative, lets that irrigation infrastructure also be 100 per cent tax-deductible.

The government is standing by small business. The government is growing opportunities. It is a government I am proud to be a part of. We are doing a lot for the 15,000 small businesses, and those who are employed by those small businesses, in the electorate of Mallee. It is a great initiative. It is a government that understands small business. If we empower our small businessmen, they will not just be working for the man, they will be the man. We will really make sure that we can capture the opportunities that their hard work affords.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

Is the motion seconded?

Mal Brough (Fisher, Liberal Party) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

I am pleased to speak on this motion by the member for Mallee because it gives me an opportunity to point out just how recent the conversion is, by the government, to the needs of small business. I have spoken on a number of private members' motions on small business by both sides of the House since the election and they have always been in the Federation Chamber. This is the first time I have had the opportunity to stand in this chamber on a government-side motion on small business. That is not surprising, because all the things they are so proud of, at the moment—the instant tax write-off, for example—they were attacking just a year ago. They are now very pleased to have introduced instant asset depreciation, and we on this side support the action they have taken—but just a year ago they were removing exactly that tax assistance for small business.

Labor in government introduced a range of tax measures, including the instant asset write-off, back in 2011, which increased the write-off threshold for small business from $1,000 to $6½ thousand. Business welcomed that. Small business was delighted by that. But when the government first came to office, in 2013, one of the first things they did was set about abolishing that. In 2014 they abolished some $3.5 billion worth of tax assistance to small business by abolishing that measure alone. Last year they considered that small business did not need assistance in purchasing assets; it did not need instant right-off. They abolished it. Not only did they abolish it but they did it retrospectively, so businesses that had made their plans suddenly found those plans undone by this government. Last year, there was a completely different view.

We had also introduced a loss carry-back for companies which, again, was incredibly well received and, recommended back in the tax forum a number of years ago, was well received by business. This was also abolished by the Abbott government last year. In total, over $5 billion in tax assistance to the small business sector was abolished. Now we have them standing up and crowing about this recent conversion—that instant tax write-off is really good and they are going to introduce it. Business had it a year ago. Government took away, and now it is wanting credit for putting it back—at a considerably lower level—and only for two years. We have already seen accounting firms and economists around the country talking about the danger of that, of introducing an instant tax write-off for two years that ends at the end of June 2017, where small business will pull their spending forward and we will see a bit of a cliff for many suppliers to small business around the end of June 2017.

We have to applaud the government here for its conversion. We have to applaud them for realising the error of their ways last year, of recognising that the abolition of the instant tax write-off last year was a mistake, and for setting about to undo some of the damage it did. And it did do damage. If you look at business confidence, over the last year it has essentially flatlined. It has been in free-fall since the election, in September 2013, and it flatlined at an incredibly low level—under 95—after the budget last year, and has sat there for a year, flatlined. We are now seeing a slight improvement, and thank goodness for that because business confidence has been at an appallingly low level. It is now back to where it was immediately before the last budget. I cannot say it is much of a recovery but it is, at least, back to where it was before the last budget.

We have also seen in the last few days some dreadful news on capex, which measures the extent to which business is planning on investing. This is business across the full range. We have capex, at the moment, down at recessionary levels. There has been quite a bit of economic debate, about the effect of this, over the last few days. These are incredibly poor figures for a government that believes it is about encouraging business.

I want to say one last thing about the language of this government, in getting up and telling business to 'have a go'. I have 16½ thousand small businesses in my community of Parramatta and they have been having a go for a long time. Since the economy has dropped and $5½ billion in tax assistance was ripped away last year they have been really having to have a go to survive. For the government to get up and tell them to have a go, now, is quite offensive. They have been doing it for a long time and they have been doing it very tough under this government.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

I thank the member for Mallee for moving this very timely motion in support of small business. Unlike so many members opposite, the member for Mallee understands small business because he has actually lived the experience of a small-business owner. Having run my own convention and event-management company for many years, prior to being elected to this place, I can also attest to the level of innovation, endeavour and resilience it takes to run a successful small business.

A strong small-business sector benefits all Australians. Indeed, if only half the small businesses in Australia hired just one extra worker our country would have zero unemployment. Yet small business is a tough world. Margins can be tight, markets can be crowded and competitive, and larger players do not always play fair. Building a business takes you away from quality time spent with family and friends. Cashflows and credit lines are a constant source of concern and many small businesses just do not stand the test of time.

Success requires resilience. It requires hard work and determination. It requires a government that understands that small businesses do not need handouts but they could certainly benefit from a tax system that provides the right incentives to invest and grow. This government listens when small business speaks but, better than that, it takes action. The 2015 budget confirms that the coalition government is the best friend small business has ever had. It is a budget framed around creating the right conditions for small businesses to grow, for small businesses to prosper and for small businesses to employ more Australians.

This budget was good for small business on many levels, not only the tax cut from 30 per cent to 28.5 per cent. The measure that has garnered the biggest positive reaction amongst small businesses in my electorate was, as the member for Mallee has outlined in his motion, the accelerated depreciation of assets purchased under $20,000 in value. Following the budget, I invited the Treasurer, Joe Hockey, to visit my electorate to speak to an owner of one of more than 13,000 registered small businesses in Ryan which stand to benefit from the budget. We visited Savas Ermides at his family run Briki Espresso and Gelati Bar in the suburb of Ironside. The Treasurer himself remarked that Mr Ermides's business was exactly the sort of business he was speaking about in his budget speech. The budget will make a real difference to that business. Mr Ermides wants to expand his cafe and buy a new oven so that he can serve more customers and grow his business. As a result of the accelerated depreciation changes in the budget, he will now be able to invest in the equipment required and receive an immediate tax deduction. This means more money back into the business sooner and a flow-on effect for other local businesses.

This budget is one of the most small business friendly budgets ever delivered. It is very good news for the thousands—indeed, tens of thousands—of small businesses across Australia, and it is a budget that could only ever have been delivered by a coalition government because we are the only side of politics that has the breadth of real-life experience to truly understand the needs of small business owners. When we say we support small business, we actually mean it. We stand on our record of doing the right thing by small business. Whether it is removing unnecessary red tape, creating access to new markets in North Asia through trade agreements or, now, by ensuring the tax system better rewards investment, the coalition government always has the needs of small business front and centre of our thinking. The coalition stands for small business. It is in our DNA. I commend the motion to the House.

Bernie Ripoll (Oxley, Australian Labor Party, Shadow Minister Assisting the Leader for Small Business) Share this | Link to this | Hansard source

It is a pleasure to be speaking on this motion because it does highlight how amazing 12 months can be in the parliament and what those 12 months represents. Of course, that is the time between budgets and between what it takes for a Liberal government to get rid of all of Labor's small business plans, assistance and good measures and reintroduce them back in this budget because they discovered just how much damage the Liberals' cutting of small business assistance actually did. What was worse for the government is they had a look at the polling and realised how bad it was for their popularity. Then they looked at the consumer confidence and realised how bad it was for the economy. Then they looked even further and realised that business confidence had fallen through the floor as well. They had a moment of panic and they decided they had better quickly reintroduce all Labor's small business assistance package, which is exactly what they did. It is an amazing thing, but I am glad that the Liberal Party finally has come to the front on small business and realised it is a major contributor to our national economy.

Small business is a key sector for current and future economic growth. It is a major driver of employment, particularly in regional and rural area, and it is important to recognise the contribution that it makes in those areas. Around 35 per cent of the total number of small businesses in each state are located in regional area, compared to 20 per cent for larger firms. It is also important to recognise that over 95 per cent of the total number of businesses in Australia are small. Almost two-thirds have no employees and a further one-quarter only have between one and four employees. This means that only 10 per cent of small businesses have between four and 19 employees. The recent Reserve Bank of Australia conference on small business conditions and finance further identified that small business makes a significant contribution to the economy through the provision of innovation, with over 85 per cent of the businesses in Australia engaged in innovation being small businesses. The Australian Bureau of Statistics data also identified that 97.9 per cent of businesses in the agriculture, fisheries and forestry sectors in Australia are small businesses and that, of the more than 192,000 businesses in this area, 188,000 of them were classified as being small businesses. I have no doubt that farmers well understand this and they welcome the primary producers accelerated depreciation, along with the $20,000 instant asset write.

But for farmers, like the rest of the economy and small business, certainty is especially important in planning, and the government's assistance, while it is welcome, is very short term and for only two years. When the identical package with Labor was in, it was over the full forward estimates for a full four years. That did provide certainty and that did provide confidence, and that was reflected in all of the surveys that were done during that time. We had set ours at a more realistic level of $6,500, wanting to raise it to $10,000, more appropriately reflecting where small business actually spend their money. In June last year, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) report on agricultural commodities forecasts predicted a decrease in both crop and livestock production, and they have predicted that gross value of farm production will fall by 3.1 per cent in this current year to about $51 billion, with a further estimate that it will fall even further from the previous years.

This is bad news, and this drop in consumer confidence and business confidence has not been helped by the Prime Minister and the Treasurer who have talked down our economy for the past six years. They did that in opposition, and I have got to say that they did it very skilfully. If there is anything you could give a very big A-plus to for the Prime Minister and the Treasurer, it was talking down our economy. But one would expect that, when you get elected to become the Prime Minister and Treasurer, you would stop doing that, you would stop talking down the economy, and start talking up the economy. Of course, they just could not stop themselves. They just had to keep going, and that was reflected in the very poor conditions that we see the economy in today where people have stopped buying, businesses are struggling and we have needed this massive injection of assistance through the budget to try and help small business and the economy. In fact, so large is this injection that it is similar to the levels that we had during the global financial crisis. So not only are we seeing the deficit double since the Liberals won government, but this has occurred since the last budget. They have added an extra $39.1 billion worth of debt, and I suspect people ought to ask the government where are they getting the money to fund that debt.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

First of all, I would just like to compliment the motion and the member for Mallee for raising this very important issue. What is a small business in the Lyne electorate? In the Lyne electorate, we have over 10,000 small businesses. Whether it is a sole trader, small family business, larger small business or medium-size small business, they are employing the vast majority of the people in the Lyne electorate.

What does small business mean? It means that individual and their business is taking the responsibility and control of their income and his or her family's welfare onto their own plate. When you are running a small business, there is no knock-off time and there is no start time. Your business travels home with you to your house when you leave your workplace. That is the nature of a small business, particularly when you are starting up. It often means that for your house that you go to—when you have not finished your job, because it is perpetually on your mind—your mortgage on that house is what feeds your small business. Your start-up capital sometimes represents a mortgage on your own home.

As a small-business owner, it means that if you have employees, they have to get paid before you do. Their super and their wages are your responsibility. It is often the boss who is the last person paid. When things turn down, it is the boss who has to carry the responsibility. Whether you are a butcher, a baker, an electrician, a tradesman, running a bike store, running a cafe, running a hairdressing salon, running a B&B at Lake Cathie or someone in the hinterland in the beautiful Lansdowne region or turning up at your manufacturing factory off Lake Road, it is the same.

The accelerated depreciation measure that the member for Mallee has brought to the attention of the House is a great initiative and it has been very well received across the board. To write-off equipment over an accelerated time frame will improves cashflow. Depending on the tax being paid, it is up to roughly $4,500 for a small business for each write-off up to $20,000. That makes a huge difference to your cashflow.

In the Lyne electorate, there are roughly 1,800 agricultural small businesses registered. The initiative's accelerated depreciation includes fencing, water infrastructure and fodder storage. Instead of writing off fencing improvements over 30 years, you can now do the sensible thing and write-off that cost in a year. That makes a huge difference. If you have only ever run a grazing concern, you will realise how important your fences are. If you want to keep your agricultural concern drought proof, it involves a lot of pumping and a continual course of maintenance and replacement. Pumps cost a fortune. If you are running 10 or 20 troughs and you have got kilometres of agricultural piping serving them, then it is a huge continual drain. But to prepare yourself for drought, it is essential. We are writing that off up until 2017 in one go. That will make a huge difference to the cashflow and the bottom line of these small family businesses.

If you are in accounting space, it will generate a lot of activity in itself. In the last two weeks, I have visited many businesses in the electorate that are by one definition small; but by the definition in this initiative, they do turn over more than $2 million. But they are still very much small businesses. A lot of them have said, 'We may not qualify directly for this initiative, but a whole lot of our customers do.' If the small businesses do well, large and medium-sized businesses will do well as well.

I commend this initiative. It is a great small business budget. Small business is what drives the Lyne electorate and the coalition government is out there supporting them through this initiative.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Next month, the Logan Chamber of Commerce will be holding the 2015 Business Distinction Awards in my community. I am proud to sponsor the emerging business category. I want to thank the chamber—Bill Richards and his team—for the opportunity to be part of the awards and for all the other opportunities I have had to spend time with them at their networking breakfasts. I want to work with our small businesses and I want to celebrate their success. The sum total of their efforts, right around the country, will determine whether we can build a nation powered by aspiration and enterprise. I am pleased to speak today on the motion moved by the member for Mallee in support of small business. I am particularly pleased to follow the contributions from the member for Parramatta and the member for Oxley, who is here in the chamber.

I am very proud to represent 10,746 small businesses. They are extremely important for the local economy in my area as a source of employment, goods and services. More than 60 per cent of them are sole traders. The other 4,059 of them employ between one and 19 workers. They are a much-needed source of jobs in my area when jobs not particularly easy to come by. The types of goods and services they produce and provide are incredibly important to our area as well.

In my experience, when we think about small businesses, we often think about retailers: restaurants, small shops, hairdressers and the like. Certainly, I have thousands of fantastic small retailers in my electorate. They are a crucial part of our everyday lives in my community, but they are not the most numerous type of small business in my area. That distinction belongs to the construction industry. Every fifth small business in my community is involved in construction. They are the plumbers, builders, electricians, plasterers and labourers who do such important work. The construction industry is closely followed by the 1,100 businesses in transport, postage and warehousing; the 1,073 scientific and technical small businesses; and 1,024 real estate and rental businesses.

Small business owners in my community and right around the country face some really substantial challenges. As other speakers have noted, it is a brave and often risky decision to go out on your own to start a small business. They face higher fixed costs and greater financing difficulties and are more affected by fluctuations in demand than larger businesses are. These risk-takers are critically important for our economy, not only for employment and production, but also for innovation. Eighty-five per cent of innovative firms are small businesses, according to the ABS. We need to support them. We need to help foster employment, production and innovation in my community and in the broader national economy.

As other speakers have mentioned, Labor has a very proud track record of supporting small businesses. We appointed a national Small Business Commissioner, simplified asset depreciation rules and worked towards a seamless national economy. Most importantly, we introduced the first instant asset tax write-off, which the government abolished in last year's budget and then re-introduced in this year's budget. It is a fact, and not an opinion, that business confidence plummeted in the wake of last year's budget. While this has rebounded somewhat, after the government re-implemented some of Labor's policy, including the instant asset write-off, small business in Australia still cannot trust this government to provide the policy consistency they need to make important decisions. They know that the coalition's instant asset write-off is little more than an election ploy. That is why instead of it being a permanent scheme, like Labor's was, theirs is only in effect for two years.

We support the government's changes, knowing that they do not go far enough to make up for last year's attacks or to give small businesses the support they really need. That is why we want to work towards a tax rate of 25 per cent for small businesses, and why we will establish a start-up scheme to provide capital for new entrepreneurs. I will continue to advocate for small businesses in this place, because we know how important they are to the national economy, and in the local economy in communities like mine.

Debate adjourned.