Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015, the third of four bills associated with great measures the government introduced in the last budget. I start on a bit of a sour note. I do not like to talk down my electorate, but there was some talk in the previous debate about unemployment rates, and, certainly, my electorate, which is home to virtually every resource project in South Australia, is feeling the brunt of the tailing-off of the resources boom at the moment. In a little over six months, the electorate has probably lost about 2,000 jobs in that sector. There have been lay-offs—limited lay-offs, it must be said—by Santos, up in the Moomba gas fields. There have been significant job reductions at Roxby Downs. In fact, since BHP announced a couple of years ago that they were not going ahead with a major expansion, we have seen large losses of jobs in that area, with another 380 announced just last week. Alinta Energy, in Port Augusta, which operate the only coal-fired power stations in South Australia, have announced their closure. Some time within the next 15 months there will be over 400 jobs lost. While some will celebrate the fact that coal-fired power stations are closing, this is an inevitable result of policies that both sides of government have pursued to reduce CO2 emissions. Largely, in this case, it is the RET which has been responsible for the closure of the power station. Many people will applaud that, but of course it affects the workers and the communities concerned. I have repeatedly raised in this place the impacts it will have on the fairly isolated South Australian electricity supply market. There will be more comments on that another day, I am sure.

We have also seen Arrium close down Southern Iron, which is a rather strangely named iron ore operation because it is in the north of the state; but it just depends where you stand, I suppose. Southern Iron put off 600 workers and closed down what was a relatively new mine. In fact, it had been operating for only about 18 months. We were exporting up to 13 million tonnes of iron ore a year out of the port at Whyalla. At the moment, Arrium are undergoing another review of the Whyalla operations—in fact, their operations Australia-wide. All those things are leading to a fair amount of angst in my communities.

The reason I mention them is that they are the big businesses. If you look around Australia, by and large, big businesses are doing it tough—and small businesses are as well, it must be said—and not employing a lot of new people. Throughout my time as the member for Grey, small business after small business has come to me and said: 'Doesn't anyone care about us? Don't you know that we employ 4½ million people Australia-wide. In fact, 96 per cent of all Australian businesses are small businesses, and don't you care about us? Do you people in government just want to drive us out of business?' Since the budget, I have had a different response—a completely different response. Small businesses are saying, 'At last somebody is listening to us.' Whether or not they can turn on the key overnight, I am not sure; but the Australian government has identified small business as the sector most likely to be able to deliver a faster turnaround in the Australian economy. If you like racing terms—and I know you are a keen observer of the racing circuit, Mr Deputy Speaker Jones—then let's say the Australian government is putting its money on small business. It is putting the taxpayers' money on small business. I always like to qualify that statement: governments do not have money; they only have taxpayers' money. We are putting the taxpayers' money on small business because they are the best opportunity. I make the point that there are over two million—about 2.1 million—small businesses in Australia. If only every fourth one were to put on an extra employee, we would for all intents and purposes be back to zero unemployment—about 2½ to 3 per cent. We all know that you probably cannot get below that in this modern world.

This third tranche of incentives to small business specifically gives to the unincorporated business the same tax break as I think tranche 1 gave to incorporated businesses. It was a 1½ per cent cut in their effective tax rate. In this particular case it is a $1,000 reduction on an individual's overall tax bill. It is roughly equivalent. This is really important, because there are a lot of small businesses, micro businesses, out there which do not have that company structure. In fact, so many businesses are run, as my farming business was, as a partnership. It is a perfectly admirable way to run a business. It does not make them any less a business than anything else. But if you are going to restrict your tax reductions to just corporations, to just registered businesses, then you are missing out a very important sector of the economy. That is the first one.

The second one is the immediate deductibility for professional expenses, professional advice, government fees and particularly start-up expenses for small business. These expenses have previously been deductible over five years. That is a pretty slow pay-off for somebody having to stump up the money to start a new business. What a great incentive that is! 'Look, mate, we're going to give you your money back over the next five years.' It is pretty tough. So I think this measure clearly recognises a problem that has been inbuilt in the system, because we want people to have a go. One of the things I think I said in my maiden speech was that governments should allow people who are able to help themselves to get on with the job. We should also help those who are unable for whatever reason to help themselves. But so many of these small business are those who are prepared to have a go, who are prepared to mortgage their house, to put it on the line, to start up a business to give themselves a job and hopefully maybe their children a job and also give their neighbours and friends a job. That is a great service to the community—and more power to them, in my opinion. The immediate write-off of those start-up expenses is a bonus, because there are enough obstacles in your road already when you are trying to start a business.

The fringe benefit tax exemption for portable electronic devices for work purposes just recognises the fact that work today is so flexible. It does not necessarily stop at five o'clock when you bang the bell. Often people need to take work home with them. They take their mobile phone home, they take their laptop home, they take their iPad home. There are a plethora of devices—maybe it is your diary or whatever that is synced in. Everybody has something a little bit different. In some cases, this is the only fringe benefit these workers get—the fringe benefit of being able to take their work home, I must say, with a smile on my face. It is the reality of today's workplace. So once again the government has said: 'We don't want to tie you up in red tape. We want you to get on with the job. We want your employees to be properly equipped and we want you to employ people.' That recognises those issues as well. This goes with the three tranches of legislation that we have previously put forward.

I can tell you, Mr Deputy Speaker, that as I drive around my electorate I can see that it has received a very warm response. Only the other day I was talking with a commercial pilot. He has taken the opportunity to put in a new $20,000 navigation system in his aeroplane. Everything in aeroplanes costs a lot of money—trust me, I know. He said, 'I would not have done this if it were not for the immediate tax write-off' but it is so much better flying the aeroplane now.' He showed me how it all worke It is a very smart little box of tricks, it must be said. In fact, he was showing me on one of the apps that he could plot every aeroplane in the world. He just brought them up. The sky is full of aeroplanes worldwide. It is an advance to his business; it is an investment in his business, and it is one that he would not have made if it were not for the change in the legislation.

One of the parts of this bill that I have been particularly enthusiastic about—I must say, as a farmer and someone who still owns a farm—is the ability to write off water catchment and storage over a much shorter period. I will give you an example. On Eyre Peninsula, which is the part of South Australia where my farm is, many places have clay subsoils. It is quite good. You can grade up some water runs and dig yourself a dam. The western half of Eyre Peninsula has sandy soils, and there are no surface dams. Water is pumped from a very long way. While we have a flat price across South Australia, stock water at $3.50 a kilolitre can be pretty discouraging for livestock investors. One of the things that modern plastics and technologies have brought us, of course, is that we can now dig a dam in dirt that leaks like crazy, line it with plastic, put a plastic top on it to stop evaporation, built a plastic water run, virtually drought proof your farm, and disconnect from the reticulated supply. I do not think many people will do that, because it will always be the backup.

But water being that expensive actually provides a real investment opportunity within your own farm. There have already been a number of these around on Eyre Peninsula. I could name about five or six without even trying. There are a lot of other farmers thinking, 'Yep, if I get a decent income year, I think I will have a go at this.' It will probably cost them $100,000, but, if you can write that off over two years instead of over that extended period, that becomes a real incentive to manage your taxation arrangements in the short term.

While it is not related to any of these bills, I also congratulate the government on the agricultural white paper, which has telegraphed the fact that we will be lifting the farm management deposit scheme caps. One of the points that I make is that changes in agriculture have seen farms get bigger and bigger. Many of the farmers I know are now cropping 10,000 or 15,000 acres year, which is 6,000 or 7,000 hectares—much bigger than the electorate of Wentworth, I might point out while the member is sitting there. So large tracts of land, it must be said. These are super efficient farmers. It is one of the downsides of Australian agriculture; I say every year that Australian farmers will grow more food and more fibre, more efficiently with better quality and, probably, at a price. That will be great for Australia, great for the state and not bad for the farmer who is still involved, but it will be an absolute disaster for our local communities, which is another story about how we deal with our local communities. So if they are able now to reinvest in their properties in a way which expands those properties, that it is very good thing.

I think that probably rounds it out pretty well, but these bills really do string together a coherent government policy, which is saying 'We recognise small businesses as a driver of the Australian economy.' Gee, I have heard that out of parliamentary members' lips a lot of times—and I have been the almost eight years now—'We recognise how important small business is.' But, up to now, not much has been done about it. That is why I am so proud of the last budget, and that is why I am proud of these bills. They are assisting small businesses to get on with the job and do what they do best.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

In talking to the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015, a number of members of the House have referred to the benefit that would be generated through some of the measures announced particularly for start-ups. Schedule 2 talks about the deductibility of professional expenses for those that are starting their own business and changes to the way in which those expenses are paid. It is a good start. On a range of areas, there are things that do need to be done. But at least this is a modest contribution—and one that reflects something else that is going on, which I think has been a good development over the last 12 months in particular. That is that, within the public space, we have been talking more and more about the contribution of start-ups within the Australian economy, the value that they create both now and into the future—and for good reason.

I saw some of that good reason last night when I attended the University of Melbourne's Melbourne Accelerator Program entrepreneur gala. There were 400 people in attendance; a huge turnout and a terrific initiative by MAP. They are really working hard, particularly within Melbourne, to harness a lot of creative energy and the application of that energetic spirit to see a number of new businesses created with the potential, using technology, to disrupt quite a lot of business models and the way in which things are being done both here and, potentially, in the broader international community. Last night they had a number of case studies from people, including the CEO and co-founder of Venuemob, Ying Wang. Venuemob is for people trying to find venues to hold different events, and it is a platform for people to hire those venues and get that done very quickly, adding huge value in the process. He mentioned last night to the dinner that he will be looking at expanding his operation within Australia but also looking actually to take their operation offshore for the first time. They have done that within a very short space of time. Venuemob is the first marketplace platform for the $18 billion events industry. They started off small and are growing very rapidly.

Djordje Dikic is the co-founder and CEO of Palette, which is looking—particularly for home renovations—at ways in which people will be able to change the way they paint and decorate their homes, with some fairly groundbreaking technology. They have won numerous industrial design awards. They have already raised $1 million in funding from private investors and are looking to do some pretty innovative work there.

We had Ivan Lim, the CEO of Brosa, who is the co-founder of that firm. They label themselves 'the Zara for designer furniture'. They were also part of the MAP incubator in the 2014 batch. They are bringing designer furniture direct from makers to customers. Again, they started off small and have grown very big and are doing quite well.

Omny have a personalised radio app that is getting quite a lot of traction. They have secured partnerships with Southern Cross Austereo, which is Australia's largest radio network, and CBS in the US.

Those are four examples mentioned at last night's event, showing us the huge potential that exists within entrepreneurs in this country. I want to commend, if I may, MAP and in particular a number of people. There is Doron Ben-Meir, who has just started his position there at MAP and who, I understand, was previously at Commercialisation Australia. There are also people like Charlie Day and Rohan Workman, who are doing some great things there in helping usher in the next lot of businesses that will take not only Australia but the world stage by storm. They are very important.

But why do I mention them? There is a perception that these are small businesses. While we are very big fans on both sides of politics of the work of small business in this country, these businesses in particular have an ability to scale up phenomenally quickly. The number of jobs that they will create as a result of that work means that they are completely different from the types of small businesses that would benefit from some of the things that are here—some of the measures that are being reinstated, by the way. This is as a result of decisions made by this government, on its first election, to get rid of measures that Labor in office put in to aid the cash flow and aid the operations of small business. Those were cut by the Abbott government and are now being reinstated in a very clumsy attempt to claim credit for that by this government.

Putting that aside, we should be looking at the huge economic, productivity and employment-generating potential of start-ups in this country, and we need to do more. This bill, as much it is being paraded as in part conferring some benefit to start-ups, will help to a modest extent, but a lot more needs to be done. There are a number of areas where there are serious impediments holding back the growth of our start-ups in this country. It is a fact—it has been recognised—that the rate of start-up formation in this country is horrendously low and we need to do more in this space.

If we want to see start-ups grow a lot quicker and a lot broader and be able to make a much bigger contribution to the Australian economy, we have serious issues to deal with, particularly in terms of skills and talent and making sure that there are people who have the capability to transform ideas into reality. We need to see more people. That is why Labor have mentioned, for example, that we want to see more people trained in science, technology, engineering and mathematics. We put in place some measures not only to encourage people to take that up but also to make sure that we have the capability to teach those subjects, by paying particular attention to teacher training and seeing growth in that space.

I am aware that there have been sections of industry that have been very keen to see teacher training rolled out, particularly to benefit the ICT sector. They have not necessarily met with a great reception from the Minister for Education and Training. I do know that the Minister for Communications is very aware of this issue and very alive to this matter, but, as is the case with this government, it only has a few people who recognise the types of issues that need to be dealt with, and then you are met with stonewalling from the senior leadership of this government, which simply fails to understand that there are serious tasks that need to be undertaken to address the types of issues that are facing this sector. It does need the application of resources and effort, particularly if we are to deal with the huge skill shortages that are crippling and holding back start-ups from evolving.

The other area is capital, where we need to see more money flow in and be able to support, again, the transition of idea to reality. Start-ups start very lean. They might get some benefit from some of the measures announced in these bills, but it is not going to tide them over. It is not going to sustain them. It is not going to give the big uplift that is required to ensure that they become a success.

We need to take a hard look at the way in which the taxation system as it currently stands impacts on the ability of start-ups to grow and, importantly, impacts on the capacity of angel investors, for instance, to support start-ups. Angel investors are relied upon to many extents to help start-ups reach the next level of their development. We need to look at what can be done, as has been done in other parts of the world, to support the taxation arrangements that ensure that angel investors can play a bigger part in supporting start-ups.

I note that my colleague the member for Oxley made a number of references today to what is happening in other parts of the world. I will not go through all of those other than to make the point that this is a global competition. There are other countries that recognise the potential economic benefits of having a very solid ecosystem that is supporting start-ups, and they are taking concrete steps to support them. We are not doing it. We are not doing it at the same rate. We are not doing it in the same breadth. We are not doing it at the same pace. We need to be doing more. Certainly I think that this is an area that needs to be pursued in making sure that we align our taxation arrangements in a particular way that will help angel investors and those that want to get involved in this space to support start-ups and see them grow. We need to see more happen in that area.

In talking of capital, too, and the types of things that could be done, while we are talking about these bills and what might be done to support small business: again, start-ups are not small businesses. They have a much greater capacity to grow. Some of those businesses that I mentioned earlier that were profiled last night at the entrepreneurs gala by MAP are already looking to step up onto the world stage. There are the types of businesses that I saw—the start-ups that were being supported, for instance, by muru-D—at their investor night a few months ago which are looking to expand into China. After only a small period of time in existence, they are now looking to go elsewhere. These businesses need a different set of arrangements to support their growth, and they need capital to survive.

One of the things that we are very concerned about is ensuring that we have, for example, platforms that can provide that type of capital—platforms, for example, for equity crowdfunding. There have been a number of us that have been championing this, and we have indicated to the government—and I have actually held very productive discussions with the Minister for Small Business about what both sides of parliament can do to work together—that this is not a contentious issue, and that we can cooperate in a productive way to help fast-track the introduction of laws which will see equity crowdfunding become a reality in this country, and which will enable us to harness the power of the internet so that we can raise funds, allow people to have a stake in start-ups, and ensure that those start-ups go from strength to strength.

I note, for instance, that the government has just released yet another discussion paper, talking about what might be done in the case of equity crowdfunding for Pty companies. I note the surprise that has been expressed in some quarters—that yet another discussion paper has been released instead of the actual draft legislation. I understand the issues that lie at the heart of this most recent discussion paper, but I have to say that I am surprised that they had not been flagged sometime earlier. I understand that the consultation period for this discussion paper is set to close on 31 August. I hope that that does not inhibit the ability of the government to release its draft legislation very quickly, because the amount of time that will be required to set up equity crowdfunding in this country—in terms of having a legal framework in place—will be critical, and it will take some time. Having said that, we remain committed to working with the government on this, because this is one platform that will be able to provide capital for start-ups that are needing it.

If we are going to talk about start-ups, we need to have a dedicated focus on them and we need to have a legislative program—a reform agenda—that will allow them to grow and to prosper, and to do so in a much more timely way. But we should not confuse that with the types of measures that are being discussed in this bill. I think, in part, the reason why start-ups get referenced in these types of discussions about small business is that the government recognises that it is having to reinstate measures that they have pulled apart. When Labor was in office, we put these measures in place. The government pulled them apart upon being elected, and they have had to put them back in. And to try and create a cover—that they are doing something unique and novel and new—they have tried to refer to the fact that they have brought in some of the measures in the bill. These are modest—sure, they will be welcomed by some start-ups, but they are not the big-ticket items that will help start-ups in terms of what they need or want. And we should not confuse a lot of the great work that is being done by Australian small businesses with the type of work that is being done by start-ups. There is a type of economic potential that is relevant to them both, but they demand different levels of attention. We certainly think that start-ups need to be taken in a different way.

Having said that, we recognise—certainly on the Labor side—that we need to ensure we can do whatever we can—particularly for the next generation of young Australians, who are much more willing to embrace risk and to pursue their ideas, and to see those ideas translate in a way that will be a huge economic benefit to this country—to support start-ups, and we need to make sure that, in the public's mind, they are aware of their potential. We need to make sure that we are able to muster effort from a whole range of different areas to ensure we have a very supportive culture that will enable those start-ups to take the types of risks that they need to take in order to grow and to be able to bring others online as well. There are elements of this where we will be critical of the government; there are some areas that we think will work. Particularly when it comes to start-ups, we hope that we will see a lot more happen in a much shorter time frame.

Ann Sudmalis (Gilmore, Liberal Party) Share this | Link to this | Hansard source

I rise to speak to the House on the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015. There is nothing more important for jobs growth than the development of national economic health for small business. In Gilmore, there are hundreds of mum-and-dad businesses—which, in good times, are more likely to start employing someone, even if it is only part-time in the beginning. Having been a small-business owner for many years, and talking with the owners of small businesses during that entire time, I got a good sense of the changes that need to be made to make employing people easier and cost effective. In my experiences talking to small businesses all over Australia as I developed sales for my product, it was clear that many government processes could be changed that would ultimately lead to better circumstances for business owners and for potential employment. During the Labor government's disastrous carbon tax debacle, I doorknocked dozens of businesses whose business bottom line was so badly impacted that they had to cut back on their employment of casual staff as one of their survival techniques. This proposed amendment to the tax laws is a great initiative to help small businesses to recover some of the losses they sustained under the previous government's carbon tax policy—which, incidentally, Labor plans to reintroduce at the next election.

The tax discount for unincorporated small businesses is part of the package of measures to help business confidence to grow and to establish a better employment scenario. This measure will provide individual taxpayers with business income from an unincorporated small business with a five per cent discount on the tax payable on the taxable income from that source. The discount, unfortunately, is capped at $1,000, but I know businesses that will welcome that absolutely. There are many businesses in Gilmore who will be able to benefit from this tax discount. Some are the locations of my regular village visits held throughout the year, and they include: the Bawley Beach Cafe, Oscar's Cafe, Bomaderry Bakehouse, Burrill Lake Newsagency, By the Beach Cafe in Callala, Cambewarra General Store, Jervis Bay Feeds, Huskisson Bakery & Cafe, Stone Wall Cafe, Merry Beach General Store, Breakers Cafe, Slice of Life general store, The Shoppe Shell Cove, Mountain Side Meats, Mellies Cafe Gallery, the Porthole Cafe, the Bluedog Country Cafe, and the Werri Beach Fish Shop. I have had coffee in every single one of them—and sometimes I have managed to actually eat there as well.

This measure will give a tax cut to the large majority of unincorporated entities for the 2015-16 income year and beyond. Small businesses tend to operate as sole traders, partnerships or trusts. Seventy per cent of small businesses are unincorporated, so this tax benefit for them is a great move. I could not be more proud than to be part of a political team that really addresses the needs and issues that start the process of assisting small businesses to grow and to thrive. This tax discount will increase cash flow for unincorporated small businesses with a turnover below $2 million and, let me tell you, Mr Acting Deputy Speaker, this would be the majority of small businesses in Gilmore—in fact, most are just barely breaking even, so any assistance at this time will be a welcome reprieve. Certainly, having to pay a little less tax will be warmly welcomed.

There are almost 9,000 small businesses working and employing people in Gilmore. Almost 80 per cent are in the industry areas of accommodation and food services, arts and recreational services, wholesale, retail, transport, warehousing, IT and telecommunications. The 80 per cent also includes hire businesses, tradesmen and tradeswomen, real estate and other industries associated with housing. During May and June I was determined to hear from my local businesses from a grassroots perspective, particularly after the budget measures. My team and I went and talked directly to them. For the most part we discussed the instant tax write-off for purchases of up to $20,000 for each piece of equipment. We all know how well this initiative was received. As I have mentioned previously, TCC Accounting Services in Milton was already setting up forums for other businesses in the area to make the most effective use of that particular aspect for their own enterprises. Some of the places I visited during that time were Kiama Country Store, Synergy Beauty Therapy in Kiama, Milton's Sarah Gabrielle boutique and the Akwa Surf shop. In Ulladulla, I spoke with the owners of Walking on Water & Ulladulla Surf Schools and Kings Point Windows & Glass. Finally, I visited Addison's Seafood Grill & Bar and Green Poppy in Shellharbour. Paul Richards is a local tiler. With his business, ALM Services, he decided that this was a policy that was definitely in his best interest. He used the new write-off for assets and purchased a second-hand ute—a glowing white ute that I saw when I visited him the other day. Instead of having to write this off over time, it can be fully taken into account for his tax return for the 2014-15 financial year.

The second part of the amendment to the bill is directly related to the set-up of a new business or the conversion of an unincorporated business to a different structure. There are many professional service costs that can impact heavily on the set-up of a business. It is at this very time that the cash flow for initiating a business is at its lowest. I recall setting up the structures for the fudge business. Way back then we had to go and negotiate with multiple banks. We had to go and talk to them, pay mortgage fees and transfer fees, move the loan from one bank account to another account, set up another account, buy the equipment, pay all of the legal fees and pay all of the registration fees. By the end of it, we had absolutely no cash left. In order to buy the stock that was left on premises, we actually had to raid our children's piggy banks . Thank goodness one of the banking institutions gave us an immediate overdraft facility, or we would have been absolutely cactus.

What kind of expenses will now be immediately deductible and will absolutely help a growing business? These include advice on appropriate entity structures: is it right for you to have a company, or is it right for you to be a sole trader? And there are legal expenses, which are ever increasing, and insurances. Should have a company, a trust or a partnership? And there are ASIC fees. If anybody has actually tried to register a business name recently, it is torturous. We really have to do something about that as well. Stamp duty on the transfer of assets can now be written off straightaway. The cost to convert your business structure can be written off straightaway. When you get relevant information in connection to establishing your business, like going to the proper authorities, getting the right placements, looking at work contracts, you can get all of those costs deducted straightaway. Sometimes you are looking at a slightly bigger business and you need to have a prospectus, particularly if you have no history in borrowing money from the bank. If you go to them and say, 'I have a great idea for a business,' they do not open the door and say, 'Here you are; here's some cash.' You have to give them a business proposal. Sometimes you need a little help to prepare that; otherwise, there is no way you are going to get money. That is a really good thing to be able to write off straightaway.

What currently happens to these expenses? At the moment, it takes five years to write off those expenses. That is not very helpful for a start-up business. How does it help with a new business? I know that 30 years ago, give or take a couple of years, when we were setting up the fudge business, being able to write those off in the first year would have been most welcome. After we bought new vehicles—actually, we leased them, as we could not afford to buy them—it would have been really good for our cash flow. An immediate deduction for professional expenses helps the cash flow when your business is just starting, because, believe me, that is a tough time. In our beginning years, we had to work between 13 and 14 hours a day in order to make our business viable, to pay some of the mortgages off, to pay some of the loans that we had taken out to pay the mortgages, and to pay some of the credit cards that we had to take out in order to pay the personal loans off in order to pay the mortgages off. It was just a rolling process of debt.

So I think this is a wonderful initiative. Because we now know there is a lot more excitement about business, excitement about the economy, one of our local supermarkets recently decided to invest in the land that they had bought. It had been sitting there with a big fence around it for some time. They finally decided that things are so good now that they would turn the first sod. They were there the other day. I was there with a whole bunch of people—the local mayor and the pseudo-mayor of the area in Sussex Inlet—and we turned that first sod. They are a beautiful Greek family. They blessed the land; they blessed the shovel. They even had a chook for the builder, which, apparently, is a Greek tradition, which I had never heard of before. The builder said, 'What do I do with a chook!' It was alive. Anyway, that was an interesting experience. The Kapetanos family have had this project in mind for a long time, but now, finally, they have the confidence to initiate this project and to invest in their local area. Ultimately, their supermarket will double in size, and they will be able to employ more people.

While heartily congratulating the Kapetanos family, I was privileged to meet Kiaya Fleming. She is setting up a brand new business, Be Indulgent. This enthusiastic young woman has decided to invest in herself, to test her ideas and set up her small boutique gift business. I wish her the very best. Being a business person demonstrates a degree of personal risk. However, there is no better time than right now to start up and not have too great an impact on your cash flow over time.

I met Colin Brown on one of my village visits. He has a business called Lumo Solutions. He makes amazing fluorescent hard plastic stuff. Instead of having to put electrical lights on walkways, jetty edges and harbour edges, this solar-powered fluorescent plastic product is bolted and glued to the ground. It collects all the sunlight during the day and it fluoresces at night, so the edges of the walkway, the jetty and the quay are all illuminated. It is also a safety measure. So he is going around, flogging this product, which I think is wonderful. He wants to set up a supply arm in Gilmore and he also wants to make this a possible export item. And guess what? The plasticthing is a recycled product. It is an amazing invention.

Any person wishing to use their entrepreneurial skills to set up a business has a great opportunity right now to reduce their initial cost. What a bonus for a start-up business! Finally, we are helping to take taxation benefits into the current century. It has been absolutely absurd in this day and age to only have a fringe benefit available for a single, portable electronic device. How many members in this House actually carry two phones? So do business people. This change is long overdue and it makes perfect sense. Currently, the fringe benefit is only available if the devices do substantially different tasks. Maybe 10 years ago that might have been real but not now. With the rate of technological change, that is simply ridiculous.

The proposed amending legislation will allow small businesses an FBT exemption for more than one qualifying work-related portable electronic device. And it can only come as fast as possible, because so many people will benefit. This measure does not introduce a new FBT exemption; it just removes the restriction that currently applies in relation to the existing process.

Of course, it will only apply to businesses that meet the ATO definition of being small—that is, their aggregated turnover is less than $2 million per year, which I am pretty sure for the Gilmore electorate would probably mean every single one of them. If only I had a few more businesses that turn over more than $2 million I would be very happy!

Nationally, this means more than 30,000 small businesses will benefit. There will certainly be a significant number in Gilmore. I am proud that we have legislation in place to help small business to thrive, grow and then employ people. This side of government has innovation grants. It encourages individuals to follow their dreams, put their ideas to the test, build a business and grow with the outstanding Aussie attitude: nothing is impossible. And, in the words of John Flynn, founder of the Flying Doctor Service: 'If you have a good idea, nothing can stop it.'

Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to this | Hansard source

As the member for Oxley, speaking on behalf of the opposition, made clear earlier on in the day, Labor will be supporting the Tax Laws Amendment (Small Business Measures No. 3) Bill 2015. The government portray themselves as the friend and champion of small business. I have heard that theme come through time and time again by government members who have come into the chamber to speak on this legislation. I believe that they think that if they say it often enough the Australian people will believe them. The reality is that the facts do not support that claim and I want to talk about some of the policy measures that the government have brought in which, in fact, show that they are anything but a friend of small business.

As someone who regularly speaks to small business owners around the country—and I have had personal experience of small business for a long time—I do not consider small business owners as fools. They understand good and bad public policy when they see it. And I suspect they understand it much better than what some of the coalition members who have contributed to this debate give them credit for.

They also understand that so many of the policies that have been brought in by the Abbott government are hurting their business. Firstly, when the Abbott government were elected they started to reverse Labor's instant asset write-off policy in the, I think, 2013 MYEFO assessment. That was the first thing they did. It was a good policy and I will talk about that a bit later on. Winding back Labor's instant asset write-off policy was one of the first measures. But it went much further than that because then, in the 2014-15 budget, we saw the Abbott government eliminate a whole range of business support initiatives that Labor had brought in. Enterprise Connect, Commercialisation Australia, Industry Innovation Precincts, Australian Industry Participation, the Innovation Investment Fund were all abolished by the Abbott government. In fact, they cut some $845 million from industry support programs, programs which were delivering for business around this country, including many small businesses.

But of course the most business-destroying criticism that I am going to make of this government is its disastrous handling of the Australian economy. We heard earlier on in the MPI how unemployment in this country has now reached 800,000-plus. As I understand it, that is the highest unemployment rate in some 13 years. That does not include underemployed, which you can add another seven or eight per cent to. So the real unemployment and underemployment figures right now are probably closer to 14 or 15 per cent.

Not surprisingly, we have seen business confidence across Australia fall. It is because of the Abbott government policies that the economy is trending in the direction it is and, whilst it is true to say that the people who bear the brunt of those policies are the unemployed, the pensioners, the veterans and their families, it is equally small business around the country. When pensioners lose funding and people are unemployed—when they lose their jobs or when their jobs are at risk or when family income is cut and industries close, the flow-on effect will directly fall onto the small businesses of communities across Australia because people will have fewer dollars in their pocket to spend. That means that all of those small businesses which depend on the spending ability of families around Australia will be directly affected.

In my own home state I am seeing that firsthand. Firstly, we have the uncertainty surrounding the submarine contract and naval shipbuilding in this country. The uncertainty is causing some real concerns in South Australia, where I am seeing small business people who might otherwise have expanded their business will not do so because they do not know what the future holds. That means that, as a result, jobs are either being lost or not being created.

We are already seeing the effects of the impending closure of Holden in the northern region of Adelaide. I am seeing it physically and I have gone out there and spoken with many small businesses as well. As Holden winds down, so too do the hundreds of small businesses around them that relied on Holden employees spending money in their businesses. Again, I see this direct effect firsthand in and around my own community.

Recently, I went out into some of the regional centres of South Australia, travelling up to Port Pirie and Port Augusta. I again saw the effects on small business of funding cuts to services in those regions by government. I will come back to that a bit later because I want to dispute one of the claims made by so many members opposite that governments do not create jobs. Governments do create jobs—whilst in many cases those jobs are indirect, they certainly do create them.

The other area of uncertainty—and, again, I have spoken to many people in my own electorate about this—is for businesses that are directly involved in the renewable energy manufacturing business sector. The uncertainty caused by the Abbott government in wanting to change the renewable energy target saw a rapid decline in the amount of money that was being invested in manufacturing businesses across the country. That included businesses in my electorate, and they are not all huge businesses—many of them are very small businesses—but they all would have picked up from the work that was being generated previously, before they all had to stop because of the uncertainty. In fact, I understand that we have seen an 88 per cent fall in investment in the renewable energy sector since this government has come to office, which has meant that some 2,000 renewable energy jobs have been lost in just under two years.

More recently, I was approached by several pharmacies within my region. Their concern was about the Sixth Community Pharmacy Agreement. Pharmacies are small businesses—these are not multinationals; these are small business operators who run a business, seven days a week, and employ several staff. So they are an employment generator as well. They are being slowly but surely squeezed out more and more as a result of the tightening that occurs from within these agreements. A couple of them told me quite openly that, if the squeezing continues, they will close their doors and simply walk away from the business. If that happens, jobs will be lost. These are small business operators responding to the policy decisions of the Abbott government.

In a similar vein, I have also met with a doctor's surgery in my electorate. I have written to the Minister for Health about this, but, in essence, the case is this. The practice is having its Practice Incentives Program payments reduced from $44,000 to $14,000. What that means is that it is going to cut its after-hours service to people from 17 hours a week to four hours a week. That, in turn, means that a receptionist will be losing hours, as perhaps will other staff and doctors. Again, this is a small business. These are the very small businesses that I am sure members who come into this place would like to think they are supporting and defending. They are being directly affected by the policies of this government.

This legislation, effectively, as I see it, is a desperate attempt by the government to win back some of the support and confidence that it had lost amongst the small business community across Australia. I think it is fair to say that both sides of parliament genuinely respect and appreciate the contribution that small business makes to the economy of this country. I very much dispute and reject the comments made by many members opposite in their contributions that Labor do not care about small business and that our track record shows that we do not. Indeed, it was our commitment to small business that underpinned the package that we put together during the height of the global economic recession, where we embarked on a whole range of infrastructure programs across this country. The beneficiaries of that expenditure were almost entirely small businesses across the country. In my view, that highlights better than anything else the support that we were prepared to give small business in this country, at a time when it mattered most.

I want to finish on this note—the mantra often repeated by members opposite that 'governments do not create job but business does'. I reject that mantra. Every Public Service relies on government employees. That includes our law enforcement and Defence services and emergency service people and so on. I would like the members who say that governments do not create jobs to say it to the people of Darwin or perhaps the people of northern Adelaide, where the Defence sector is probably the biggest economic driver for those regions. The truth of the matter is that governments do create jobs. The point I was making earlier, about my recent visit to Port Pirie and Port Augusta, was this: every time a government department in a regional town closes, the flow-on effect to small business in that town is immense. You see the ripple effect right through that community as a result of governments withdrawing funding from government services that were previously available in those communities. So governments do have a direct role not only in managing the economy but also in injecting funds into job-creating projects in the country.

That comes back to the very point that I made when I moved a private member's motion in the Federation Chamber today that related to procurement policies of government. I made this very simple point: the federal government expends over $40 billion a year on procurement of goods and services. Where it procures those goods and services from makes a difference to small business in Australia. If all of those funds could go to businesses in Australia, it would certainly make a difference to many, many small businesses across this country. Indeed, many other countries are adopting what I refer to as smart procurement policies, because they know that the economic lever that that kind of spending creates makes a difference to their communities. Indeed, if governments were to ensure that most of their funds were invested into their local communities, it would improve or increase innovation and investment by local businesses, it would give them certainty and it would make those businesses not only grow but be more competitive with other businesses around the world. That is not just a personal view; it is a matter that has been taken up by other governments, including the US government, which since 1933 has had an act of congress in place which effectively sets the framework for buying local as opposed to sending money offshore and getting goods and services from some provider somewhere across the world, which does nothing for your local industries.

As I said in my contribution today in the Federation Chamber, we saw a firsthand example of that with the purchase of Defence boots from an Indonesian supplier as opposed to the Adelaide company Rossi Boots, which could have provided the same boots. We saw it again when the government fleet in Canberra for the ministers was ordered from BMW as opposed to GMH who had previously been able to provide vehicles that were more than satisfactory for the job. Again, local jobs are being lost because of direct decisions of this government.

I finish on the point that that is exactly what is going to happen if procurement of the Australian submarines goes to an offshore supplier and they are not built in this country. That is directly going to support hundreds of small businesses around this country. It is a decision within the responsibility and control of the government, and we should ensure that it happens.

With those comments, of course we do support the measures in this bill which go, firstly, to providing a tax discount for unincorporated businesses. The discount is limited to $1,000 a year for businesses up to $2 million. I totally agree with the deductibility for small business start-up expenses. I have been in business and I appreciate that that would be useful. As well there is the exemption of fringe benefits tax for portable electronic devices. These are sensible decisions which, in my view, do nothing more than tweak what was previously Labor policy.

Bruce Billson (Dunkley, Liberal Party, Minister for Small Business) Share this | Link to this | Hansard source

The fantasy must end. The nonsense that we have heard from Labor has to come to an end, and that is going to be achieved by summing up this debate. To hear the gaggle of Labor members talking about these measures as if they were their own is just utter nonsense. It is an act of fiction and an effort to rewrite history, because we know that is not the case. If it were not for a coalition government with such a deep conviction and deep respect for the hard-working men and women of small business, we would not be having this discussion at all. That is why I am pleased to sum up this debate and to thank, particularly, the coalition members who have characterised our goal and our ambition. This package of measures is but another step towards our vision of creating the best economy in this country where you can start and grow a business. That is our mission, that is our vision and that is what we are working toward.

The government knows that hard-working men and women of the Australian small business community are the engine room of the Australian economy. They account for a vast majority of active private businesses in this country and employ over 4½ million people. We know we have work to do because half a million jobs were lost in small business under Labor. Half a million livelihoods, made possible by enterprising men and women, disappeared under the maladministration of the previous Rudd-Gillard-Rudd government. We are working hard to turn that around. You know what I am pleased to share with the chamber tonight? We are succeeding. The most recent figures show that there has been a growth in the number of people employed by small businesses by 146,000 jobs. That is 146,000 livelihoods made possible by enterprising men and women of small business.

There is also encouraging news. Prior to the election of the Rudd-Gillard-Rudd government the private sector share of employment made possible by small business was around 52 per cent. Under Labor that fell to only 43 per cent of the private sector workforce being employed by small businesses. That is recovering as well. It is now at 44 per cent, so we are getting things right by listening to and engaging with the men and women of small business, by acting in a very clear-eyed and purposeful way to support the entrepreneurial environment within which they operate. To listen to, get alongside and benefit from the impressive case studies, the great stories, you heard from coalition members is showing that we are getting this right and we are healing the harm and hurt the small business community had inflicted upon it by the previous Labor administration.

We have spent our time in government out and about, meeting with these enterprising men and women, hearing about the daily challenges and triumphs that are at the heart of their lives and are very much the dominant thing that occupies their waking hours. We are committed to ensuring that Australia is the best place to start and grow a small business, and we are getting there as evidenced by the examples that I shared with you. We are seeing signs of it.

Labor, for some reason, wants to run down the economy. They want to create a kind of economic funk. That is yet another example of the self-serving nonsense we hear from Labor. Do you know business confidence is at a plus-10 percentage point? It is at the highest level in almost two years. Even today there were some buoyant Westpac consumer confidence figures. There is lots to be positive and optimistic about. There is no risk of you finding positivity and optimism in the Labor Party. It does not suit their base political objectives.

We are getting on with the job. We are getting on with implementing our economic action strategy. We are committed to creating the best entrepreneurial ecosystem that we can. A key part of that was the very impressive small-business package announced as part of the 2015 budget, a historic $5½ billion package aimed to provide encouragement and incentive for enterprising men and women in our economy. It was the largest package of its type in our nation's history.

The government has already passed legislation for the 1½ percentage point company tax cut and the accelerated depreciation measures for small business that are a part of this package. It is an initiative originally implemented by Joe Hockey when he was the small-business minister, way, way back. But Labor wants to claim that as well. I know they like to attach themselves to our good work, but there is a fair amount of nonsense coming from those opposite. We know small businesses and family enterprises across the country are already making the most of these initiatives to build the prosperity of their enterprises and their capacity to employ. We heard example after example of field evidence and practical case studies from coalition members.

This bill includes three more of the small-business measures and provides a further $1.8 billion of cash flow benefits to these hard-working, enterprising men and women. Schedule 1 of this bill will provide a five per cent tax discount for approximately 70 per cent of small businesses which are not incorporated capped at $1,000 per taxpayer. We understand that two-thirds of Australian small businesses are not incorporated. That is something that Labor has failed to appreciate. Even in their budget reply speech, when we mapped this out in great detail, there was nobody home. I am not even sure if the lights were on, but there was nobody home to understand the true nature of the small business economy when Labor was trying to play catch-up footy to the coalition's measures.

The discount of five per cent is broadly mirroring the benefits of the 1.5 company tax cut for small businesses. With both of these measures in place all small businesses will be eligible for a tax cut no matter how their business is structured. This measure reflects our knowledge and understanding of how small businesses are actually operating in our economy. There is no 'one size fits all' because there is no single model and modality of small business and entrepreneurship in our economy.

Schedule 2 of this bill will provide immediate deductibility for professional expenses for small business. The cost of professional advice and payments made to government agencies will be immediately deductible instead of having to be depreciated over five years. Once again, this will improve the cash flow of small businesses, particularly in that start-up phase when cash is scarce and there is a need to improve that cash flow as best we are able. It is also about reducing the regulatory burden imposed upon these businesses.

Schedule 3 of this bill will reduce red tape within the fringe benefits tax system by expanding the FBT exemption for work-related portable electronic devices. Under this bill, small businesses with an aggregate turnover of less than $2 million will be able to access an FBT exemption for all portable electronic devices that staff are provided with for work purposes. At the moment, this exemption applies only where there is a single device with a single type of functionality. So if you gave your staff member a mobile phone, one of these technological devices, for their work, perhaps to monitor what is going on in the field, to get advice about the microclimate in a horticultural business or even to engage with customers, and you then gave them an iPad, you would risk an FBT liability, even though we are encouraging digital engagement of small enterprises in our economy—something we need to do more of. This measure is removing an impediment that needs to be dealt with.

This exemption will be available even if multiple devices with substantially similar functions are provided by an employer to their employees for work purposes. The government has acknowledged that with the development of new products and increasing overlaps in the functionality of these devices it is becoming increasingly difficult for employers to determine with certainty which devices can access the existing FBT exemption. This uncertainty is stemming the use and availability of critical tools of trade for small business—that is, portable electronic devices. We need to work in a thoughtful way to boost digital engagement of our small business community. That is another part of what the government is doing. With the evolving technology being used for work purposes, the legislative provisions that allow for an FBT exemption for portable electronic devices and computer software simply have not kept pace. That is what we are dealing with in this bill. We are resolving this issue, with the bill allowing the existing FBT exemption to apply to items that may have substantially similar functions. This will simplify the current rules and provide employers with more flexibility in the number and nature of items given to employees by disregarding overlaps in the functionality of these items.

As such, simplifying this exemption is expected to lead to a reduction in compliance costs for employers. There are around 30,000 small businesses with an annual turnover of less than $2 million who lodge FBT returns. This reinforces the government's position that the tax system should not impede innovations by companies hoping to grow and employ more people. This measure will reduce red tape and regulatory costs for small business. Such a step is crucial for small businesses, which tend to face a proportionately higher regulatory cost than larger businesses because of their inability to take advantage of economies of scale and the understanding and application of compliance with government regulations. Moreover, small businesses typically have fewer resources with which to specialise in meeting their compliance obligation. So this is about removing and simplifying an FBT portable electronic device exemption. That is going to provide great benefits to small business.

The government is out and about. We are listening to, collaborating with and learning from small businesses every day and sharing those insights in this chamber, as you heard so eloquently done by coalition members as part of this debate. We are committed to making it easier to do business in Australia, to make our economy and our country the best place to start and grow a business. There will be more in this budget package. We have work to do and legislation to bring forward about the capital gains tax correction in a situation where the ownership is the same and the business activities are the same but the owners feel they need to restructure their business to prepare it for the future. That risks a capital gains tax liability event, even though all that the businesses are doing is what we are encouraging them to do: to be ready and to get themselves in their best possible shape to succeed into the future.

There will also be some legislation coming forward in the spring session about a new funding framework, about crowd source equity funding as being another channel, another avenue, that small and growing businesses may be able to take advantage of to bring in much-needed venture capital, growth capital and equity into their business. That is an important measure. At the moment workarounds allow funding to come into those businesses, but linked to special offers. You might support the start-up of a new magazine and put your money in and get five years of free subscription. That is a workaround that we see in the current economy. But if you want to offer your investors a stake in that business, an equity position, the law currently does not provide for that. We see that as a shortcoming in the range of financing options available to small enterprises, and that is something we are going to fix.

I have released a discussion paper in recent days teasing out what those policy settings look like from the government's point of view, particularly for publicly listed companies, but also drawing in insights from those in the start-up community and looking at how we can support funding avenues for small business and growth businesses and how we deal with proprietary limited companies, as some of the disciplines of a publicly listed company are not actually part of a proprietary limited business's existence. How do you make sure that there are appropriate checks and balances, good governance arrangements and good disclosure requirements? This is something we are working through as well. I think that could put us at being world class, as most other countries where crowd source equity funding is available tend to limit that availability to publicly listed businesses. They have not dealt with the challenge of proprietary limited, closely held businesses. That is something that we are turning our mind to.

So there is more to come. My message to Australian men and women of small business is that we are continuing to work as hard for your success as you do. This package of measures, another third instalment of our budget package, is a continuing demonstration of our commitment. We know there is more work to be done. We are up for it. We are going to work as hard for their success as they do. I commend this bill to the House.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

The question is that the bill be now read a second time.

Question agreed to.

Bill read a second time.