Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Education and Employment, I would like to present the committee's report entitled Getting business booming, together with the minutes of proceedings and evidence received by the committee.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—On behalf of the aforementioned committee on education and employment, I present the report of the committee's inquiry into the factors that discourage job creation and employment by private sector small business.

On 23 March 2015, the Minister for Employment, Senator the Hon. Eric Abetz, asked the committee to inquire into and report on matters that inhibit or discourage job creation and employment by small businesses in the private sector and/or provide disincentives to individuals from working for such businesses. The committee sought and received submissions from a range of stakeholders including small businesses, peak industry and union representatives and individuals, who all identified a variety of issues relevant to those terms of reference.

It is an article of faith on this side of the House that small business is the engine room of the Australian economy and that it drives national prosperity. Small businesses are 96 per cent of all business, employing 45 per cent of the Australian workforce. That is 4.5 million Australians, and they produce over $330 billion of national economic output per annum.

The report I present today sets out many of the positive initiatives that the coalition government has implemented since election in 2013 to improve the capacity of small business to employ. In summary, red tape has been cut. Compliance processes for small business, particularly in superannuation, taxation and employment standards, have been streamlined. The tax burden on small business has been reduced. Wage subsidies are in place to help people over 50 find work. Programs have been introduced to assist disadvantaged groups into employment also. There has been a significant investment in programs to develop the quality of job seekers through work experience opportunities and apprenticeships.

These are all important practical measures demonstrating the government's commitment to small business growth and employment. I should note also that the government's National Innovation and Science Agenda. It is one of those opportunities for small business to grow, invest and employ.

Notwithstanding the significant progress that this government has made to date, the report still recognises there are some specific areas for improvement. They are addressed in several of the report's recommendations, but I want to highlight three.

The first is the committee's proposal that a framework is established to develop a single decision tool to help small business correctly identify when a worker is an employee or a contractor.

Second, the committee recommends the Minister for Employment—together with Safe Work Australia—formulate proposals to take to COAG that will eliminate the requirement for a small business operating in multiple jurisdictions to have to engage with multiple workers' compensation schemes.

Third, the committee recommends that the Productivity Commission investigate the impact on small business of lowering the GST threshold, particularly on the importation of physical goods, and undertake regular cost-effectiveness research on the impact of GST threshold reduction.

The committee also makes recommendations in this report to assist disadvantaged job seekers find employment in the small business sector. It recommends that the federal Department of Employment work with jobactive providers to ensure that ancillary service providers might also receive Australian government funding for the assistance they provide in placing jobactive clients into employment.

We recommend that the Australian small business ombudsman, small business commissioners, chambers of commerce, business enterprise centres and peak small business organisations develop strategies to promote to small business the benefits of workers coming from culturally and linguistically diverse backgrounds.

The committee recommends that the Australian government reassess the policy case for taxing the redundancy payouts of persons over the age of 65 to encourage people to stay in the workforce.

Taken together, the committee has 14 targeted recommendations, which, if properly implemented, will ensure that Australian small business will continue to grow and employ freely. To the entrepreneurial women and men of Australian small businesses, I want to say that the Australian government is here to support you and to encourage you to invest and employ your high-quality staff.

My thanks go to the Deputy Chair, the Hon. Alannah MacTiernan MP, and to each of my colleagues on the committee, including the previous Chair, Mr Ewen Jones MP, for their hard work and professionalism. Thanks are also extended to the inquiry participants—individuals and organisations—which took the time to write submissions and speak to the committee. These participants provided invaluable insight into the small business environment and the issues that are faced by them on the ground, in this nation, every day. I commend this report to the House.

I move:

That the House take note of the report.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the recommendation that the House accept this report. In particular, I compliment our new Chair on his very bipartisan approach to his chairmanship. It has been a delightful change of experience in that regard. I look forward, in the very short time that we may be working together, to doing something quite constructive.

This is a pretty modest report into what is really a very challenging area—that is, how do we provide the ecosystem in which small business can thrive? The Chair has set out some of the indicators that tell us just how important small business is to our economy. I want to pick perhaps five issues that I think are significant and I would like to comment on.

One is payroll tax. We had a significant number of representations about the issue of payroll tax. In one sense, we might say: 'Well, payroll tax is a state tax. What are we doing talking about this federally?' But we know that the tax mix, the way in which we collect taxes, the different taxes that we have and our taxing arrangements are inextricably linked. What we do at a federal level affects what we do at a state level in terms of providing a stable base for states to function on. I have to say I find payroll tax an increasingly inequitable and indefensible tax. I know that state governments are reliant on it. Let us make it very clear that this is a tax that is affecting small business. If you look, you will see variation across the states as to the payroll threshold at which this tax kicks in. In South Australia, an annual payroll of as low as $600,000 brings with it the imposition of a payroll tax.

It has been a popular tax in a way because it is one that is not easy to avoid. But I believe that, in this day and age where we are going to increasingly find it a struggle to ensure that we have sufficient jobs for our community, a tax that actually imposes a disability on people who employ people, as compared to those who might invest in labour-saving devices, is going to be increasingly unattractive and indefensible. I would really urge us all to think very deeply about this. I think we collect around $22 billion a year in payroll tax across the states. We are saying very clearly to those employers, 'Please think twice about employing someone because we are going to, regardless of your profit, impose a disability on you if you invest in staff as opposed to capital.'

We also had a number of submissions about the increasing difficulty for small business in employing apprentices. In particular, there was concern about the abolition of the Group Training program. I think the Group Training program for apprentices was a great boon for small business because it meant that an entity took fundamental responsibility for the engagement of an apprentice and small businesses would then participate in the training and employment of that apprentice over the three- to four-year period of their apprenticeship. It certainly made it a lot easier for small businesses to participate in the apprenticeship training program. Then we saw, in that 2014 budget, in the first year the funds were cut by about 20 per cent and then the program was to be abolished. I think that is a very retrograde step for training in this country, but also, again, it differentially disadvantages small business.

I note a small issue that we paid some attention to. This is something that governments of all political persuasions have not dealt with: the issue of redundancy payments for over 65s. It is a small issue but one that we do need to address. More and more people are working beyond the age of 65. We treat their redundancy payments in a very different way to the redundancy payments of people who are under 65. That is having the impact of causing people to retire earlier than they otherwise would.

Another issue that was raised by many people making submissions to us was the question of the GST threshold. The GST threshold for low-value imported goods. That immediately gives a 10 per cent advantage to people who are retailing overseas: they are not required to pay GST on sales that are under $1,000. According to the ABS in the 2013-14 figures—the last figures they have that we were able to access—that is a $6.7 billion value to those below threshold goods. That is a massive disadvantage for people that are building bricks and mortar shops in Australia or even selling online within Australia. It is much more than just 10 per cent, because with it comes a whole range of other exemptions—tariffs, import duties and customs. When we combine all the consequential advantages—the GST exemption itself, the tariffs, the import duty and the customs—the submissions we received valued the overall discount that is being delivered to these overseas retailers, as against our Australian retailers, at between 20 and 25 per cent.

In 2015 we had a statement from the former Treasurer, the former member for North Sydney, that they were going to do something about that, but we have yet to see action. Our side of the House has pledged that we will work cooperatively with the government on this. We see this as a real problem for small business and we want to address it. I think our recommendation in the report could have been a bit stronger in light of the strength of those submissions, but we obviously need to work together. We want to work together to bring the issue to the attention of the public and try to generate some movement on it.

The final matter is an issue that is very dear to my heart and was the subject of a couple of the submissions. That is the role of access to the NBN. Increasingly, small business is operating in a global environment. It is needing to compete—whether it is offering services or goods, it is competing internationally. We are entering into more and more free trade agreements which are giving overseas countries more and more access to an increasing range of services to be delivered within Australia. Yet we are hamstringing our economy and our people by having a second-, third- and often even a fourth-rate product. No matter how enterprising and talented our businesses are and how developed their skills are, unless they have access to the same sorts of upload and download speeds that their competitors have in this region and across the world they are not going to be able to take their proper place and be properly rewarded for their enterprise and creativity.

So we have a recommendation that urges us to speed up the implementation of the delivery of broadband and to particularly focus on those areas where there are many small businesses. I would add to that that we need to ensure that in that process we are installing a 21st century technology, not a 20th century technology. With that I thank the staff and again thank all of the committee members who have worked very cooperatively on preparing this report.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The debate is adjourned. The resumption of the debate will be made an order of the day for the next sitting.