Kevin Hogan (Page, National Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Would the Treasurer update the House on how the government's enterprise tax plan will drive jobs and wages growth? How will increasing the turnover threshold definition for small business to $10 million help employers in my electorate of Page, and indeed across the country, to invest in their businesses, develop new markets and employ more Australians?

Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for Page for his question and his keen interest in small business, in particular, and the important role that small business plays in driving jobs and growth in this country—particularly those small businesses that are between $2 million and $10 million in turnover. Members will know that in the budget this year we announced that we would be increasing the threshold from $2 million to $10 million for the definition of a small business, which would mean that those businesses will get access to not only the instant asset write-off and the 27½ per cent corporate tax rate but other depreciation provisions, how GST is treated on a cash basis, and so on. These are important tax arrangements for small businesses.

The $2 million threshold was set in 2007 by Treasurer Costello. For six years after that those opposite, when they were in government, froze it. They did nothing with it: they left it at $2 million and stuck rigidly to the view that a small business in this country was only up to turnover of $2 million. That is despite the fact that the Henry tax review actually recommended that that threshold be lifted from $2 million to $5 million. I note that those opposite rejected that advice from the Henry tax review. They took another piece of advice in relation to the mining tax—that worked out really well, didn't it? Maybe they would have been better advised if they had paid attention to the recommendation that would have seen the small business definition lifted from $2 million to $5 million, because Ken Henry said that small business had a disproportionately higher share of the tax compliance burden.

This government recognises that, and that is why we are seeking to lift the threshold from $2 million to $10 million to give those businesses the opportunity to invest back in their businesses by paying less tax. These are businesses that pay their staff and creditors first, pay themselves last and reinvest in their businesses. That is what they do, and that is where the growth comes from. There are 2.2 million Australians working for these businesses, and we want to ensure that they can look forward to better real wages in the future and more investment in their businesses so they can grow.

There are plenty of these businesses. There is Zokoko, with a turnover of $2 million and a staff of seven, in the member for Lindsay's electorate. There is WB Truck 'n' Trailer in the member for Braddon's electorate—another business between $2 million and $10 million. They have 13 employees. There is Australian Honey Products in the member for Bass's electorate: they have $2½ million of turnover and eight staff. There is Martin Locke Homes in the member for Herbert's electorate, which I mentioned the other day. They have eight staff and support 30 subcontractors. The member for Greenway has Salem Power Engineering, a $5 million business which has a staff of 20. These are businesses that want to invest and grow. Those opposite would have put a cap on their growth by not supporting the very sensible decision to lift the lid for small businesses and give them access to a better tax deal.