Melissa Price (Durack, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017. It is worth noting that I follow the member for Barker. I believe he is a true champion of the small business sector, even though he may not believe that himself, so it is timely that we are talking about what is great about small businesses and how we are supporting them. This bill amends the Income Tax Assessment Act 1997 to enable small businesses with aggregated annual turnover of less than $10 million to claim an immediate tax deduction for eligible individual assets costing less than $20,000 first used, installed or ready by 30 June 2018.

This bill extends by 12 months the popular and successful 2015-16 budget measure 'Growing Jobs and Small Business—expanding accelerated depreciation for small businesses'. This is welcome news. This legislation was introduced in 2015 after extensive stakeholder consultation, including with the Australian Taxation Office, small business stakeholder groups and professional tax and accounting bodies. There has been very strong stakeholder support for extending this measure in addition to all the other hundreds of small businesses around the country. Extending the time in which small businesses can depreciate capital expenditures at the higher threshold will improve cash flow and business activity by releasing those funds back to the small business owner that would otherwise be tied up in depreciating assets. This is good news for small business.

So why are small businesses so important? A strong and successful small business community means simply more jobs for Australians and more opportunities to build vibrant local communities right across the country. Small business employs by far the highest number of Australians when compared to any other sector. We all know that. We hear that almost daily in this place. There are more than six million Australians employed in small businesses across Australia. Small businesses create employment and pay tax at a rate not seen by any other sector in our business community. That is why it is so important for all of us in here to support small business, to support those people in this country who are simply having a go. They are putting their own money at risk. As we heard from the member for Barker, sometimes they do not get paid because the staff have to be paid first.

My electorate is known for its big business—the miners, the oil and gas companies. Those big businesses generate billions of dollars into our economy and we are all very grateful for that. But there are also 16,000 small businesses in my electorate of Durack. Those small businesses drive our regional economies, they drive regional employment and, by extension, they drive regional growth and development. Without small business, our regional economies would simply fall in a hole. We have seen that especially with the downturn of the construction of the various mining projects. The small businesses have really been the glue that has held many of our regional communities together.

You and I both know, Mr Deputy Speaker, that governments do not create jobs, but they do create opportunity, and that is indeed what the private sector does with our support—enterprising Australians who have a work ethic and a propensity for risk, who start their own business, who identify a gap in the market, who work day and night to get themselves ahead. I want to applaud all of those thousands of small businesses in Durack, people who get up every morning and then go to bed at night knowing that they are going to have to do it all over again the next day. These are the people who create opportunity, and they create jobs. Government merely creates the policy to support these people, and we should be backing small businesses every day.

That is why I and many other members on this side of the House are proud to support those people. I am proud to say that we come here with a policy agenda that aims to cut the red tape and cut the costs involved in investing in a small business. Sadly, we know that those opposite have shown a complete lack of interest in supporting these types of measures that will really support the engine room of Australia and some of the other policies this government is seeking to push through this parliament in order to secure jobs and secure growth in the future. Those members opposite have instead sought to fall back on the usual rank hypocrisy, as is their wont, and instead are criticising, as we have heard numerous times over the last couple of weeks, our government's corporate tax cut initiatives. And that is in spite of comments made by their leader, their Treasurer, their Assistant Treasurer and their Minister for Finance. These four are all on record as supporting a cut to company tax—and we will get back to that particular issue shortly.

We have heard from many of our small business contacts throughout the electorate that the extension of this depreciation initiative is one of the highlights of the federal budget. And why wouldn't it be? This is very easily one of the most popular small business incentives and encourages the almost 3.2 million small businesses in Australia to invest in themselves and create job opportunities for their fellow Australians. This government has a proven record of supporting the small business sector by building up the engine room of the economy. We can guarantee growth, we can guarantee investment, we can guarantee lifestyle and we can guarantee jobs if we back the small business sector.

But I am not sure that those opposite understand this simple concept. They seem to think that jobs simply fall from the sky. Well, maybe in the various jobs they have worked in that is what happens, but you and I both know that it takes hard work and it needs a good policy agenda to ensure that small business is supported so it can grow, so we can create the jobs of the future and make sure our grandchildren have a job. But those opposite seem to think our 25 consecutive years of growth is something that just happens by accident. But, put simply, if a business owner is given an incentive—and they are, in this legislation—to invest in their business, to receive a tax break, then they will. That investment allows them to expand, and hopefully that expansion will create a job or two. That can then be repeated across the 3.2 million small businesses in Australia.

This feeds into this government's holistic approach to job creation, wage growth and training. We have committed to cutting small business tax as well as the corporate tax rate to keep us economically competitive. Make no mistake: as global economies become more interconnected and capital flows across jurisdictions far more than it used to, we enter a new era of corporate competition. Australians are no longer competing for jobs against those who studied for the same degree as they did, perhaps at UWA or Curtin; they are competing with graduates from around the world. And for Australia as a nation it is no different. We need to be creating the perfect conditions for foreign investment, because to do so ensures that our young people have good jobs to move into once they finish their degree of choice. That means that a variety of measures, including a lower maximum income tax rate and a lower corporate tax rate, are of benefit to us.

We know that, by doing all of those things, we will get growth and we will create jobs. By and large, this is just a sensible approach to ensure the jobs are created. The hypocrisy, time and time again, displayed by those opposite on this issue is as breathtaking as anything that we have seen previously. The following is a direct quote from the Leader of the Opposition when he was Minister for Financial Services and Superannuation back in 2012:

Any student of Australian business and economic history since the mid-80s knows that part of Australia's success was derived through the reduction in the company tax rate.

Those words are direct from—we will not say the horse's mouth because that might sound unparliamentary. This is simply one of the arrows in this government's quiver that we are aiming to bring to bear on the issue of joblessness and slowing growth. But there are many other measures in the budget that we have just brought down recently which are going to lead to improvement in growth.

This government has introduced several programs that will address issues around unemployment and, by extension, address our rising welfare bill, our slowing growth and our rising debt. We are aware of these issues, as you are, Mr Deputy Speaker Irons, and we are, no doubt, putting our shoulder to the grind and developing some policy that is actually going to help. Rather than follow the example of those opposite and throw money at our welfare bill and, sadly, our ballooning debt, we are sticking to the simple concept that the best form of welfare anyone can have is a job. And I know that you know that only too well, Mr Deputy Speaker.

When someone gets a job there are a large amount of flow-on effects that come with it. We know that their health improves, resulting in less public spending on health. We know that these people are then able to afford rent and, maybe if they are lucky, afford to save for a deposit, together with the new—it is such a great initiative that I have forgotten the words! We have the assistant minister down here. It is relating to helping people get into their first home. I have forgotten the words!

Honourable Members:

Honourable members interjecting—

Melissa Price (Durack, Liberal Party) Share this | Link to this | Hansard source

That is it. It is good that we have a lot of these initiatives that are going to help young people get into their first job.

We all know that people with jobs experience a boost to their self-esteem, meaning they have more drive and motivation to apply for, and continue in, employment. And, hopefully, they will be able to proceed along those lines. There is no government welfare program that can deliver those benefits. There is no welfare program that can benefit anybody quite like a job can. That is why the employment programs that we have introduced are so important. It is why I am proud to stand on this side of the House with a suite of employment programs aimed at mobilising the unemployed and getting as many as we can into an appropriate job.

You may have heard, Mr Deputy Speaker, that we have just recently rolled out the Youth Jobs PaTH program, which will benefit those in the largest city in my electorate, Geraldton. I have to say: I just saw a media release before I left. The City of Geraldton itself has taken on a couple of interns with respect to this program. That was literally before I came here. That is, indeed, good news. The reason why it is good news is Geraldton, at the last assessment, had an unemployment rate of about 8.5 per cent, which is some 2.5 per cent above the state average. So they need all the help they can get. So good on the City of Geraldton for taking on a couple of young interns. My electorate of Durack, as a whole, has 3,700 young people aged between 15 and 24 who are not currently employed. This needs to stop. This has to be addressed. This is urgent. This is what this government is aiming to address. Geraldton really needs more employment programs just like I have described. I am very glad to see that this program has been rolled out.

The other thing that I would like to touch on is the shipbuilding program and the benefits that Western Australia will get from defence spending. This is why we need to be supporting our businesses and our industries, so there is actually a job available for young jobseekers to take. We need to promote those industries that encourage the employment of our jobseekers. In Geraldton, I recently hosted the Centre for Defence Industry Capability and the Department of Defence, and I represented the Minister for Defence Industry, Christopher Pyne, in detailing how the important $89 billion naval shipbuilding program could provide opportunities for the city and the region, and more broadly for regional Western Australia.

We know that there is a tremendous degree of skill in Geraldton and more broadly in the Mid West with respect to the marine industry. But there is also a high degree of engineering capability in the city, coming off the back of the mining industry, which could be diversified into the shipbuilding, maintenance and sustainment work. In the Mid West there are several companies involved in the commercial boatbuilding industry and several more with potential to be involved in the supply chain for these vessels. This is really great news and a fabulous opportunity for anyone who is looking to diversify their business, because we know that the potential for a student currently studying in year 12 to spend their entire life working in the shipbuilding industry and also in Western Australia is now a real possibility, and it is something that we should celebrate every day we come into this place.

I am almost out of time, but to round out all the opportunities in the budget I just want to give another shout out to the Geraldton Universities model, which is going to allow regional kids to stay at home. This is what we strive for in regional Western Australia and in Australia more broadly so that a young person does not need to pack their bags and be a financial impost on their family. It is something I am particularly proud of. We got a commitment of $15 million in the budget, and it is certainly going to help young people to get the education that they deserve.

Susan Templeman (Macquarie, Australian Labor Party) Share this | Link to this | Hansard source

I think it is interesting that yet again from the member for Durack we hear claims that nobody on this side of the House has any idea about small business, yet there are people here who have been in small business for much of their career. There are people who have partners in small business. It really behoves those opposite to take a look at the expertise on our benches. You are going to be looking at it all too soon from the other side if you are lucky enough to still be here.

Labor will support the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017 to extend by 12 months to 30 June 2018 the period in which small business entities can temporarily access expanded accelerated depreciation rules. And I am not going to have to switch this speech into a speech about jobseekers and universities, because I will be able to talk about small business and what we want to see for small business for my remaining 14 minutes and five seconds.

Labor recognises that Australia's small businesses make a huge contribution to our national prosperity, including providing a livelihood for millions of Australians. Over two million businesses—sole traders, partnerships, trusts and small employers—have helped underpin more than 25 years of continuous economic growth. In my electorate of Macquarie, there are around 11,000 businesses, with around 5,000 of those employing one person or more locally. Until July last year, I ran a small businesses. Those opposite look a bit surprised: 'Gosh—are people who support Labor allowed to run businesses?' In fact that is how I came to appreciate the benefits to the economy that a Labor government brings. I started a business when things were definitely tough for the country, but we had the right policies in place to take us through. I grew up in small business. My father was a newsagent. I looked at what it takes to be a good employer, to know that you are making money out of your staff but that you are treating them as family. Then you have a loyalty—something those opposite have no comprehension of.

Labor is very proud to have led the debate in this policy area. I believe that in recent years in particular we have offered really practical policies to support Australia's industrious small business sector. Above all, we know that if people do not have cash in their pockets to spend in their local businesses, those local businesses will not survive. And that is one of the key things those opposite do not understand. They do not appreciate the impact that taking penalty rates out of someone's pocket is going to have in my electorate from 1 July.

Last year, we took a comprehensive suite of small business policies to the federal election including a responsible plan to cut company tax for small businesses with turnovers of less than $2 million. As a small-business person, I struggle to understand how you can justify a $10 million turnover for a small business. Once you are turning over $10 million, unless you are doing something really, really clever that I am not sure would be legal, you really have to question whether you are running as a medium-size business, with all the supports that your staff need, or whether you are simply running as a small, do-it-all-yourself business. I would argue that once you start to get up past $2 million, you should be putting in the supports of a medium-sized business. We are very firm that businesses with under a $2 million a year turnover definitely deserve that extra incentive for the hard work that we all know they do.

We also took to the election a plan to level the playing field for small businesses by ensuring that multinationals pay their fair share of tax. There is nothing worse, as a small business, than seeing this uneven playing field where these gods up here seem to get away with blue murder and you, the small-business person working seven days a week, often 15 or 16 hours a day, giving up your Sundays to do your MYOB, can see the unfairness of that situation. We also took a plan to help small businesses incorporate without additional red tape, because we recognise that a lot of businesses do miss out on some of the tax benefits by not being incorporated, yet they do find it daunting to go through the current process. We also took a range of other innovative policies to assist small businesses better access finance and help entrepreneurs start their own businesses.

I am pleased to say that Labor has continued to fight for small business in this parliament, and I am pleased to have been part of that fight. We continue to develop and advocate for policy that will benefit Australian small businesses, helping them to grow and prosper. I just want to talk about a couple of those policies. In February we introduced into the Senate the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017. These access to justice reforms would help small businesses take cases of anticompetitive behaviour to court. Can you imagine what it is like as a small business when you are up against one of the big guys? It is bad enough in the advertising war, let alone when there is a legal issue at stake. We know small businesses are less likely to take up private litigation against anticompetitive behaviour. It is just too daunting. There is too much at stake—often their home. It is because big businesses have deep pockets and armies of lawyers, so the risk of small businesses being overwhelmed and having to pay the big business's legal fees is a significant obstacle. The Productivity Commission and the government's own competition review say that small businesses are disadvantaged in the court process. But the Turnbull government has refused to address this inequity. Labor's bill will restore the balance by letting a small business request a no adverse costs order very early in the court case. This will help level the playing field, give them confidence to pursue cases and encourage more small businesses to take on anticompetitive behaviour.

The other policy area that we have done a lot of work on and have announced is a package of reforms to tackle illegal company phoenixing, a practice that often leaves small businesses—tradies, people who have put in the blood, sweat and tears—ending up with no money. They end up with unpaid debts that they are never able to recover. They have bought the materials, they have done the work, they have paid their staff but no-one is paying their bills. I draw the House's attention to some comments that were made just yesterday by the Australian Taxation Office commissioner, Chris Jordan, who confirmed that there really is a need for action on dodgy phoenix operators who deliberately burn companies in an attempt to avoid their obligations to employees, taxpayers and honest businesses. The tax commissioner told a Senate estimates committee: 'This is not a new issue. Phoenixing is a big problem, especially when you have these people that are unassociated with the principles. You cannot keep track.' There we have the ATO telling us how difficult it is to keep track of people intent on doing the wrong thing. When speaking about how easy it is to become a company director in Australia, Mr Jordan said this to a senator: 'I could appoint you as a company director without you even knowing and me then controlling the company.' That shows you the holes that there are at the moment. The tax commissioner also noted: 'In other countries proper identification checks are required for anyone wanting to become a director.' Apparently, here, you can almost register your dog as a company director because there are no checks required.

Illegal phoenix activity costs our economy billions of dollars annually, and that is why we have announced the following measures. First, we want to require all company directors to obtain a unique director identification number, with a 100-point identification and check. We expect this of so many other people. If you are on Centrelink you have to have a number. If you are receiving a Medicare benefit you have a unique number and it does not change. If you are registering for any other government facility or service you need a number. Yet, for some reason, you can set up a business and not be identified. So the 100-point check is a really good step. It is only as hard as getting a bank account.

Second, increasing penalties will also be associated with phoenix activity; third, we want to introduce an objective test for transactions depriving employees of their entitlements; and, fourth, we want to clarify the availability of compensation orders against accessories. These measures are based on recommendations from the Melbourne Law School/Monash Business School Phoenix Research Team recommendations. They are well thought through and they are very much needed.

It is just not us calling for a director identification number; among the people who think it might not be such a bad idea are the Productivity Commission, the Australian institute of Company Directors, the Australian Small Business and Family Enterprise Ombudsman, the Australian Chamber of Commerce and Industry, Master Builders Australia, the Australian Council of Trade Unions, the Australian Restructuring Insolvency and Turnaround Association and, of course, the Phoenix Project. So you do have to wonder why, when it is such a sensible idea, that is not the legislation that we are discussing right now.

But let me turn to the instant asset write-off. It was Labor who first identified the value for Australian small businesses in increasing the immediate deductibility threshold. I remember when Labor was in government in 2012 that the threshold for small businesses to write off capital purchases increased from $1,000 to $6,500. That increase meant that it became a bit easier to buy, say, the $3,000 piece of equipment and receive deductibility in the same financial year. That was a good move for a small business that wanted to become slightly bigger.

I first became aware of the whole cost-of-growth issue as a fledgling business in the early nineties. As a journalist I had reported on the issue of cost of growth in the eights from Old Parliament House, but I had not really understood it until I experienced—the issue being, of course, that if you want to grow your business there is often a significant leap of faith that you have to take to hire more people, rent bigger premises or buy a new piece of equipment. A higher instant asset write-off does not solve all those problems at once, but it does mean that the cost of an asset is defrayed more quickly in one go rather than by using depreciation over several years.

As a small business operator, I was pretty shocked that, among the many horrors of the 2014-15 budget, the Abbott wound back this successful Labor initiative. It reinforced my view that Liberal governments might pay lip-service to small business but, at their heart, they are a friend of big business every single time. They only come to the side of small business when they are dragged kicking and screaming. And, thankfully, they were dragged. Just 12 months later, the Abbott government belatedly recognised the error of their way and appreciated the value of Labor's instant asset write-off policy, reinstating and extending it to $20,000.

While Labor does welcome the Turnbull government's decision to extent the small business instant asset write-off, we also note that this measure is expected to cost the budget almost $1 billion in 2018-19. With this expense on the budget, Labor wants to ensure that the predicted economic benefits are being delivered. And we call on the government to evaluate and release the evaluation in full prior to any further extension. That is a sensible measure. I think small businesses would also like to see what the economic benefit is. They are frugal with their money. They know you just cannot throw it around. They would appreciate knowing that an initiative has not just been for their benefit but has also been for a broader economic benefit.

Regrettably, this budget has failed to address many other significant issues facing Australian small business. Small business owners right across the country have talked to Labor and, in my electorate of Macquarie, have talked to me about rising energy costs, inadequate broadband infrastructure and late or delayed payments as key priorities for them and some of the things that they want the government to address.

Waiting for payment—and I speak from experience—is debilitating for a small business. Getting the cash flow right is one of the biggest challenges that you face as a small business, because the first thing you do is pay your staff and your overheads; the last thing you do is pay yourself, let alone put anything aside for super. This budget contains no effort to address the payment terms problem exposed in the Australian Small Business and Family Enterprise Ombudsman's recent report into the practice. This is another issue we need to see addressed.

The NBN—it is hard to know where to start. The hopelessness of the NBN rollout in the electorate of Macquarie has really put pressure on small businesses. The reliance on fibre to the node in the upper Blue Mountains is a major issue for all sorts of professionals who run their businesses from home or who like to work from home some of the time. For an architect, for an engineer, for the accounting firms shifting large volumes of data or for the creatives in my electorate who want to upload amazing video and digital data, it is really difficult. In fact, one of my small businesses has had to relocate from the Blue Mountains down to the bottom of the mountains in Penrith, in the seat of Lindsay, where, thanks to Labor, he can access fibre to the premises. NBN should have been a game changer and a way to improve the economy in regions like mine, which are a long way from the CBD. Sadly, that is not going to be the case. This budget was an opportunity for the government to prioritise small business and for the Prime Minister to prioritise small business over his best friends at the big end of town. Yet, again, the Prime Minister and this government failed.

Rick Wilson (O'Connor, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017. This bill provides for the extension of the instant asset write-off provision, which was introduced in the May 2015 budget. The provision allows small businesses with a turnover of up to $10 million—it has been increased from $2 million—to claim an instant deduction on capital equipment up to the value $20,000. I thank the member for Macquarie for her support for this terrific initiative. It is good to see the member for Paterson here as well supporting small business. I suspect that these members will be trotted out fairly regularly when the opposition talk about small business. Their entire contingent is here, I think. It is good to see you are here supporting small businesses.

Mr Deputy Speaker Irons, if I may, I would like to use you as an example of a small businessman who has carved out a very successful career. I know that you were described as a 'privileged white man' during the election campaign, but I happen to know that you did come from humble beginnings. You got a trade and developed a very successful business. That, to me, embodies the story of small business—people can come from any type of beginning and if they have some initiative, are prepared to work hard and are prepared to take a risk, they can carve out a successful business and a very good life for themselves and their family. I take my hat off to you, Mr Deputy Speaker, for the success that you have made of your life and your business.

Before I get into the detail of the legislation and how it impacts on my electorate, I want to thank Minister McCormack, who visited my electorate of O'Connor several weeks ago, just before the budget was handed down. We held a series of forums. They were very well attended by very well-engaged small businesspeople across the electorate. The minister was accompanied by Kate Carnell, who is the Small Business and Family Enterprise Ombudsman; Dr Michael Schaper, who is the Deputy Chairman of the ACCC, and Les De Wind, who is an Assistant Commissioner with the ATO. I know that the small businesspeople across my electorate found those forums very useful. They were well attended. It was a worthwhile exercise. Once again, I thank the minister.

Just prior to the 2016 election, I was reading the Fairfax newspaper. The Treasurer had just announced a better than expected growth figure. Of course, our friends in the media—as we can always rely on them to do—were trying to find a negative spin on that particular number. I think it was about 2.75 per cent. It was about 0.5 per cent above expected growth. Fairfax were running a story, asking: 'Where is the poor growth? Where is the growth not happening?' This was so that they could identify some areas and go to town on us about that.

So I thought I had better read this story because I just wanted to know where my electorate of O'Connor sat in the scheme of things. I opened the story online and had a look at the table, and there, right at the top of the 150 electorates, was the electorate of O'Connor and of course the electorate of Durack, represented by my dear friend Melissa. There was 11.6 per cent growth in the case of O'Connor and I think 11.7 per cent growth in the case of Durack.

People may say, 'Well, these electorates have large mining interests in them.' At that point in time, in 2015-16, we were seeing a significant contraction in the mining industry. So where was this growth coming from? I can tell you, Mr Deputy Speaker Irons, that there is only one source where that sort of growth could have come from: the 18,765 small businesses across my electorate. So I salute them and I acknowledge their achievements. I say to them here in this place that this government is here to support them going forward.

I want to bring the conversation back to the instant tax write-off. I will use the example of a business which does not actually operate in my electorate, but which certainly sells an enormous amount of product into my electorate. It is the Heiniger company, which is run by a very good friend of mine Garry Lyon. They produce shearing gear, among other things, and also wool presses. The TPW wool press is the most-recognised brand of wool press around the country. They are far and away the best, and designed and manufactured in Western Australia down at Bibra Lake. As I said, that is not in my electorate but it is a wonderful business.

I asked the managing director, Garry Lyon, about 12 months ago, 'How's the instant tax write-off working out for you guys?' It just so happens that a wool press is about $19,990. He said that they just could not keep up. They could not keep up; they were putting staff on and trying to train people up but they just could not keep up with the demand. That is exactly what this scheme is about. It is about generating more jobs, more investment and more economic activity. This is one side of the equation.

The other side of the equation, of course, is to allow other businesses which need equipment or which need to upgrade equipment to purchase that equipment and get the tax deduction effectively up-front. So those are the two sides of the equation—stimulating demand for those businesses that produce assets in that price range and also for the businesses that require assets in that price range. Those may be new display cabinets in a deli or some new shelving in a newsagency. It is those types of investments back into the business, to stimulate demand for that business and to bring forward jobs.

I want to run through some of the different types of businesses across my electorate of O'Connor, because it is a wonderful and varied electorate. I am very proud that we have such a diversity of businesses. Of course, agriculture is a very important business across the electorate. I am a farmer myself so that is the industry that I understand the best and it is the industry that I am very proud of. Agriculture across the electorate of O'Connor produces around 40 per cent of the Australian wheat crop in an average year. We do dry land farming better than probably anywhere else in the world. I have been learning a lot about irrigated farming on the east coast as part of the agriculture committee and with the member for Paterson, and I am thoroughly enjoying that, but when it comes to dry land farming we are as good as any there is in the world.

The free trade agreements that the government has signed are seeing a real impact in our export activity, particularly in the areas of meat, wool and grains. That area of my electorate, that industry, is certainly going extremely well. There are subdued grain prices at the moment, admittedly, but there are record high beef prices, record high sheepmeat prices and record high wool prices. So we are going pretty well. We just need it to rain, and I am sure it will sooner or later.

We have a very significant horticultural sector down in the south-west part of the electorate—down around Manjimup and Pemberton. There are some wonderful businesses down there in the southern forests producing world-class produce. I know that people like the Newton Brothers and Harvey Giblett are exporting some of the best apples you will ever eat into South-East Asia. The Bendotties are exporting from their potato plant, once again into South-East Asia and doing great work. Those businesses are the sort of businesses that will be out there at the moment looking at their end-of-year financial figures and thinking, 'We can pick up a bit of new gear before the end of the financial year and write that off pretty quickly.'

Tourism is a very important sector in my electorate. There are thousands of small tourism operations, whether they be hotels, motels and cafes along the south coast and up through the Goldfields. They have been doing it pretty tough in many respects, but we are starting to see the wheel turn. Those businesses are well run and will make a big contribution going forward.

Forestry is a growing industry. We saw a lot of plantation going on 10 to 15 years ago, we are now moving into the harvest phase. There are some big businesses involved in the harvesting. The transport of those chips to the port is a very important aspect of that business. There are a lot of owner-driver small-business operators involved in that sector. With road transport, Southern Transport and Esperance Freight Lines are businesses that probably do exceed the $10 million, because they are very big businesses now that they have grown into substantial businesses. They have been extraordinarily well run in a very competitive environment, and those businesses have really outcompeted the competition from the bigger metropolitan areas. They are based in the electorate and I am very proud of them.

Certainly everyone would associate Kalgoorlie and the Goldfields with the mining industry. The mining companies are big businesses for the most part. Some of them started as small businesses. That is the great thing about the mining industry, particularly around the Goldfields: you can start off with a tenement, drill a few holes, find a bit of gold and all of a sudden you get to the share market, you get some capital and all of a sudden you can be a big business. There are a lot of people out there having a go at that. That is what I love about the mining industry, particularly the gold mining industry. But the mining industry requires a lot of support services. Those support services are mainly based around Kalgoorlie. They include engineering businesses. I have visited Harlsan Industries and taken the minister for industry there. I have been to Newlands engineering and taken the minister for resources there. These businesses are world leaders in what they produce. They are producing mining technology that we are exporting to the world, bringing in much export income to this country. They are world leaders.

Engineering is only part of it. We have tyre supply places. We have mechanics, we have hydraulic fitters. The number of small businesses around Kalgoorlie that service the mining industry is extraordinary. Those fellas up their work very hard. They work 12-hour days as a minimum, a starting point, and they work longer if they have to.

Those businesses work very hard and they do deserve a tax break. That is what brings me next to cutting the company tax rate to 27.5 per cent this financial year for businesses earning up to $10 million. I think that is a great initiative of this government. Those hardworking small-business people are out there growing our economy, contributing to that 11.6 per cent growth in O'Connor. They need a reward for their effort, so they are made to feel like the government does not just have its hand in their pocket taking the bulk of their hard-earned revenue.

I fear for those small businesses, because the opposition, it would appear, will reverse those tax cuts. It does not appear that they have accounted for that loss in revenue to the budget through the tax cuts in any way shape or form. So I fear for those small businesses that at the next election the opposition will be taking a tax hike to those small businesses. Of course, over time we are going to extend that 27.5 per cent tax cut to a 25c in the dollar rate. That could all be in jeopardy at the next election. But if we continue to govern and win the next election we will be extending the reduced tax rate to companies over $25 million and from 1 July 2018 that will be extended to businesses over $50 million. So that will pick up most of those businesses across my electorate, bar those very large mining companies.

There are a couple of other tax issues that I just want to touch on while I am speaking on the issue of small business. There is the tax reform delivered in the agricultural white paper, and that is: the immediate write-off of new water infrastructure, uncapped. So irrigators who might be upgrading irrigation equipment, dams, storage et cetera can write that off almost immediately, uncapped.

I want to touch on one last issue before I wrap up, and that is the PaTH job program. This program, I think, will be very well received across my electorate of O'Connor. I do not know how many times I have been told by young people looking for work: 'I can't get a job because I've got no experience. But how do I get experience unless someone gives me a job?' The PaTH program will allow an internship for three months. It will allow an employer—one of those great small business people in my electorate—to take somebody on at no cost to the business. The employee will get a top-up of $100 on their normal job search payment. And, after three months, they can then move into full-time employment, with a subsidy from the government. That will give a lot of young people an opportunity to get that work experience and get into the workforce. Even if it only lasts nine months, they will then be able to go and apply for their next job, having had some work experience.

I want to wrap up by saying that I am proud to support the fantastic small businesses in my electorate. This government is recognising the hard work and enterprise of this vital sector of the economy, and I welcome these tax incentives that will give small businesses in my electorate reward for their hard work. I commend the bill to the House.

Milton Dick (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

It gives me pleasure to speak on the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017 today because, quite simply, it is the government supporting Labor policy that was first introduced by the member for Lilley, and, unlike the government, the Labor Party has been consistent in backing Australian small businesses, rather than flip-flopping around with this policy. We have heard speaker after speaker lecture everyone about their credentials around small business. When it comes to this policy, they have not been consistent; they have been inconsistent with small businesses in Australia.

I am proud to be someone who grew up in a family deeply invested in small business—someone who learnt from an early age the importance of running a payroll and of looking after workers in my father's small business. When he came out of the war, my father traded as a butcher and ran a number of butcher shops with his brother, Milton Dick Sr, and Dick Brothers Meats was an institution across Brisbane.

So I am very proud to say that I am from a family of small business—because far too often we hear, from that side of the chamber, untruths about where Labor sides as to business. Today I am going to put very clearly on the record, on behalf of the businesses in my electorate, that I back them 100 per cent. Small businesses need our support and they need policies which back them, because we know that, when Labor was in government, originally we recognised the value of an increased immediate deductibility threshold for small businesses and increased the threshold from $1,000 to $6,500, as part of a broad package of tax reforms contained in the Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011.

This broad package was introduced and, as I said, lifted the threshold. I may add, for the record: it was opposed by those opposite. That bill was actually opposed. And I am going to place on the record today the name of the person who introduced this measure, which somehow the government wants to be patted on the back for, and somehow wants somehow to be congratulated on, despite the flip-flopping that we have seen. It was introduced by the member for Maribyrnong—who, at the time, was the Assistant Treasurer and Minister for Financial Services and Superannuation—Bill Shorten, the Leader of the Opposition. In the speech, the leader said:

These changes improve cash flow for businesses and makes investing in and growing their business more achievable—

which is precisely what they did. The increased asset threshold was embraced by the small-business community across Australia, who saw tremendous value in this policy. But, despite the support shown at the time, and despite all the lectures that we have heard today, what did the government do when they came to power? They scrapped it. That is right—the government scrapped this measure. We know it was unfortunately part of the 2014 budget—that toxic 2014 budget that seems to live on and on throughout Australia and keeps coming back to haunt the government. I believe that the inconsistency we have seen from the government has continued on from that moment.

So rather than supporting small businesses with the competence those opposite like to talk about, the Liberal-National government tore up the increased threshold and scrapped it. I may add that members on this side of the House opposed them every step of the way. Then, like they always do, the government performed a U-turn when the Abbott government reversed its position the following year and proposed a temporary two-year increase in the deductibility threshold to $20,000 in the 2015-16 budget. Of course, this side of the House was happy to support that. But so much for providing the confidence and business confidence we hear about in lectures from members of the government today.

It is a little galling to hear the government wanting to be congratulated for this measure when for the last four or five years they have not been consistent. In fact, we know business investment looks set to slide for a fifth consecutive year under this government, with total business investing falling to 2.1 per cent in the December quarter alone. That is more than double what was forecasted by economists. This includes plans for mining investment down 20 per cent and plans for manufacturing investment down 1.2 per cent over the past year. But we should not be surprised when we have an incompetent government like this, flip-flopping around on small business policy and trying to introduce measures which are simply supported by the Australian community.

Labor, on the other hand, recognise the importance of consistency for businesses, which is why we will support the bill today to extend by 12 months to June 2018 the period in which small businesses and small business entities can temporarily access expanded, accelerated depreciation rules. This extension is also supported by small business groups across Australia and the Australian Chamber of Commerce. The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said, 'a healthy small business sector is a prerequisite for a growing economy with high employment opportunities'. Of course, there are also a number of other key groups.

Labor recognises the importance of supporting the two million genuine Australian small businesses that represent 83 per cent of Australian companies. In my electorate there are 8,748 small businesses who provide thousands of jobs to local residents and inject millions of dollars into our local economy in the south-west of Brisbane. Quite simply, small business is the backbone of our local economy in the south-west of Brisbane. In my local area small businesses are supported strongly by some terrific chambers of commerce. The Centenary and Districts Chamber of Commerce and the Greater Springfield Chamber of Commerce are two I am proud to work closely with. Led by presidents Steve Pollard and Neil Coupland, the chambers provide advocacy, support and particularly support for new members who join our growing local economy.

From the centenary suburbs of Jindalee and Mount Ommaney all the way to Australia's fastest-growing region, the Greater Springfield area, small businesses make a huge contribution by employing local young people, giving people their first job and also giving opportunities to people getting back into the workforce. Just a few short weeks ago I had the pleasure of visiting Little Tokyo Two, a hub for local start-ups in the Springfield area with the shadow minister for trade and investment, Jason Clare, where we saw firsthand the spirit of small businesses and the boundless opportunities that are finding their way through the Springfield corridor.

Small businesses contribute so much to our national prosperity, including providing a livelihood for millions of Australians. Whether they be sole traders, partnerships, trusts or small employers, they have helped underpin more than 25 years of Australian economic growth. Labor's commitment to supporting these small businesses is unwavering. Labor is proud to have led the debate in this policy area in recent years by offering practical policies to support Australia's industrious small-business sector. In 2016 Labor took a comprehensive suite of small-business policies to the federal election, including a responsible plan to cut company tax for small businesses with turnovers of less than $2 million, a plan to level the playing field for small businesses by ensuring that multinationals pay their fair share of tax, and a plan to help small businesses incorporate without additional red tape, along with a range of innovative policies to assist small businesses better access finance and help entrepreneurs start their own businesses.

Labor has continued to fight for small businesses in the 45th Parliament. We continue to develop and advocate for policies that will benefit Australian small businesses, helping them grow and prosper. In February of this year, Labor introduced into the Senate the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017. These access to justice reforms would help small businesses take cases of anticompetitive behaviour to court. Currently, small businesses are less likely to take up private litigation against anticompetitive behaviour. This is because big businesses have deep pockets, as we know, and armies of lawyers, which means the risk of small businesses being overwhelmed and having to pay the big businesses legal fees is a significant obstacle. Despite this, the government has refused to address this inequity in the face of the Productivity Commission and the government's own competition review saying that small businesses are disadvantaged in the court process. I am proud to see that Labor's bill will restore the balance by letting a small business request a no adverse cost order early in a court case. This will help level the playing field and encourage more small businesses to take on anticompetitive behaviour.

Labor has also announced a package of reforms to tackle illegal company phoenixing, as my friend and colleague the member for Macquarie was talking about in her contribution earlier today. As we know, this is a practice that often leaves a small businesses on the hook for unpaid debt that they are never able to recover. Labor will crack down on dodgy directors who engage in phoenix activity where they deliberately burn companies in an attempt to avoid their obligation to employees, government and honest businesses. The package will see employees and business owners benefit from new enforcement tools for the Australian Securities and Investment Commission, tightened laws protecting employee entitlements, and harsher penalties to deter and punish insidious phoenix activity. Currently in Australia, it is easier to be a company director than to open a bank account, yet the government has barely raised a peep about phoenix activity. Rather, the coalition has chosen to continue its narrow, ideological agenda. We know their priority is not looking after the little guy, not looking after the battler, and not even looking after the small-business operator. We know their agenda is—front and centre, first, second and third—delivering large multinational companies tax cuts. We know that is their agenda.

On this side of the chamber, we have a different view. Labor's new plan will require all company directors to obtain a unique director identification number with a 100 point identification check, increase penalties associated with phoenix activity, introduce an objective test for transactions depriving employees of their entitlements, clarify the availability of compensation orders against accessories, and consult on target integrity measures based on the recommendations of the Melbourne Law School and Monash Business School phoenix research team's recommendations. I acknowledge the good work and the hard work of our shadow minister, Andrew Leigh, in this area. Estimated in 2012 to cost up to $3.2 billion annually, fraudulent phoenix activity hurts employees, small businesses, subcontractors and, most importantly, families—families and small businesses right across Australia.

With respect to the instant write-off, it was the Labor Party that first identified the value for Australian businesses in increasing the immediate deductible threshold. We know, on this side of the chamber, it was Labor who increased that threshold for small businesses from $1,000 to $6,500. We know it was one of the poorest decisions under the Abbott-Turnbull government to junk this. So, whilst we hear a lot of platitudes from those opposite saying, 'We're the champions of small business,' look at what they have done, not what they say. Let's remember that one of the first actions they took on coming into government was to reduce that from $6½ thousand down to $1,000. We hear a lot from those opposite saying, 'Look, we support small business', but, when it comes to the record, in this particular policy area they are found to be wanting. I understand that the government then realised that this was a huge mistake, that they got it wrong. But the consistency is important, as I said in my opening remarks.

While we welcome the decision to extend the small business instant asset write-off, we note that this measure will cost the budget around $1 billion in 2018-19. We want to make sure that, with a large expense on the budget, the predicted economic benefits are being delivered, and we are going to call on the government to evaluate it and release the evaluation in full prior to any further extension. That is a measured response. That is a sensible response that the Australian community understands.

So there is no doubt of the enormous contribution that small business makes to Australia. Accounting for 33 per cent of Australia's GDP and employing 50 per cent of the workforce, small businesses really drive our economy. Labor, including me, as the local federal member for Oxley and Brisbane's south-west, will continue to support small businesses. We support this bill to extend the instant asset write-off to encourage small businesses to grow and prosper, to see those jobs of the future, particularly in the corridors that I represent—the high-growth corridors—to make sure that our young kids get jobs and that they continue in the future.

Julian Leeser (Berowra, Liberal Party) Share this | Link to this | Hansard source

I am delighted to speak on the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017. The bill implements one of the great measures announced in the 2017 federal budget in recent weeks. It is a very important measure that will help small businesses right across the country, particularly in my electorate of Berowra. The bill extends by 12 months, to 30 June 2018, the period during which small business entities can expand their accelerated depreciation rules.

There are around 15,000 small businesses in my electorate of Berowra, and they employ tens of thousands of people. Berowra businesses know that they can spend their own money better than the taxman can. Those small businesses in my electorate of Berowra keep telling me that they want tax relief. They want tax relief so that they can invest more in their businesses. They want tax relief so that they can employ more people. They want tax relief so that they can turn their small businesses into bigger businesses that have glorious nationwide reputations.

This government has a strong record of backing small businesses, helping them grow and deliver more and better-paying jobs. We have done this by cutting small business taxes, reducing the corporate tax rate to 27½ per cent for small businesses that have a turnover of up to $10 million, and that takes effect from 1 July 2017. And we are going to further reduce that to 25 per cent by 2026-27. We are increasing the number of businesses that are eligible for a range of small business tax concessions by raising the small business entity turnover threshold from $2 million to $10 million. Only those opposite, in the Labor Party, believe that a business with slightly over $2 million turnover—that is turnover, not profit—is somehow a big business. We on this side of the House have a greater appreciation for small business. Many of us have run small businesses. Many of us come from small business families. Many of us are in electorates like mine where the small business community is the absolute backbone of the electorate: it is the small business people who get involved in the P? it is the small business people who get involved in the charitable organisations; it is the small business people who employ people and give them an opportunity.

Our party understands that the best thing governments can do for small businesses is to reduce the regulatory burden and get out of their way. The coalition government has maintained its focus on simplifying small business paperwork and has committed to cutting red tape costs by $1 billion every year since we were elected. Our party has reduced the annual regulatory burden on small business and the community by more than $5.8 billion since coming to government. That exceeds our target every single year. And we are continuing to reduce the complexity and cost of complying with regulation. The National Business Simplification Initiative will tackle the burden of unnecessary regulation, particularly where there is duplication across the different levels of government—federal, state and local. It will improve access to government information and services for businesses by providing them in one place and with streamlined service delivery. We are developing a simplified business activity statement solution to save small businesses time and money on bookkeeping and reporting. These changes will allow small business owners to spend less time reporting to government and less time on their paperwork, and more time growing their business and with their families.

Let me talk a little bit about the instant asset write-off contained in this bill. Through accelerated depreciation, the 2017 federal budget delivers additional support to the nearly 3.2 million small businesses across Australia. All businesses can claim the cost of most depreciating assets if they are used for work purposes. The instant asset write-off measure allows small business with a turnover of up to $10 million to claim an instant deduction on capital equipment with a value up to $20,000. Prior to 12 May 2015, the immediate write off was only $1,000 for any asset purchased. If the asset was over the $1,000 cap, it would be depreciated over a set period or pooled in a small asset pool. This meant it could take up to 10 to 15 years to obtain the benefit for any large asset purchase. This measure was due to finish on 30 June 2017, before its extension in the 2017-18 federal budget. Small- and medium-sized businesses will now have more certainty that they will be able to immediately deduct the purchase of these assets first used or ready to be used by 30 June 2017 and 30 June 2018.

Additionally, assets that cost more than $20,000 and costs of $20,000 or more relating to depreciating assets can be allocated to a small business's general small business pool and deducted at a specific rate for the depletion of the pool. The rate of deduction is 15 per cent in the year they are allocated and 30 per cent in subsequent years. If the balance of the small business' pool is less than $20,000 at the end of the income year, the business can claim a deduction for the entire balance of the pool. As the pool depreciates all assets in the same way, small businesses do not need spend valuable time tracking each individual asset against different depreciation rates over time. The extension of the instant asset write-off will improve cash flow for small business. This will boost productivity and help small-business owners reinvest in their business. Improved cash flow will also give businesses the flexibility to hire more employees and pay staff more. It will also encourage small businesses to bring forward capital investment from future years to the current income year, renewing their capital base. That is something we so often see business generally in Australia underinvesting in.

This bill is a great boom for Berowra businesses. For example, hairdressers in Berowra could claim deductions on new flooring or equipment in their hairdressing salons. Take Real Men's Hairdressing—a great name—in Pennant Hills and its owner and operator, Aman Hamid. This is an example of a great Berowra small business in my electorate that stands to benefit from this measure. If you want to see how good he is, you only need to look at my haircut, because this is the place I get my hair cut. They will be celebrating their third year of operations in June this year and they will benefit by being able to depreciate the clippers that they use every time to shear my head.

It is not just hairdressers that will benefit from this; tutoring business can benefit from instant deductions. For instance, they could deduct an interactive whiteboard, as so many more of our tutoring businesses are using. I want to talk to you about one of the great businesses in my electorate that does tutoring. Sponge Education is a business started by a remarkable 26-year-old woman, Sarah Carmen. She had an idea for a tutoring business—having had her own experience of the HSC and having done a science degree at university—realising that part of the success of tutoring was not just the technical tutoring but also looking after the mental health of those students who are under the pressure of doing HSC. Sarah Carmen has now taken this business to employing 50 tutors and providing services to 200 students across my electorate. She tutors in maths, English, science, geography, history and music, and I think her business is so important because of her understanding of the important mental health aspect. If a student has good mental health, they will do well at school. I look forward to seeing the way that Sarah will use the instant asset write-off to help her business.

This is a great boom for architecture firms. Great architecture companies like Stanton Dahl, which was started by the great Phil Stanton back in the 1980s, a resident of Pennant Hills in my electorate. He is a person who has designed and built so many of our community's institutions, from churches and school halls to aged-care facilities, automotive businesses and homes for people. He has been in practice for over 30 years. It is a really extraordinary business. He and his firm can claim deductions on new drafting tables and equipment, for instance. I spoke recently to Geoff Lloyd of Hardwood Mills Australia in Hornsby, which provides small portable sawmills in my electorate. He said to me that he saw huge benefit in the instant asset write-off. He said many businesses lost a lot of confidence during the global financial crisis, and having this measure promotes confidence in the community that businesses can make decisions and buy assets and invest in their businesses with greater certainty. He said: 'This supports our business. I think it is great and it should stay. We agonise over every spending decision. I have bought many assets for our business, because of the asset write-off, that we would not have otherwise.' He also outlined that, when small businesses purchase more or better assets locally, communities and other businesses directly also benefit from a flow-on effect of the purchases. Hardwood Mills recently installed a crane on one of their trucks. Geoff Lloyd explained that he does not have a licence to install the crane, so, in addition to the purchase itself, Hardwood Mills hired a business to install it. This shows the clear flow-on effect in stimulating our economy, increasing investment, growing businesses and creating more jobs. This is a purchase they would not have made without the asset write-off of $20,000.

As the son of an accountant, I know how important accountants are in helping small businesses; and I know that accountants, more than anyone else, know the health of our economy and the health of small businesses. Accountants are not just there to do tax; a good accountant advises you how to build and grow your business. And so I talked to a couple of accountants in my electorate to find out what they thought of these particular measures. I talked to Craig Lawton, an accountant from Glenorie in my electorate. Craig said: 'This policy is really useful for many small businesses and I hope it carries on. It has got a very strong endorsement in the accounting community.' Pedro Sasso, the director of Shuriken Consulting at Hornsby, another one of our great accounting firms and a small business as well, said: 'The higher up-front deduction will allow small businesses to lower their tax bill. In a low-growth environment the immediate write-off incentive allows small businesses to purchase assets with the immediate write-off helping to stimulate a growth. Not only does the immediate write-off benefit existing businesses, but it also benefits start-ups and innovation companies as it increases deductions and helps to lower tax to be paid, allowing greater funds available for business growth. This will allow an increased chance for these start-ups to succeed in business.'

So we have great practical endorsement from a range of Berowra businesses, Berowra accountants and small businesses more broadly. This is a very important measure to allow businesses to invest in their business and to do so more quickly. It stimulates not only the growth of that small business but the broader economy around it. It is a really terrific proposal and I am delighted to be here to speak on it today.

And what have those opposite had to say whenever we talk about small business? I think they see small business as not that important. The Labor Party almost see small business as part of a class war. They have constantly had a go at the small business tax deduction that we gave earlier in the year because they think a business with a turnover of $2 million or more is a large business. Well, as most of the businesses in Berowra, which have turnovers a little bit larger than that, can tell you, they are not large businesses. A $2 million turnover makes you a microbusiness. We need governments to understand the position that small business is in, we need governments to support small businesses, we need governments to be in a position to understand that small businesses are better to deal with their own money themselves. Small businesses know how their businesses run and we should give them the incentive to invest now and to grow their business. That is what this particular measure does. That is why I am delighted to support the Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2017 and I commend its passage to the House.

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

I rise to speak on the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017, which for convenience I will call the TLAB. Obviously Labor support this bill—of course we would. It is basically our bill. There is only cheap politics involved in the coalition playing ducks and drakes with this sector in the first place. This bill extends until 30 June 2018 the period in which small business entities can temporarily access expanded accelerated depreciation rules.

I know that small businesses make an enormous contribution to the Australian economy. There are around 18,000 to 19,000 small businesses in Moreton. I see the great work that they do and how much of a struggle it is and how much sweat so many people have often invested in setting up a small business, and I know the heartache that can come with a small business going belly up. Sadly, nearly a third of them do that. In my time as a lawyer I worked in commercial law. In fact, I still see some of the buildings that have leases that I helped draft as a young lawyer. So I know how hard and how difficult it is to start a small business, with all the associated red tape. And Labor understand that—I saw that in our time in government from 2007 through to 2013. I know the valuable contribution that the thousands of businesses in my electorate of Moreton make—the sole traders, the partnerships, the small employers. They keep the economy ticking over and employ numerous people.

Labor has led the debate in this policy area. In fact, I remind those opposite that Labor introduced the instant asset write-off. I say that again, because from the speeches preceding mine you would think that this is a coalition initiative, but it was the Labor government that introduced the instant asset write-off. When in government in 2012, Labor increased the threshold for small businesses from $1,000 to $6,500. The coalition government, on the other hand, wound back that very successful Labor initiative in its horror 2014-15 budget, again reducing the threshold to $1,000. So, for all of the platitudes and the narrative put forward by those opposite, I need to remind them that those of them elected at the 2013 election got rid of Labor's increased threshold of $6,500 for small business and the opportunities that came with that increased threshold. In what is becoming a trademark of the coalition government, just 12 months later they reinstated the instant asset write-off and extended it to $20,000.

Labor welcomes this extension of the $20,000 threshold for instant asset write-offs until 30 June 2018. However, at a cost of $1 billion in 2018-19, I know that this measure should be evaluated to ensure it is delivering the predicted economic benefits and that people are taking advantage of stimulating the economy. I call on the government to prudently evaluate this measure and release that evaluation before there is a further extension. If the benefits are there, obviously Labor will support such policies.

We do understand small business. As I said, I have worked as a lawyer with clients who were small businesses. We know that the Labor Party has produced practical policies that will nurture small businesses and help them thrive. At the last election one year ago we had plans that included a responsible plan to cut company tax for small businesses with a turnover of less than $2 million, a plan to level the playing field for small businesses by ensuring that multinationals pay their fair share of tax, a plan to help small businesses incorporate without additional red tape, along with a range of other innovative policies to assist small businesses to better access finance and help entrepreneurs start their own businesses—something that Australia does not do as well as we should. Labor is still working with small businesses across the country, listening to their needs and developing policies that will benefit them.

This year, Labor introduced into the Senate a bill to help small businesses take cases of anticompetitive behaviour to court. The Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017 would level the playing field so that small businesses who challenge a large business for anticompetitive behaviour would not risk having to pay the often very large legal fees of the large business if they lost. Remember that competitive behaviour is what best benefits the Australian public. The prospects of a costs order sadly often deter small businesses from making a claim of anticompetitive behaviour against the top end of town. Small businesses could request a no adverse costs order early in the court case, giving them the confidence to pursue their claim. I am hopeful that the government, the self-proclaimed champions of small business, will support the Labor legislation.

The member for Fenner has also recently announced a package of reforms to crack down on phoenixing. Labor believes that we need stronger laws to make sure that directors cannot simply strip the assets out of a company and then set up a new one, often to the detriment of employees and creditors. Illegal phoenixing activity costs the economy billions of dollars annually. I know that it can be legitimate, that companies do make bad decisions or markets change and people want to start again. There is no problem with legitimate businesses failing and then trying again—that is not a bad thing at all. But illegal phoenixing is what this legislation is about.

Among the measures announced by Labor are requiring all company directors to obtain a unique director identification number with a 100-point identification check, so we would know if people are repeatedly doing this; increasing penalties associated with phoenix activity; introducing an objective test for transactions depriving employees of their entitlements; clarifying the availability of compensations orders against accessories; and consulting on targeted integrity measures based on the recommendations of the Melbourne Law School and Monash Business School phoenix research team recommendations. As one expert said recently, under current laws it is almost possible to register your dog as a company director. Currently, setting up a bank account requires a much more rigorous process than becoming a company director. At Senate estimates this week, the tax commissioner noted that in other countries proper identification checks are required for anyone wanting to become a director. We need to have the same rigour applied to prospective Australian company directors.

Small business owners know that rising energy prices are having a devastating impact on small businesses right across Australia. Rising energy prices are the result of the failure of the Turnbull government to put in place an emissions intensity scheme. Just this week the energy minister has again confirmed that the Turnbull government will not be imposing an emissions intensity scheme on the power sector. An EIS would send a positive signal to investors encouraging them to renew our ageing electricity infrastructure. An emissions intensity scheme is supported by experts, industry and the states. It will cut electricity costs by up to $15 billion and will support new investment. But what do we get from the Turnbull government, after four years? We have, horrifically and horribly for business, wholesale electricity prices that have doubled since the member for Warringah became Prime Minister. Try as they might to duck and weave, the Turnbull government is ultimately responsible for these price hikes and costs for small business.

Another topic associated with small business is the NBN. The Turnbull 2017 budget has brought no joy to businesses still waiting for the rollout of this second rate NBN. The member for Wentworth promised in 2013 that the Liberals would deliver the NBN to everyone by 2016, but it will still be years before businesses in my electorate of Morton are hooked up to this second rate NBN. In 2013, during that election campaign, businesses on the south side expressed concern that a change of government would delay the rollout of the NBN. It was actually the number one topic at the business forum organised by the local Quest papers. The local media said in an article that business owners in Rocklea, in my electorate, were worried about this possible delay. They were right to be concerned, despite the assurances given by the LNP candidate. The NBN company's website shows that the rollout of the NBN has not even started in Rocklea yet, and will not start until next year at the earliest.

In 2013 I had no idea how badly the member for Wentworth could wreck the NBN. That is what he was asked to do by the member for Warringah, and he did it. In the two years that the member for Wentworth, our now Prime Minister, was communications minister he did not connect a single paying customer to his second rate fibre-to-the-node network. Where his second rate network has now been switched on, sadly it is not working properly. The member for Wentworth's management of his NBN as communications minister and now as Prime Minister, where the buck stops, has been an absolute disaster. Because of the Prime Minister's dastardly deeds, the productivity gains and business opportunities that would have flowed have not eventuated.

I have been contacted by people all over my electorate who tell me how disappointed they are and tell me about the business opportunities they have missed out on. The NBN is behind schedule, over budget and not designed to meet the future needs of Australian businesses. Businesses need access to high-speed internet to compete in a highly competitive global market. In my electorate, being particularly multicultural, many people have business connections with the rest of the world, and they would benefit from an NBN but instead we get a rollout that is slow and speeds that are even slower. The 2017 budget has not provided any solution to this crucial problem, which is preventing businesses from growing and selling their products and services around the world, particularly in South-East Asia. Small businesses will continue to struggle with one of the slowest and most expensive internet services in the developed world. When medals are handed out for being connected, Australia is not even in the stadium. We are going further and further back while governments in other countries have been forward-thinking enough to invest in the digital revolution. The member for Wentworth's failures are bad for productivity, they are bad for our economy and they are bad for businesses—and dare I say, as someone who comes from country Queensland, there has been a betrayal of the bush as well. That is where the great opportunities lie. Agricultural producers could be hooked up with markets around the world, particularly with that expanding middle class in China, India and the like, and our near neighbours.

Labor supports the measures in this bill because Labor supports small businesses. We do not just say we do—we have shown our support while in office. The Turnbull government have looked up at the top end of town in their 2017 budget but they have failed to address the real concerns of small businesses. They have been so focused on delivering an uncosted $65 billion tax giveaway for big businesses that they have forgotten small businesses. They have failed to address rising energy prices and the fact that they impact on businesses all over Australia. As I have pointed out, prices have doubled under the coalition government. They are about to start their fifth year of government, and prices have doubled. I was in the 42nd and the 43rd parliaments, and I heard promise after promise about a sensible price on carbon and what would eventuate, and instead we have seen a complete betrayal of those utterances.

The payment terms problem exposed in the Australian Small Business and Family Enterprise Ombudsman's recent report has not been addressed by this government. Obviously a most pressing issue, the one raised more often with my office than almost anything else, is that small businesses, when they go to set up, do not have access to high-speed internet. Moreton is in the southern suburbs of Brisbane—not out the back of Burke—but we are still not getting the benefits of the National Broadband Network that the then shadow communications minister promised would come. It has been a great betrayal, and a great productivity gain has been missed. The 2017 budget was a missed opportunity in so many of these areas, and sadly that has impacted on small businesses. The small businesses of Australia do the heavy lifting when it comes to employing, when it comes to taking risk and when it comes to participating in their local communities, and small businesses deserve better. I wondered where the rot set in, and I can see that it was perhaps when they got rid of Bruce Billson from the cabinet table—someone who was a champion for small business. We had a new Prime Minister come in and he got rid of Bruce. Bring him back. (Time expired)

Michelle Landry (Capricornia, National Party) Share this | Link to this | Hansard source

Time and time again we hear of the need to cut red tape to make it easier for small business. Thanks to the coalition government, action is catching up with the rhetoric. The government's efforts to support small business are being felt across the nation. I applaud the Minister for Small Business for making a real difference to the businesses of Capricornia.

Throughout Capricornia, small businesses have been suffering, with continued delays in new mining approvals and a lack of support for major new infrastructure projects from the Labor state government. But in the resilient spirit that is Central Queensland, small businesses persevere. Running a small business is tough in an ever-evolving economic landscape. I think back to the days when my own parents ran Lucky Daniel News & Casket Agency in Rockhampton. It was hard enough then to make a decent income—so much so that, on occasion, I would have to step in and help out when my mother would go to work the night shift as a nurse. As hard as it was then, my parents did not have to navigate the complex system we simplistically label as 'red tape'. They did not have to worry about BAS statements. They did not need to worry about social media strategies and ensuring their business had an appropriate digital presence. They did not have to worry about competition from online suppliers and competition from major internationals. They did not have to worry about how they were going to pay staff members double time and a half and still be able to feed their family at the end of the day. Running a small business today is just that—running. It is running from union pillar to taxation post and back again, via digital trenches and gutters of compliance.

The steps the coalition government is taking have real and measurable outcomes. An immediate business tax deduction of $20,000 for purchasing assets can make a big difference. It is the difference between buying the computer that will allow them to better manage their online presence. It is the difference between being able to afford opening on a Sunday in the hope of countering losses from 24/7 online competitors. Extending the instant asset write-off program is the highlight of the budget for small business. The measure has proved to be one of the most popular government small business incentives. It encourages Australia's 3.2 million small businesses to invest in their business. Based on current lodgements of the 2015-16 tax returns, as at the beginning of May 2017, around 220,000 business have reported that they have utilised the IAWO. That is around $1.9 billion in deductions for the 2015-16 financial year. This number is expected to increase as more businesses lodge their income tax returns.

What does this mean for small businesses in Capricornia? It was just last week that Minister Fiona Nash and I walked through the main street of Rockhampton. We visited Stewarts, a department store operating since 1862. Bruce Woods praised the efforts of the coalition government and the efforts to support small business. When Prime Minister Malcolm Turnbull was in town two weeks ago, we were fortunate to visit a number of new small businesses, including Dingles Cafe & Bar and Headricks Lane. Both of these businesses have shown confidence in the measures being made and confidence that the measures will push the economy in the right direction.

The instant asset write-off will improve cash flow for small-business, providing a boost in productivity and helping small-business owners to reinvest in their business. Improved cash flow will also give businesses the flexibility to hire more employees and pay staff more. When small businesses purchase more or buy assets locally, the community and other businesses directly benefit from the flow-on effect of that purchase. They have that little bit of extra cash to support the local hockey team or to take on a new apprentice.

What we are hearing is that small businesses around Australia feel energised by the small-business measures in our budget. We are hearing that it has given them the confidence to carefully invest in growing their business. Rockhampton chartered accountant Ms Sarah Becker, from James Becker & Co, has said that the $20,000 immediate tax deduction for small business purchases is being taken up by a number of her clients in order to get their businesses up to date and ready for increased future capacity. Mr Chris Harris from CT Harris & Co, who is also in Rockhampton, has applauded the small-business tax package. He explained that many of his clients have already take up the $20,000 immediate tax deduction by bringing forward the acquisition of items that were previously only on the wish list. These small businesses will use the purchase of assets to generate income and boost struggling regional economies. By allowing small businesses to purchase both old and new items, the continuation of this package is boosting not just the market for new products but the second-hand market, which benefits even more small businesses. Mr Harris has said that this ensures there will not be a negative effect on the second-hand market and has commended the government for this foresight.

Every dollar spent in a small business is an injection of confidence into that business and the local community. Small businesses and industry groups have been vocal in their calls for an extension to the program. This has been well received by small business stakeholders following the budget.

The extension of the package has also been welcomed by rural communities. Ken McCaffrey, a well-known livestock agent in Queensland, was saying that he has been talking to a number of property owners. Overall, he says, the fact that farmers can deduct the cost of water facilities and fencing in the year that they are purchased and deduct the cost of fodder storage assets over three years has meant a boost not just for those farmers themselves but also for related businesses in rural communities that will be supplying the fencing materials and other equipment required.

Capricornia is home to 12,927 registered small businesses. The instant asset write-off supports businesses to reinvest in the local economy. For example, if Olive Catering wants to expand its operations and purchase a mobile kitchen or buy a new coffee machine, they can take advantage of the generous incentive. Design+Architecture may need a new drafting table so that they can better prepare designs to bid for the Mount Archer redevelopment; they can now write that off, too.

The figures speak for themselves. As at 4 April 2017, with 60 per cent of the 2015-16 returns counted, over 200,000 claims have been made. This is an increase from 153,000 in 2014-15 and 117,000 in 2013-14. The average claim size in 2015-16 was $8,547.

Finally, I would like to touch on the importance of the depreciation deduction. Allowing pooling for assets costing more than the $20,000 threshold will allow for longer-term financial planning and cash flow. The pooling arrangements are available to small businesses to provide greater simplicity for their tax affairs. As the pool depreciates all assets in the same way, small businesses do not need to spend valuable time tracking each individual asset against different depreciation rates over the time.

Almost Anything, a web and graphic design business in North Rockhampton, is a perfect example. Almost Anything have a high turnover, but the profits are marginal. They can now benefit from an increase in turnover to $10 million. They can purchase a new printer so that they can perform die-cut printing services and better compete with online companies. The printer costs over $50,000, which is above the threshold, so they are not able to claim an immediate deduction. However, Almost Anything can depreciate the asset through their general small business pool. If the value of the pool falls below $20,000, the entire pool balance can be immediately deducted in that income year, providing an additional cash flow benefit. Because the business is not limited to just one purchase, and thanks to the forward cash flow, they can also purchase branded vehicles for staff, to help promote their business. It falls under the $20,000 threshold, so they are able to write it off instantly.

The extension of this budget measure will build on the tremendous success already achieved. The measure has proved to be one of the most popular government small business incentives, and encourages Australia's 3.2 million small businesses to invest in their business. A strong small business sector means more jobs for Australians and more opportunities to build vibrant local economies across the country. Small business is the backbone of our economy and the backbone of Capricornia. Most small businesses do not have a team of accountants, ongoing administration support or marketing departments; they do the work themselves, and they have to continually navigate an increasingly complex business world. Every new compliance requirement and government regulation means less time to focus on growing their business and employing more people. This continues the government's strong record of backing small business to grow and deliver more and better-paying jobs by helping them replace or upgrade their machinery and equipment.

By continuing to reduce red tape the coalition government is proving its commitment to the working class. Making business easier for Australians will deliver more for everyday families than what union-driven compliance will ever achieve. Thank you, Minister, for your work to support the small businesses of Capricornia.

Mike Kelly (Eden-Monaro, Australian Labor Party) Share this | Link to this | Hansard source

This is just another area where we see the same policy drift and clueless approach from this government, not only their approach to economic issues but their approach to just about every aspect over the four years of chaos of this government. They have flopped about like a flathead in a tinnie. Really, if we are talking about 'vibble bobble' we have seen so much on this side that it just defies belief. Will they ever achieve some kind of policy coherence?

Here is an area where I can at least congratulate them for having adopted a Labor policy. When we talk about benefiting small business and what will actually mean something on the ground to small businesses, Labor's policy of loss carry-back and instant asset write-off is something that meant something to every small business in Australia. Whereas, if we talk about the government's tax reform proposals, it just does not actually achieve anywhere near that kind of impact to small businesses. If you look at Eden-Monaro as an example, I have around 5,000 small businesses in my region and there are only a handful of them that are actually incorporated that would even 'benefit' in from this 'tax relief'.

So, effectively, this does nothing for the vast majority of small businesses in Australia, and that is the first essential point that we should communicate here. Those sole traders and those partnerships do not get any benefit out of the tax reforms or tax cuts that the government is proposing. But, yes, instant asset write-offs and loss carry-back really help. But when we talk about the record of this government on assisting small businesses in this country, we have seen a record of devastation. The car industry has collapsed; a couple of hundred jobs are going there. We have seen what they have done in naval shipbuilding. I have talked about this in a couple of speeches already. Labor built the shipbuilding workforce up to over 4,000 in this country and we had a program ahead of us of building supply vessels and going into rolling shipbuilding that would have grown that workforce even further. Instead, what we have seen is over 3,000 jobs lost in that space. We have seen the great shipyards of Newcastle and Williamstown, which were playing such a vital role in that plan, now rotting on the vine.

To really reinforce this downward spiral that has been created these last four years, there was been the massive casualisation of our workforce. Permanent jobs are just a dim, dark, distant memory from this government's way of dealing with the economy. Really, when they talk about creating these tax deductions and the effect that this will create and the trickle down tradition, we know it will not happen. It has never happened before and it has never worked before. If it was going to happen with the record profits we are seeing in some sectors now, it would be reflected now, we would be seeing it now. Instead, what we are seeing is record low wages growth. So it is just a complete myth that that will happen.

They talk about encouraging investment. All we know that will happen with this $65 billion tax giveaway is that all of that money—or the vast bulk of it—is going to go overseas. We will see very little of that benefit come here. When you take into account all the benefits that are already here in our imputation regime, there really is no impact that is going to be felt here in relation to those massive tax giveaways to those big overseas companies. If you wanted investment, what you would have done is continue Labor's Clean Energy Future framework, because that was encouraging massive investment in the renewable energy industry, one of those growth industries that we could have been playing such a vital role in. We could have been getting the benefit of being at the ground floor of so much developing technology in that area and marketing it to the world. Instead, we saw reports like Bloomberg's report, which was evident in reporting in 2015, saying that investment in large-scale renewable energy had fallen by 90 per cent in 12 months. My region was one of the regions to suffer the most from that fall-off. In the period when I was the member from 2007 to 2013 we had over $1 billion in investment in just renewable energy projects coming into just Eden-Monaro. We managed to negotiate to get wind farm components brought in through the port of Eden, which created local jobs for our stevedoring company there. We had the trucks stopping in towns like Bombala, putting money into the town and all the small businesses, with the retail and hospitality sector gaining from that, particularly through the successful Boco Rock project. That had a phase 2: there was a wave energy project; there were all sorts of projects that we were going to see come from the flow in investment that would have happened from maintaining that policy framework. All of it disappeared. We have seen some kicking to life of investment through what the states and territories, the ACT, has done in this space, but effectively now we are moving into another phase where uncertainty is killing off any further flow of investment. This is an area where we could have seen investment flowing, but it has not. It has been killed off by the coalition.

Then you look at the other side of that story, the impact of climate change, which the government is doing nothing about, and the impact on it on small businesses. I am not just talking about farmers and those who depend for their livelihoods on some of the more open environmental business enterprises. It also affects cafes and small businesses in Queanbeyan. During the last massive heatwave we saw cafes like Hotch Potch and many small businesses around Queanbeyan completely shut down because all their vital machinery, their refrigeration and the rest of it, broke down. A small business like Hotch Potch was not in a good position to be able to replace that machinery. Obviously you can talk about storm damage as well and the effect that that is having on many small businesses.

They are ignoring all these issues and impacts—what would encourage investment, what would take away serious effects on small businesses—at the same time as trying to make this huge tax giveaway, which is not going to achieve jobs and growth in Australia. In fact, they are looking at completely the wrong policy settings to achieve that. There have been so many reports and commentaries by economists on the fact that this tax cut will not achieve jobs and growth. One example from the MacroBusiness website from February this year stressed that there was no evidence at all to support the notion that this would create jobs and growth, if you actually were aware of what is going on in the world in terms of where jobs are created and where industry is going to grow. They said:

An alternative approach, which would be much more likely to have positive effects on employment, investment and innovation, would be to tax new companies at a lower rate. OECD research shows that young businesses are the primary drivers of job creation. And new companies are more likely to be at the frontier of productivity growth … Confining preferential tax breaks to new businesses – for example, by prescribing that a lower tax rate is only available to a business for the first (say) three years after its incorporation – focuses the assistance on those businesses which are actually likely to innovate, and to create jobs.

Effectively this government has lost the plot on focusing on putting policy settings in place to create start-ups, support start-ups, support innovation and to support new businesses. That is where the job growth in Australia will come from, not from this flawed tax proposal by the government.

You also need to look at how we can properly commercialise research and development, look at our tertiary institutions and how they relate to business, how we commercialise and market the research and development from the tertiary sectors, and how we develop a proper venture capital industry in this country. We have seen no policy initiatives from this government that have addressed that really critical issue. It is a great shame for this country not to have the sort of mature venture capital industry that really is essential in this day and age, when you have $2 trillion sloshing around in our managed funds not working hard enough to get behind new businesses. We need policy settings that achieve that.

An example of the sort of possibilities in this start-ups space, and particularly in rural and regional Australia, where we are not really taking advantage of the human resource that is out there or enabling them to take the ride on these new economies that is possible with good information infrastructure and good skills and training—an example is the Birdsnest business in Cooma, south of Canberra.

Jane Cay managed to wander off from the farm—she is married to one of the local farmers there—into town, bought a shop and started a business. Now her business occupies an entire block in Cooma. She is employing 110 local women. It is a very creative workplace environment with incredibly flexible work hours so the women can get their kids to school and do what they need to do on the farm. Now I think that company is in the top seven online companies in Australia. It is enormously successful, underpinned by communications infrastructure that she has there in Cooma.

Of course that can be amplified much more widely with a greater spread of successful NBN technology, which we know this government has made an absolute mess out of. I had an NBN forum in Queanbeyan last week. Over 100 people came in just from the near surrounds of Queanbeyan—

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I heard it was very cold.

Mike Kelly (Eden-Monaro, Australian Labor Party) Share this | Link to this | Hansard source

It was cold but they were fired up, so it was quite warm in that building! They were outraged at what has been going on—and the attempts by this government to save money by putting more people onto satellite than were ever intended. It is holding back so many people in their small business operations. They are just outraged at the impediments to their development that have been created by the flawed NBN approach by this government.

What we need is a much more imaginative approach. I must also refer to the government's attacks on penalty rates in this context, because we are now coming very close to the situation where those penalty rate cuts will take effect on 1 July. This is absolutely critical to rural and regional Australia. We know that the McKell Institute's analysis shows that workers in rural Australia will be losing between $370 million to $691 million a year through the partial abolition of penalty rates in the retail and hospitality sectors. We are going to lose disposable income of between $174 million and $343 million in rural and regional Australia through this measure.

This is the big economic impediment right now. This is the thing that is the weak link in the government's own budget—wages. There is not enough money circulating in this economy to drive small business and to drive growth. It is this government's contractionary policies, through things like penalty rate cuts and through advocating at the Fair Work Commission for no rise to the minimum wage, that are really hurting our economy.

In New South Wales that penalty rate situation means that we are going to be losing somewhere between $118 million to $220 million, with a loss of disposable income of between $53 million and $106 million. In my local Monaro economy alone we will lose $16 million. This is going to have a serious impact on small businesses, and that is where they need the help. Consumer volume is the single biggest issue for a small business, which wants to have that going through the door.

I also want to talk a little about the impacts on broader small businesses of the approach to the defence industry by this government. We have seen, as I mentioned, the shock that has been created in the shipbuilding yards. We have seen small businesses, like Taylor Brothers in Tasmania and J&H Williams in Adelaide, who make the ducting for these vessels, have a drop-off in work created by not building the supply vessels here and continuing the Future Frigates. This has caused tremendous to disruption to so many small businesses around the country.

In the process of Land 400 we are also seeing small businesses like Elphinstone in Tasmania, which does a great job in bending metal, being ignored in that. Across the border here, in Queanbeyan, EOS does world-class remote weapons station technology. They were not even allowed to compete in the Land 400 process. We have the US Marines in Singapore and all these other countries looking at their technology, but their own country slammed the door in their face. There is no proactive marrying up of Australian SMEs with the primes in any of these projects. And by cutting and destroying what capacity we had within the DMO and by cutting the programs Labor had, we just are not seeing that proactivity in growing Australian businesses in our defence procurement processes.

And we have seen, for example, the killing of the Skilling Australia's Defence Industry program, SADI. It has gone; it went last year. We had 2,600 apprentices supported through SADI. Every aspect of the employment chain was supported through that program. There was the Defence Future Capability Technology Centre, which spawned the Defence Materials Technology Centre; the Australian Industry Capability Program that we started; the Defence Export Unit helped those companies to export; and the Global Supply Chain Program was really the key forward for a lot of our businesses. We may not be making whole units of products; the key now is to get into global supply chains with componentry. That would have been the future for the car industry if we had really seen some imagination from this government in that respect to save it. The Defence Industry Innovation Centre, and all of these programs, including a Priority Industry Capability Innovation Program and a Priority Industry Capability Development Fund, were helping Australian businesses. We need to get this country on track, to exploit the potential of the new economies, to grow the jobs of the future and to then make sure it is supported by the infrastructure that will deliver those skills—not cuts to universities and not smashing up the TAFEs. We need this government to really look at what supports small business.

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

It is never more interesting than to hear a Labor MP talk about small business, because it highlights their lack of understanding and, indeed, a great dichotomy that has occurred in Australian politics in recent times. As you would well know, Deputy Speaker Georganas, there has been a general belief on both sides of politics now for three decades about the importance of small businesses and making them competitive, because both sides of politics, up until now, have realised that every single taxpayer dollar that we need for health, every single taxpayer dollar that we need for education, every single taxpayer dollar that we need for welfare, every single taxpayer dollar that we need for defence, or any other thing that the Australian federal government needs to spend money on, comes from the private sector.

From the ramblings of the other side, you would believe that the more you tax them the better, because we are going to get more money out of them. That has not been a belief on both sides of politics for about 30 years, because what Bob Hawke and Paul Keating realised was that we needed a competitive and vibrant private sector, and it began with them. It began with the Labor Party who cut taxes not just for small business but for all businesses, including big business. Why did they do that? They did that because they knew that we needed to have a competitive tax structure that made us competitive with other countries throughout the world, because we cannot take our bat and go home—we are playing in a global economy and all our industries need to be competitive on the global scale. So Hawke and Keating cut taxes. They knew that was the way you had to go, and they did it. And they did not just cut them— they slashed them. It continued under the Howard-Costello governments, where we continued to move tax rates for companies and small businesses down.

If you were to believe the Labor Party right now, you would say 'What happened? We started getting less money, did we, in corporate and company tax collections?' No, that is not what happened. Because when you lower tax rates it encourages small businesses to develop, it encourages the cash flow of small businesses, and it encourages more businesses to establish and come here. What happens has been statistically proven by the ABS—and I wish I had brought the figures in. I will talk about the accelerated depreciation for small business in a minute, but I did not know I was going to talk about company tax rates. I feel as though I need to, though, given the dismal contribution from the previous member. What happens—every time we have done that since the 1980s—is this: when you cut company tax rates ,within two or three years—guess what?—you are collecting more money. You are collecting more money from companies than you did previously. That is not only because the economy is growing. It actually improves and is bigger—the actual tax collection as a percentage of the total size of the economy increases.

That was believed by everybody until populist Bill Shorten arrived as opposition leader and felt he needed to oppose small business and company tax rates. This is going to put us in a perilous position if we do not keep up. Deputy Speaker, I am sure you are aware that Britain's company tax rate is below 20 per cent, the US has proposals to drastically reduce their company tax rates, and within the OECD, which is not competitive by a world standard, we are near the top of the list. I think we are about sixth or seventh in the level of our tax rates. If you were to look more widely around the world, especially within our region, we are even more uncompetitive with our tax rates. The good member who just spoke talked about start-ups. I tell you what: when you have the choice, as a start-up, of opening up in Australia with high tax rates or going to a country close by with a lower tax rate, guess what? You do not go to the higher tax rate. He can talk about start-ups all he likes; if we do not have a competitive structure that is ongoing—if it is just for a few years—they will not do it.

I leave this part of my contribution on tax rates to say—and we say it all the time, but I say it for the benefit of the other side of politics—unfortunately, you cannot tax your way to prosperity. However, we can certainly help our businesses, our small companies and, indeed, our large companies to be competitive and to compete on a world scale. The more we encourage and help them and the easier we make it for them, the more successful they will be. And then, not only that, we will get more money from them to fund all of our public measures.

There is another measure that I am very happy to talk about in relation to the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017. You would remember, Mr Deputy Speaker Georganas, that this accelerated depreciation measure was introduced a number of years ago. I cannot walk the streets of any of my towns without someone in a small business saying, 'This is one of the best things they have ever seen.' They like the tax cut, but I think they would put this measure up there as an equal. You know how it works, Mr Deputy Speaker. If you are a small business—and it has double whammy effect for some—you get a tax write-off on any capital purchase of less than $20,000. This obviously encourages you to go out and spend, and it improves your cash flow situation. A lot of businesses benefit not only from that measure but also from people coming to buy things from them, with the idea of getting the tax write-off. When this measure was first announced, some of the businesses I spoke to in the agricultural sector—businesses who sell machinery to farmers, such as big ride-on mowers and that type of stuff—they said that sales of those types of items just went through the roof straightaway. For some businesses, it is a double whammy. They get the tax write-off when they buy something and then they have people coming to them to buy something. Their business has expanded and boomed because of this injection to their cash flow.

It was most unfortunate that in my region in the last two months—on 31 March, in fact—that the CBD of Lismore was flooded. It was a devastating blow. I recall the images of the flood from when I was walking around the town. The levee over topped in the very early hours of Friday morning. The place was literally flooded for two days. You could not get into the CBD until the Sunday. I will always remember that Sunday, walking the streets of the CBD as all the owners went into their outlets to clean up. For many it has been a huge blow, because in some cases they had six foot of water and even higher come into their shops and destroy a lot of things. Some people had time to put things up; some people did not. Not that it is important for me, but my own office also flooded. The floods have caused great havoc for small businesses in the town of Lismore.

A couple of things have happened from that. The Lismore Chamber of Commerce and Industry did a great job. We had a meeting just a few days after the flood. We were applying for category C funding. The chamber got very mobilised. We got a lot of forms to small businesses at this public meeting, which was on, I think, a Thursday morning at the university. We had 600 people fill out this form and return it to us. Within two weeks of the flood, we had category C funding declared and a grant for small businesses to help them go out and recapitalise. It was a $15,000 grant, which for some was great, for some it helped and for some it will not go close enough to helping but at least it has assisted in a way. That has been a great help, and so is the depreciation on the purchase of capital goods helping them. Not only are they getting a grant; but they know that when they go out and spend the money it is tax deductible. They can write it off their taxable income straightaway. We need every bit of help we can get in order to get the economy and the people out there turning things over again.

I will just to go through some of the specifics of the legislation. We know that, based on current lodgements of 2015 to 2016 tax returns, 220,000 businesses have reported that they have used this measure and claimed nearly $2 billion in deductions. I actually think this number will get even bigger. I am still a little bit surprised. I go to a lot of business chamber meetings and talk to a lot of tax accountants especially in my region, and some of them are still unaware of this—not so much the tax accountants, but certainly some of the small businesses. In fact, I was doing a radio interview this morning and someone asked me about this and how it worked, and I was explaining to them what it was. They had read about the fact that we were doing it in 2017, and I told them we had been doing it for a number of years.

A key benefit of the $20,000 threshold, as we know, is that it encourages businesses. The whole idea of this is to give economies a boost, and it brings forward any type of capital investment that people have been thinking of making, because previously, as you know, if you bought something, although you could depreciate it, you could depreciate it only over time, at a certain percentage, depending on what it was, over a number of years. The fact that we have said that they can write it off straightaway has significantly brought forward capital investment, and that was the whole aim of this.

Another thing obviously has been very beneficial, and here I want to talk about pooling. Accelerated depreciation has two arms, the immediate depreciation for an asset less than the threshold but also the pooling of assets costing more than the threshold. The pooling arrangements are available to small businesses to provide greater simplicity for their tax affairs, as the pool depreciates all assets in the same way—15 per cent in the first year and 30 per cent each year after that. So, if you have a good that is worth more than $20,000 you can start to pool the goods together, and, again, it is an accelerated depreciation. Also, if the small business is registered for GST, the exclusive amount is taken to be the cost of the asset when calculating the depreciation amounts, and the immediate deductibility threshold is $20,000 exclusive of any GST. Where the entity is not registered for GST, then the GST-inclusive amount is taken to be the cost of the asset in the depreciation calculations and the immediate deductibility threshold of $20,000 inclusive of GST.

I want to give some examples so that people understand exactly what you might be able to do and what you could buy. Some of my neighbours have done this. For example, if you are a courier service then obviously you can go out and buy yourself a van. Neighbours and friends of mine who are farmers have gone out and bought themselves a secondhand ute, the sole use of which is for their farming activity. A book retailer could go out and buy things like bookcases or any capital equipment that they might need. Or it could be flooring—if you have to put new flooring into your retail outlet—or refrigeration or cooling equipment, or you could get a car in addition to a ute, if it is less than $20,000. Restaurant and cafe owners have so much capital equipment, and, as I said, a lot of this has been damaged recently in Lismore. You could go out to buy ovens, dishwashers and those types of things. And the great thing is that it is not capped at $20,000, so if you were to go out and buy an item, as a lot of local cafes and restaurants in Lismore are doing at the moment, such as a refrigerator for $15,000, you might also go out a bit later and buy an oven for another $15,000. It is not capped at $20,000. You can keep this. As long as the capital item is less than $20,000, it is not limited as to how much you do that, which, again, has given a great boost and brought forward many capital purchases.

So, again, I think this government understands small business. There are many people I know on this side of politics who have run a small business, and that is why we understand small business. I think one of the flaws of the other side of politics, with all due respect, is that there are not enough people over there who have run a small business, who understand small business. It is a cellular thing, when you wake up in the morning and you know not only that you have to pay or make your own salary from the activities but that you potentially have to do that for other people. At a cellular level you understand what it means to make a small business successful and the challenges you face when you run a small business.

We on this side of politics understand small business. The other side, unfortunately, do not. The previous speaker spoke about an economist who did not think the small business tax cuts were a good idea. I am an economist. I do not always advertise it; I do not necessarily treat it as a claim to fame. But I do treat as a claim to fame the fact that I have also run a small business. And while they may well find economists who do not think this is a good idea, I would say, with all due respect: go and find me an economist who has run a small business who would think this is not a good idea. And I think they would be struggling to do that. While they may well find economists who think this is not a good idea, there is not a small business in this country that does not think the instant asset tax write-off is a good idea—and the tax cut that the previous member said is not a good idea. Small businesses know it is good for them, our country and our economy and, therefore, good for the public services that we can provide if we encourage small businesses to succeed.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

There are over 12,000 small businesses in my electorate of Forrest, so that is over 12,000 instances where people have literally had a go. They have invested their own money, they have taken a huge risk, they have mortgaged their house or property and are working their hearts out in their small business. The Turnbull government is backing these courageous small business people. These are the small businesses who employ almost half of our country's workforce and pay significant tax. We know our economy grows when the small business sector is strong and doing well. We also know every small business started with someone's idea, someone's dream, someone's passion—along with the sheer hard work, dedication and sleepless nights that it takes to make it all happen.

To the small businesses in my electorate of Forrest and those right around Australia: this bill, and this government, backs you. The bill amends the tax law to help small businesses invest and grow. It is a continuation of a series of measures the Turnbull government has introduced to offer genuine support for small businesses. On any day, 5.6 million Australians are at work in small businesses across the country. They are earning a wage from one of our 3.2 million small businesses. These same small businesses make up 99 per cent of all Australian businesses and annually contribute $380 billion to our national economy—that is big business from small business.

Many of these small businesses are the heart and soul of rural and regional towns and communities, and many of us on this side are small business people. My husband and I bought our small business, a dairy farm, on the day we got married. Like most small businesses, it was head down and tail up for many years. We had a massive debt, a rundown property that needed developing and a very limited income. I am sure many small businesses that may be listening to this tonight can really identify with this start in business. And that is how I know that one way the government can assist small business is to cut small business taxes and red tape and introduce the instant asset write-off measure in this bill. It will reduce the burden of tax on small businesses, directly encourage growth—you can invest in yourself—and increase their ability to employ even more Australians. As I have said repeatedly, how often it is that the small businesses in a small regional community offer young people their first job and sometimes offer older Australians their last job. They support the fire brigade, the local service clubs and the local sporting clubs, and they are always there when we need them in those small communities.

The measures in this bill are part of the 2017-18 budget. Prior to the budget, the Turnbull government achieved a significant milestone to help small businesses by reducing the company tax rate on businesses with a turnover of $10 million or less—and that is turnover, not profit. Some small businesses, in spite of that turnover, actually make relatively small profits. That is because of the nature of their business. Those businesses owners have to work overtime themselves to pay for and retain their staff. These are the same people who often work in their businesses during the day and on their businesses at night—in particular, small family businesses. This can mean doing your accounts, BAS and ordering at night. This is exactly what happens in my own family business.

Because of the Turnbull government, the tax rate for small business is now at its lowest level in many, many decades, and small businesses have more money to invest in their business today. That change in the law also means more than 90,000 additional businesses have access to tax concessions with the redefinition of small business to those turning over the $10 million per annum. The bill continues the government's plan to back small businesses. Whether it is the local small-business owner in Dunsborough, the mature age worker in Bunbury or the young jobseeker looking to start their career in Busselton, the bill is full of opportunity.

In the 2015-16 budget, the Turnbull government increased the small business immediate deductibility threshold from $1,000 to $20,000 from 12 May until 30 June 2017. Well, this bill extends that measure by a further 12 months. Businesses with a turnover of less than $10 million can immediately deduct purchases of eligible assets, each costing less than $20,000. And they are doing it, Mr Deputy Speaker Hogan. You have referred to it yourself. And it is welcomed by many organisations that represent small business—do not worry about those economists that you spoke about—as well as by the small- and family-business owners themselves. The Council of Small Business Australia CEO, Peter Strong, said:

For the third year in a row, the Federal Government—

the Turnbull government—

has demonstrated a genuine commitment to small business.

There is a big difference between talking and action, and I think we have proved it.

Any logical person knows that the best form of welfare is a job. Often that job is in small-business. I visit small businesses constantly. I recently hosted the Minister for Small Business, and we visited a number of my small businesses. The overwhelming sense we both got was that small businesses see the instant asset write-off as a genuine opportunity. Businesses like Hot Weld Fabrication in Bunbury are the types of businesses who now have access to the instant asset write-off.

A number of businesses have been nominated for the very prestigious 2017 South West Small Business Awards. It is going be held later this month in Bunbury. There are too many of these nominated businesses to mention them all, but there are a few that I would like to mention. In the industrial area of Bunbury out at Halifax, the Warehouse Cafe feeds many mouths every day from the early hours of the morning through to the afternoon. This is an excellent small business employing eight people and offering products that are renowned for being really top notch. The cafe's service is exceptional. When you walk into the Warehouse Cafe, Barbara and her team will do everything they can to make sure that you get the food and service that you want and need. The south-west is home to many very efficient businesses across a number of different industries. In over 30 years, Southern Car Care has built a strong reputation. From window tinting to electrical goods, including cruise control and stereos, Southern Car Care even installs tinting for homes, as well. The business employs six people and offers good old-fashioned service, personalised to the customers' needs. What a great way to go. It is another very sound south-west small business. Other finalists in the small business awards include Balingup Heights Hilltop Forest Cottages, Bartercard South West, Built Right Approvals from Busselton, Heatseal Double Glazing, who do double-glazed windows and doors, Laser Electrical in Bunbury, Rando & Associates and Salon Sugar, a beauty salon in Bunbury—I think it is a great name!

For those of us who have actually run a small business, we understand exactly how tough it can be. As I said, small-business people are time poor. Under our measures in this bill, the business does not have to keep track of the item records and can use the extra cash flow to reinvest in the business. Assets valued at $20,000 or more can continue to be placed together in the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter. Once assets are placed in the pool, there is no requirement to track each item's depreciation over the multiple income years. In practical terms, for that small business and for those people at home at night doing this work, this really seriously reduces the burden of paperwork so that they can actually get on with the next day and do what they do best—employing people and contributing to the economy. The instant asset write-off has proven to be one of the most popular small business incentives by the Turnbull government. It encourages every one of those 3.2 million small businesses to invest in their business.

I cannot let this opportunity pass without calling out the opposition. As recently as last year the shadow Assistant Treasurer said:

… if you look at the current situation in terms of the corporate sector, you've got 28.5 per cent for small business and 30 per cent for big business. It makes sense to get them on the same level doesn't it?

Very logical. The member for Lilley even spoke approvingly of our plan, saying:

Reducing company tax will create new jobs and grow the economy right around the country, to the ultimate benefit of all Australians.

The chief of hypocrisy himself, the Leader of the Opposition, said on lowering the tax on small business:

Any student of Australian business and economic history since the mid-80s knows that part of Australia’s success was derived through the reduction in the company tax rate.

The Leader of the Opposition says:

We need to be able to make life easier for Australian business, which employs two in every three Australians.

What a turnaround! Now those very same people rail against the government daily about these measures. It is blatant hypocrisy—it is breathtaking. And, it is very risky for small businesses. Labor is determined to increase taxes for those small businesses with turnovers of up to $10 million. We are about creating more jobs—that is what this government are about—and that is why we have continued to back small business in this year's budget. Extending this instant asset write-off is a highlight in the budget for small business. Every time we walk in the door, that is a great message to deliver to a small business: 'We are backing you. We are giving you a chance to invest in your business and your people and to continue to grow.' That is what we are saying. Whether you are a trucking or a transport business, no matter what business you are, this government is backing you. If you are watching, we are backing small business. I am sure every time we do that we increase business confidence. As we have seen, small businesses, industry groups and business leaders right across the country have been vocal in their calls for an extension to the program—and we have responded to that. Our government is getting on with the job.

I congratulate the Minister for Small Business for also putting together what I call the small business tool kit—an invaluable resource for small businesses. I am very pleased to say that the minister responded very positively when I suggested this initiative so that small businesses are aware of the opportunities they can take advantage of. One important thing is the ability for small businesses to get online and arrange for the Australian Taxation Office to call them at a time that suits the small business. Isn't that a fantastic thing? I've talked about the fact that small business people work in their businesses during the day and often on their businesses at night dealing with the paperwork and the practicalities. If you have an issue or want to call the Australian Taxation Office, they can call you when it suits you and your small business. All small businesses need to know about this. There are times when you need to ring the ATO, so get online, sign up and they will call you when it suits you.

There is no doubt on this side that small business is the engine room of our economy. Family businesses are very much a part of that, from our farmers to every form of industry that we have in this country. I encourage small business every day. I know they are taking a great risk, I know the hard work—I have lived it and still live it. I congratulate the Treasurer on bringing this measure before the House and I encourage and implore the opposition to get behind this. Who in their right mind would not want to support small business in Australia? Perhaps only the Labor Party.

Jane Prentice (Ryan, Liberal Party, Assistant Minister for Social Services and Disability Services) Share this | Link to this | Hansard source

I rise tonight to speak on the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017. Let me start by paying tribute to small businesses throughout Australia for the perseverance and tenacity which sees them wake early and leave late every day, every week and every month of the year. You truly are the engine room of Australia's economy. Following the successful and popular initiative in the 2016-17 budget, this bill will enable small businesses with an annual turnover of less than $10 million to claim an immediate tax deduction for eligible assets costing less than $20,000 first used or installed for use by 30 June 2018. In fact, assets do not have to be brand new—second-hand assets are eligible to be immediately deducted if they cost less than $20,000 each. The highlight of the 2017 budget for small businesses was this extension of the instant asset write-off program, as it is most widely known, for a further 12 months.

Testament to the coalition, a pro-small-business government, this measure continues our strong record of backing small business. It will benefit approximately 3.2 million small businesses in Australia to grow and to deliver more and better paying jobs by helping them replace or upgrade their machinery and equipment. We know very well that a strong small-business sector equates to more jobs and job opportunities for Australians and is key to the success of local economies. Recognising that the small-business sector in Australia employs approximately 5.6 million Australians, the coalition stands behind them and is providing hardworking small-business owners with every opportunity to think big and succeed. The coalition's side of the House understands that businesses, not governments, employ people. However, smart people can lead to smarter commercial outcomes when backed by smart government policy. I know many smart businesses in my electorate of Ryan that appreciated these depreciation rules when they were first introduced in 2015. It is government policy providing a hand up, not a hand out.

In the Ryan electorate there are approximately 13,200 small businesses, which employ locals and support the local community. When I travel around my electorate, I am frequently inspired by the creative spirit of new small businesses and their owners—businesses which benefit from a supportive coalition government. Take, for example, Kenmore Plaza Seafood. Known by families in the area as the place of 'Charlie's Chips', Kenmore Plaza Seafood is thriving—so much so that the owners, a family business, have improved their eat-in dining options. Another community hub is the Pullenvale Marketplace. This microcosm of small businesses is home to a medical centre, a pharmacy, a restaurant and a cafe. As an employer of many local residents in Pullenvale and surrounding suburbs in the Ryan electorate, it is another prime example of investment in Australian small business.

A further success story of business innovation and entrepreneurship in the Ryan electorate is that of Opengear—an innovative leader in next-generation smart solutions to protect and manage critical ICT infrastructure. Beginning in 2004 with two employees at ilab in Toowong, Opengear now employs 64 staff worldwide and has offices across Australia, the USA, the UK and Europe. From humble beginnings, Opengear now boasts customers including tier 1 companies, DFAT and the Queensland Police, and they have been recognised with many product and technology awards.

I know the Minister for Small Business, in his second reading speech, mentioned his visit to a local Greek cafe in Parramatta. In my electorate I am fortunate to have a Greek cafe, Briki Espresso and Gelato Bar, located on Hawken Drive in St Lucia. Briki typifies the success that local small businesses have achieved through measures of the coalition government. Through incentives from then Treasurer the Hon. Joe Hockey's budget, Sav and his family were able to expand their business and grow it into a favourite Greek institution known throughout Brisbane. They will now reap the rewards of measures like the instant asset write-off and small-business tax cuts.

There are many other businesses in my electorate which will benefit directly or indirectly from the amendments contained in this bill. Small businesses are the lifeblood of Australia's economy and provide employment for young, old and, importantly, those with disability. When you consider that these businesses across Australia provide 42 per cent of the private non-financial sector jobs and around one-third of production, it becomes very clear that supporting them and their operation is vital. We all hear of the challenges faced by businesses, but it is the small business end of town which faces additional challenges in competing with larger entities. Economies of scale are not easily achieved. Access to finance is invariably more difficult. It is unfortunate that because of these many challenges the failure rate of small businesses is considerably high within their first year of operation. Year on year these businesses take risks and must brave and clear the inevitable hurdles that will arise.

The burden of red tape and compliance is proportionately greater for time-poor business owners, so it should be a confidence booster for them that the government has committed $300 million to states and territories to remove unnecessary regulatory barriers. Small business should not be about mindlessly completing unnecessary bureaucratic paperwork. Small business should be about employment, growth and ultimately profit and reinvestment. What astounds me—and as a former small business owner myself I speak with passion—is that the opposition leader and his cohort are quite literally business destroyers. Consider the opposition leader's budget in reply speech, when he announced that Labor plans to reverse tax cuts for small business. As Minister McCormack said recently, just as businesses receive the confidence injection to invest, grow and create more jobs, thanks to our small business tax cuts, Labor has now confirmed that it will hike small business taxes. Does the opposition leader really intend to deny more small businesses and their hardworking employees access to further investment and growth opportunities? Do they really want Australia to be uncompetitive on the world market? The next time the opposition leader is visiting his local corner score, perhaps to purchase a pie, please consider how the business owner, already fearful as to how they struggle to pay employees or how they often go without to ensure that the shop door actually opens, can open the next morning.

Let me be clear with sentiments that are shared widely among my small business constituency. Labor's cynical, opportunistic politics is the greatest threat the Australian economy. It is a threat to all manner of businesses, from butchers and bakers to local mechanics and cafes. The coalition government believes in small business because with a combination of good luck, good management and good government policy, the small business of today can become the big business of tomorrow. It is inevitable that Labor will harp on about cutting tax rates or providing relief to businesses. Their hypocritical big on small business, short on understanding is the same BS we have seen for a number of years in this parliament. I would seriously question whether the businesses in those seats held by Labor are particularly fond of the opposition's track record when it comes to not supporting Australian business. Labor is a threat to jobs and simply cannot be trusted. The opposition leader says one thing and does another, so how can Australian business trust them?

There is a well-known adage in small business that the harder you work the luckier you will be. I am a great believer in working hard to get ahead. I am also a great believer in government providing the right foundations and pathways to support those with aspirations. It is the policy in amendments like those contained in this bill that demonstrates the commitment that the Turnbull coalition government has to the businesses and people of Australia. We have a strong record when it comes to supporting small business. Given that this measure applies from 1 July, the successful passage of this legislation is critical to ensure certainty and confidence for small businesses. The Turnbull government continues to commit itself to unleashing Australia's business potential to invest, to grow and to pay their workers to support the economic future of all Australians. At the end of the day a business's business is business, and by providing the right foundations the coalition is supporting a path to success, rather than impeding their ability to undertake what they do best. I commend this bill to the House.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is always a great pleasure to rise in this House and speak about small business, the engine room of our economy, and I take the opportunity to speak today on the Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2017 and to applaud this government's unwavering commitment to supporting one of the most crucial elements of our national economy.

Before coming into this place, I had the joy of running a small business, along with my wife, and I also came from a family of small business people. And it is interesting that I now see our two sons seeking to venture the small business arena on their own. While they are still working, they are trying to build their own businesses on the side. As many on this side have experience, it gives us a good understanding and a good appreciation of the trials and tribulations of those hundreds of thousands of men and women who strive every day to build their small businesses right around this great country.

There are many, many people who have today put everything on the line to build their business for not only their family's wealth but also the wealth of future generations. They put it all on the line. Their house supports the mortgage that supports the small business and supports the overdraft. That is where all their wealth is tied up. As a government we are seeking to support these people who are prepared to put everything on the line every single day. These people not only put their future on the line but, due to the fact that they employ nearly 50 per cent of the workforce in Australia, also support the hopes and dreams of many, many other Australians—not just their own.

Such people give their absolute all to their work in order to give their children and the children of their employees a brighter future. In doing so, they are also sustaining and strengthening a sector that creates more jobs for Australian workers and more opportunities to build a vibrant and inviting community across our country. Many of these small business people also contribute enormously to the communities in which they live by being involved in various community organisations, such as Rotary or Lions, or being involved in and sponsoring their local sporting clubs—righting sponsorship for the team so that they have their jerseys, training equipment and footballs or soccer balls. This is what we see our small business people right around this country do so very, very well.

It is for this reason that I am proud to be part of this government, which is continually seeking to deliver for our small business sector. In my electorate of Forde, there are more than 14,600 small businesses that have built the foundation of our local economy. Several of these businesses have already taken advantage of our instant asset write-off program, and they welcome the extension of this program in the 2017-18 budget. The instant asset write-off program, which first started back in May 2015, has become instrumental for our small business community to help them replace or upgrade machinery and equipment with ease. The program improves cash flow for our businesses, which in turn boosts productivity, giving our small business owners chances they may not have had to employ more staff or to pay their existing staff more. Furthermore, when small businesses purchase more or better assets locally, communities and other businesses directly benefit from the flow-on effect of that purchase. This is because every dollar spent in a small business is a confidence boost for that business itself and for the community as a whole.

In addition to the instant asset write-off program, the government is also delivering a tax system that supports enterprise, by backing small businesses to invest and helping ensure that Australia continues to be an attractive place to do business. Such a move will secure our future and create jobs for hardworking Australians, also managing our transition to a more diversified economy that can continue to expand and create job opportunities for the employees of the future. We see many businesses, as I travel around my electorate, that you would not think are necessarily competing in the global marketplace. There are many like Poppys Chocolates, who are doing tremendous work around the country. Like every small business, they go through their ups and downs, but they continue to build and grow and develop and look for new market opportunities. That is where these programs and these tax cuts give them the direct incentive to do that.

This government is backing small business through a tax cut to 27.5 per cent for those with a turnover of less than $10 million from 1 July. This will deliver a lower tax rate for over 870,000 companies, who employ some 3.4 million workers, including more than 15,000 businesses in my electorate of Forde. This is not all this government is doing for the small business sector. We all know that our small business owners and their staff are time poor. This is why we are working hard to develop a simpler business activity statement that will help our small businesses save time and money when they are completing the GST reporting, allowing them to focus on things that really matter in the day-to-day running of their business.

Alongside this, we are also seeking to abolish further red tape. In that regard we are providing some $300 million to the state governments in order for them to find ways to reduce the red tape that small businesses face every day. Reducing the complexity of regulation for our businesses makes it easier for business to get on with the job of doing business. As the member for Ryan quite rightly pointed out in her contribution, proportionately the impact of red tape is far greater on our small business sector than it is on our large corporate sector, because our small business sector does not have the capacity to manage the red tape burden. They do not have the accountants and the advisers and the in-house people that can manage all that red tape process. It is the owners of those businesses and their staff that have to manage that on a day-to-day basis. That is why reducing red tape for small business will be such an important achievement for those businesses, because the less time they are spending on red tape, the more time they can spend working with their customers, suppliers and potential new customers to build their businesses.

We are levelling the playing field for Australian small business retailers online by applying the GST to low-value imported goods. The $1.1 billion National Innovation and Science Agenda announced in December 2015 also contains a range of initiatives and programs to support small business to be more innovative. We believe that small businesses are where dreams and big ideas begin. This agenda will give them better access to finance and help them prepare to have a go at something new. I see that in businesses around my electorate on a regular basis. We are talking to people about getting new ideas off the ground and how we can assist them. As part of this we are creating the modern digital marketplace to make it easier for small businesses to compete for the government's $9 billion information and communications technology contract. We will also require government agencies to pay invoices for contracts valued up to $1 million within 30 days. The government has made it easier for small business to access Commonwealth contracts under $200,000 and made credit and debit cards the government's preferred payment method for purchases up to $10,000. We are opening up new forms of financing for small business by legislating the crowd-sourced equity funding framework for public companies, and in establishing the Small Business and Family Enterprise Ombudsman we are providing a strong voice for small business.

All of these measures prove the coalition government is showing great leadership in managing and assisting the small business sector by helping to create a framework for small businesses to grow and prosper into the future. This government is about improving small business confidence, and we see this as a great way of encouraging Australians to support the sector whenever and wherever they can. The more Australians shop locally and access services locally, the more opportunity there is for business to create jobs and wealth for the future. I am looking forward to seeing the small businesses in my electorate continue to thrive over this coming financial year thanks to the support and dedication of this government, which is determined to give them every opportunity to do so. I commend this bill to the House.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (Accelerated Depreciation For Small Business Entities) Bill 2017. I would like to begin by thanking the Minister for Small Business for introducing this bill and including the extension of the instant asset write-off as a key budget measure. I thank the minister for all the work he puts into his portfolio, the work that assists almost 20,000 small businesses in my electorate of Swan alone. I know the minister was a small-business owner himself, as I am. In fact, a large number of members on this side of the House have been small-business owners. That is why we know just how much of a positive impact bills like this will have on hardworking everyday Australians.

Across our great nation there are 5.6 million Australians—almost a quarter of our population—working and earning a wage from one of the 3.2 million small businesses. In my electorate of Swan, this includes businesses in the Kewdale-Welshpool industrial hub and the Belmont Business Park. It includes the extensive cafe and restaurant strip along Albany Highway in Victoria Park, in which my electorate office is located, and where there are more than 100 car yards. In fact, I started my own business in Anvil Way off Division Street in Welshpool all the way back in 1988 and continued to work in the air-conditioning and refrigeration sector for more than 25 years, after spending seven years as the state manager for a national air-conditioning company.

The 2017 budget extends the $20,000 instant asset write-off for a further 12 months to 30 June 2018 and the turnover threshold will be lifted to $10 million, actively improving cash flow for small businesses, helping them to reinvest in their businesses and to replace or upgrade their assets. I have listened to the speeches of people on the other side of the chamber today, who talked about going to the last election with their definition of small businesses as being $2 million. If you know anything about small business, you will know that, across the sectors, including government, insurance companies, and various NGOs and not-for-profit bodies, there are different definitions of a small business. For me, the definition of a small business goes to the amount of people they employ, and $10 million is a reasonable level to classify a small business. When I was running my business, there were only three people working in it and it had a turnover of in excess of $6 million. The problem for the Labor Party is that they think the $2 million is profit. They just do not get that there is a difference between turnover and profit. That is why they are saying that a small business is $2 million. Their definition of it is totally incorrect. There are a lot of companies out there with only three to five people or maybe even 10 people—which is a small business by a lot of definitions throughout different sectors—that turn over far more than $2 million. But, because the Labor Party do not know anything about small business, they come in here and say, 'We have people who work in small business,' and they educate people on how to deal with media. Giving lessons to union people on how to do interviews with the media is not a small business. It is not creating anything and it is not employing people; it is just pretending to be a small business.

The 2017 budget extends the $20,000 instant asset write-off, as I said before. So how does this actually work? For the benefit of those opposite, let me break it down further. Accelerated depreciation has two arms: immediate depreciation for each asset less than the threshold of $20,000 until 30 June 2018; and pooling for assets costing more than the threshold which cannot be immediately deducted under other provisions. The pooling arrangements are available to small businesses to provide greater simplicity for their tax affairs. As the pool depreciates all assets in the same way—15 per cent in the first year and 30 per cent in each year after that—small businesses do not need to spend valuable time tracking each individual asset against different depreciation rates over time. Anyone who has run a business would understand that the depreciation tracking and depreciation schedules have been maintained over many years. I know, having been in business before there were tools introduced by the coalition, this particular process was very time-consuming—particularly for accountants, who charge a fair amount of money.

As to the GST, if the small business is registered for GST, then the GST-exclusive amount is taken to be the cost of the asset when calculating depreciation amounts, and the immediate deductibility threshold is $20,000, exclusive of any GST. For those on the other side who might not know—as the Premier of Queensland did not know—the GST rate is 10 per cent. So you can actually buy, as a business which is registered for GST, an item worth $22,000, and the actual write-off is the $20,000 threshold. Where the entity is not registered for GST, then the GST-inclusive amount is taken to be the cost of the asset in the depreciation calculations, and the immediate deductibility threshold is $20,000, inclusive of any GST.

As a proud Liberal, I see it as our duty to nurture and encourage our citizens through incentives, rather than to only impose limitations. The role of government is to provide an environment in which private enterprise will thrive. It is our duty to provide opportunity for all Australians to facilitate wealth, so that all may enjoy the highest possible standards of living; to foster an environment in which the people we represent can achieve their goals; and, perhaps most importantly, to promote individual freedom and free enterprise—arguably, most evident in the small businesses across this nation.

Ninety-nine per cent of all Australian businesses are small businesses, and they collectively contribute $380 billion to our gross domestic product annually. As we, on this side of the chamber, understand, small businesses are the backbone of Australia, and to help them grow and succeed will mean greater employment opportunities and better opportunities for all Australians.

I have heard those on the other side today saying that Labor is the party of small business. In the whole 25 years in which I ran a small business, I never once thought that Labor were the party of small business. All I ever saw was that, whenever Labor came in, they made it tougher for us; they imposed more restrictions on our freedom to operate; they imposed heavier taxes. They also imposed on us the '93 difficulty. I know that in my business I went without pay for 10 months, purely because of the fact that Paul Keating's policies made for a terrible onslaught on small businesses, which suffered dramatically.

As the minister would know from his own experience as a small business owner, the rules around depreciation of tools and equipment are complex and variable. If something like this measure had existed back when I was running my business, I would have saved hours and hours of accountancy time over the course of the 25 years I was in business.

Every dollar that is spent in small business is an injection of confidence into that business and, by extension, into the local community. It creates a chain reaction that extends from our small businesses. While those on the other side of the House seek to further make our small businesses less competitive, we, on this side of the House, are giving the backbone of our country the tools necessary to expand and compete in the global economy, and ensuring that we live up to our word on backing small business.

$5.8 billion in red tape has been abolished by the coalition government. This means saving business owners time so that they can focus on growing their small businesses and not on complying with some bureaucratic process that does nothing to deliver for the greater community.

We on this side of the House have small business experience. I know how hard my good friend the member for Wright worked in running his trucking business. I know that the member for Gilmore worked tirelessly to ensure her fudge-making business was successful. I know that the member for Fadden had a big business before he came into parliament. He had an IT business that employed 160 staff. I doubt whether anyone on that side of the House would ever have gone near employing 160 staff. They might have worked, through their union processes, to make sure that 160 staff were pushed off sites or sacked from companies—or, when they drove businesses into the ground, they got rid of 160 staff.

I can remember when I was on a building site as an apprentice. I see that the Minister for Small Business is here; he would get this. The first thing that happened to me as an apprentice was that the union shop steward, who was Scottish and had red hair, came onto the site and, while I was up on a scaffold, insisted that I produce my union ticket. Unfortunately, after 20 minutes of abusing me—because I said 'I'm working and I'm not coming down'—he walked off and said he was going to shut the site down. I must admit that I did wait until he got about 50 metres away and then I called him back and said, 'Sorry, but I'm an apprentice.' His disgust in that situation at missing out on an opportunity to shut the site down was palpable; you could see that he was so disappointed. As someone said a long time ago, if we got rid of all the Scottish Unionists in Australia we would probably be in a much better place.

Pat Conroy (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Faux racist! Why do you hate Doug Cameron?

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I will take that interjection, don't worry! The member for Dunkley ran the Nineteen Consulting business—

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

I will just caution the member for Shortland. That interjection is completely unparliamentary and he will withdraw it.

Pat Conroy (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I withdraw and I apologise.

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

The member for Swan.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

Accepted. The list goes on and on. It is a rewarding job running a small business. You may miss out on family holidays—and we in this place all understand that—because you cannot afford to put the business on hold for a few days. Your work day does not end when the clock strikes five. You work through the night because you are not going to let this plan go, you are not going to let the income for your family to survive go. We understand what it is like to be forced to reach into your own pockets when times are tough just to keep people in work. Small business owners have to make great sacrifices to keep people in work, to ensure that they keep their jobs, to ensure that they still receive their wages and to ensure that they feed their families.

For too long, the pressure on small business owners has been mounting. For too long, we have taken their hard work for granted. Our small businesses need our support. That is why this government is cutting small business taxes from 1 July 2016, reducing the corporate tax rate from 28.5 per cent to 27.5 per cent from 1 July 2017, further reducing the corporate tax rate to 25 per cent by 2026-27 and increasing the unincorporated tax discount rate. That is why this government is increasing the number of businesses eligible for a range of small business tax concessions, with the small business entity turnover threshold being increased from $2 million per annum to $10 million per annum as previously noted. That is why this government is introducing a national partnership on regulatory reform providing up to $300 million over two years to states and territories that remove unnecessary regulatory barriers.

It is not only those on this side of the House that can see the benefits of measures like this. The Chief Executive Officer of the Australian Chamber of Commerce and Industry, James Pearson, said:

Small businesses are particularly pleased to see the highly successful instant asset write-off extended to June 2018, reflecting our Pre-Budget Submission, and made available to businesses with a turnover up to $10 million. We are confident this will encourage restaurants to buy more kitchen equipment, landscape gardeners to buy more lawn mowers and tech companies to buy more hardware.

He continued:

Extension of the instant asset write-off is terrific. We heard firsthand from small businesses during our roadshow tour with the Minister for Small Business and the Australian state and territory chamber network for the instant asset write-off to be extended, as well as the call for more reductions to regulation and red tape.

One of the key benefits of the temporary $20,000 threshold is that it encourages businesses to bring forward key capital investment from future years to the current income year, renewing their capital base. When we first introduced the $20,000 instant asset write-off a business in my electorate called Print Ezy, based in Victoria Park, went out and purchased a new printing machine for his business. That measure allowed him to instantly write it off. The actual result of that—and I know the Minister for Small Business will be interested to hear this—when I spoke to him two weeks ago, he said that machine has created so much business that now he has to go out and buy a $100,000 machine. That instant asset write-off was a bonus to his business and now he has to go out and buy a machine that is capable of producing far more printing for his customers and his clients. So it has a positive effect. The coalition can see that. We understand that. We understand that providing incentives, providing instant asset write-offs, to businesses all across Australia gives them the ability to buy equipment that will improve the efficiencies of their business.

Another benefit is that this measure does not only apply to tangible assets but to intangible assets also, such as computer software and intellectual property, provided that the cost is under $20,000 each. I have a short time left and I would again like to congratulate the Minister for Small Business for his efforts in implementing this bill, and I commend this bill to the House.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

It is great to follow on from the member for Swan. His was a captivating speech. And I see the member for Brisbane in the chamber as well. Certainly, those two understand small business and I very much appreciate and acknowledge the roles that they played before they came to parliament in the small business space. I would also like to thank those members who have contributed to this debate.

With 3.2 million small businesses employing 5.6 million Australians and contributing $380 billion to the economy annually the small business sector plays a critical role in the Australian economy. To make sure that the Australian economy ticks along nicely, the government is committed to backing small business each and every day. By implementing the policies that give small businesses the confidence to invest and grow and to employ—to hire more Australians and create more jobs.

This bill amends the tax law to extend the $20,000 immediate deductibility threshold for another 12 months, until 30 June 2018. This will allow small businesses with turnover less than $10 million to immediately deduct purchases of eligible assets, each costing less than $20,000 first used or installed, ready for use, by 30 June 2018. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter. This extended measure will improve small business cashflow, encouraging small businesses to invest in their business for another year. The Liberals and Nationals understand that, when small businesses get just a bit of additional money, they reinvest it back into their own business to enable them to grow and to, as I said before, hire more Australians and create more jobs.

This 12-month extension continues the government's strong record of backing small businesses, supporting them all the way; to grow, and to deliver more jobs and better-paying jobs, including by helping them replace or upgrade their machinery, their capital equipment. We know the benefit is felt economy-wide, in metropolitan cities, in the outer suburbs, in rural, remote and regional Australia. A small business recently informed us that the instant asset write-off had a chain reaction through the local economy. That was the lovely Alana Laliotitis in Parramatta. She owns Kouzina Greco restaurant, and she said it created a chain reaction when installed new kitchen equipment for her very popular restaurant—I visited that restaurant with Senator Marise Payne, the Defence Minister, after launching the two-dollar commemorative coin recently.

Alana told us how she went and bought new kitchen equipment. She used a local electrician to install the equipment and it created a chain reaction through her business. It created greater efficiency in the kitchen, which then created greater productivity. Her staff, she reported, even got a boost from it. 'Staff morale improved,' she said. But, most importantly, more customers came through the door. And that is what all small businesses want—more customers. The results from purchasing an asset locally, arranging for locals to install the asset and having happier staff due to the new equipment ultimately produces a better product for customers.

Over the past few months I have met with and heard from hundreds of small business owners who have told me how they have used the instant asset write-off to grow their business. The instant asset write-off has proved to be a very popular small business measure, and was the highlight for small business in this year's budget. Indeed, 9 May was a red letter day for small business. In fact, I would almost describe it as more black than red, because it is enabling them to get more profits, and all small business want to be in the black, not the red. Coincidentally, the morning of 9 May was when the 27½ per cent tax rate was installed for businesses with a turnover of up to $10 million. So those measures provided for in the previous year's budget were in fact enshrined in law. That enabled the instant asset write-off, introduced that night—and hopefully this bill will be passed tonight in the lower house—now enables businesses with a turnover of up to $10 million to take advantage of this instant asset write-off.

Another great example was Anna Mitsios, the founder of Edible Beauty in Sydney. She needed the instant asset write-off to be extended so that she could buy a forklift to keep up with the demand for her products in Asia. She is taking advantage of the free trade agreements that we have been able to broker with South Korea, Japan and China. She said:

We need to palletise our warehouse as we get bigger orders from Asia. I used the write-off to finance a car last year. It's been a huge help.

In the member for Swan's electorate, small business owner Dina Otley, who runs Nosh Gourmet Food and Gifts, told of how she has used the instant asset write-off to invest in a small kitchen and equipment, which led to her employing new staff. She said:

More than long-term tax cuts, this has an immediate effect of helping us to keep investing in the future of our business. As a small business it is always difficult to maintain a competitive offer against larger rivals with more resources and buying power.

A great quote. Mechanic Tery Wallace wanted to see the instant asset write-off extended this year. The owner of Boyd's Garage in Surrey Hills said:

We need all the help we can get in small business and that tax incentive was a great idea which should be continued.

I would be a bit worried if it wasn't continued to be honest—because we need people to invest in small business.

Through the passage of this bill, we are delivering the extension which Tery, stakeholders and many small business owners have called for.

These are real stories of the men and women at the forefront of small business, who have explained in practical terms how the instant asset write-off is benefitting their business operations, In conjunction with our plan to provide tax relief for small business—down to 27½ per cent; the lowest it has been for many, many decades—a and a turnover threshold of up to $10 million, this government is supporting small businesses to create new opportunities and boost productivity to secure Australia's future.

For those who have run a small business—and there are many on this side of the House—we know that every little bit counts, every little bit makes a big difference. We understand the daily pressures and demand in managing staff, balancing cash flow and meeting reporting obligations. That is why this side is also getting on with the job of cutting through red tape. The member for Swan mentioned the fact that $5.8 billion annually has already been cut from that burden which is such a pressure on small business. Of course, in the budget—that excellent budget produced by the member for Cook—$300 million was put on the table to incentivise states and territories to see where they could further cut through some of that red tape which is bogging down business.

The member for Reid, in his role as Assistant Minister for Industry, Innovation and Science, last year in Parramatta rolled out the national business simplification incentive, which helps the hospitality industry cut through that red tape between federal, state and local government—breaking down the silos so that, for instance, a coffee shop, rather than having an 18-month wait from go to whoa, would have that time reduced to just three months. We have listened to small businesses so that we could deliver the best support they need to get ahead and to get on with what they do best.

We know Australia's 3.2 million small businesses are central to keeping our economy strong. They look to this government for support and action. A strong small business sector means more jobs for Australians, more opportunities to build vibrant local communities across the country. We are extending the instant asset write-off so hardworking small businesses can continue to get ahead.

A few stakeholder quotes: Derek Shoen, the President of NSW Farmers, said on 9 May: 'The association is particularly pleased to see the $20,000 immediate asset write-off provisions for small businesses continue for a further year.' James Pearson, the CEO of the Australian Chamber Of Commerce and Industry, said: 'Extension of the instant asset write-off is terrific. We heard firsthand from small businesses during our roadshow tour with the Minister for Small Business and the Australian state and territory chamber network for the instant asset write-off to be extended as well as the call for more reductions to regulation and red tape.'

Innes Willox, the CEO of the Australian Industry Group said: 'Critically, the budget provides a substantial boost for smaller businesses by lowering tax burdens, extending asset write-off eligibility and cutting red tape.' Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, who is doing a fantastic job, said: 'It is great to see another budget focused on small business. This gives small business a level playing field with a capacity to grow.' Geoff Crouch from Wagga Wagga, the chair of the Australian Trucking Association, said: 'The government's decision to extend the instant asset write-off to 30 June 2018 will benefit many eligible businesses.' He would know, because he and his industry keep goods moving. They are the lifeblood of getting goods freighted across the country. Geoff certainly understands the instant asset write-off and its advantages.

Melina Morrison, who is the CEO of the Business Council of Co-operatives and Mutuals, said: 'Any assistance which is given to small businesses, such as the continued $20,000 capital write-off and small business company tax cuts, will be welcomed by BCCM members.' There you have it: very much appreciated by stakeholders and by real small business owners right across the nation. With that I commend the bill to the House.

Question agreed to.

Bill read a second time.